Newcrest Mining Reports Gold Output Dip Amid $29 Billion Takeover Consideration by Newmont Mining

Australian Mining Review

Australia’s largest gold miner, Newcrest Mining (ASX: NCM), reported a dip in gold production in Q3 compared to Q2.

The company anticipates a recovery in the April-June period and expects to meet its full-year guidance.

Amid this announcement, Newcrest has opened its data room to Newmont Mining, which has offered a $29.4b bid for the company.

Newcrest’s interim chief executive officer Sherry Duhe remains optimistic about the future, citing robust gold and copper pricing, favourable exchange rates, and production growth as factors driving improved performance in the final quarter of the fiscal year.

Gold and Copper Production Outlook

Ms Duhe announced that gold and copper production is expected to increase in the April-June period, targeting a full-year guidance of between 2.1-2.4moz of gold.

Gold prices have experienced a 10% rally this year, reaching a recent peak of $2,002 per oz.

Ms Duhe’s optimism stems from continued momentum in gold and copper prices, as well as the company’s ability to achieve its group FY23 production guidance.

Q3 Production and AISC Performance

Newcrest produced 509,637oz of gold in the three months ending March 31, compared to 512,130oz in the October-December period.

All-in sustaining costs (AISC) fell by 7% to $1,012 per oz, leading to an AISC margin of $837 per oz.

The company attributes the decrease in AISC to a higher copper realized price, reduced production stripping expenditure at the Lihir and Telfer mines, as well as lower sustaining capital expenditure at Red Chris, Brucejack, and Cadia mines.

Copper Output and Brucejack Mine Performance

The miner’s copper output for the March quarter declined to 31,148t from 34,564t in the December quarter.

Gold production at the Brucejack mine increased by 29% compared to the previous quarter, following a fatality and subsequent safety review that led to a three-week operational suspension.

With operations returning to full capacity, Brucejack mine produced 70,160oz of gold in the most recent quarter.

Newmont Mining’s Takeover Consideration:

Newcrest has granted Newmont Mining exclusive due diligence access until May 11 to present a binding proposal for the takeover.

The Denver, Colorado-based mining giant has already made two improved offers since its initial $29.4b bid.

The potential acquisition of Newcrest Mining by Newmont Mining would create a formidable force in the global gold mining industry.

Despite a dip in gold production during Q3, Newcrest Mining remains optimistic about meeting its full-year guidance, thanks to expected increases in gold and copper production.

The company also continues to evaluate the $29.4b takeover bid from Newmont Mining, which could significantly impact the gold mining landscape.

Newcrest’s future performance will be influenced by its ability to capitalise on favourable market conditions and successfully navigate the potential acquisition by Newmont Mining.