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Newcrest Mining Limited - Quarterly Report for the three months ending 31 March 2014

MELBOURNE, Australia, April 23, 2014 /CNW/ - Newcrest Mining Limited (ASX: NCM) - Quarterly Report for the three months ending 31 March 2014 (these figures are unaudited)

Key Points

  • Quarterly gold production of 551,590 ounces
  • Quarterly copper production of 21,012  tonnes
  • Average realised gold price for the quarter of A$1,450/oz
  • Group All-In Sustaining Cost(1) for the quarter of A$988/oz (US$886/oz)(2)
  • All-In Sustaining Cost(1) at each operation was below the average realised gold price for the quarter
  • Full year guidance maintained with gold production expected to be around the top of the guidance range (2.3Moz) and Group All-In Sustaining Costs expected to be at or below the lower end of the guidance range(3)
  • Cadia Valley production ahead of FY2014(4) guidance but FY2015(4) production is expected to be below 2014(4) with Ridgeway ore grades expected to be lower in 2015(3). Cadia East Panel Cave 2 west crusher commissioned ahead of schedule. Cadia Valley gold production expected to be around 700,000 ounces in FY2016 with a further increase in production expected in FY2017.(3),(4)
  • Lihir will continue to feed the process plant with predominantly stockpile material in FY2015(3),(4)
  • Newcrest's operational priority remains on maximising free cash flow, not maximising production ounces

Overview

Newcrest is on track to deliver full year gold production around the top end of the guidance range following production of 551,590 ounces of gold and 21,012 tonnes of copper for the March 2014 quarter with the All-In Sustaining Cost (AISC) of sales being A$988 per ounce (US$886 per ounce).

Gold production for the quarter was 11% lower than the previous quarter, primarily due to lower mill throughput associated with increased maintenance activity, which included a conveyor belt replacement at Ridgeway, a shutdown to complete the Cadia East west crusher tie-in and processing plant maintenance at Lihir. Lower production at Telfer, Ridgeway and Lihir for the quarter was partially offset by the production ramp-up at Cadia East.

Development of Cadia East Panel Cave 2 continued with the commissioning of the Panel Cave 2 west crusher and associated materials handling infrastructure completed ahead of schedule during the quarter. The additional crushing capacity will enable the production ramp-up at Cadia East to continue.

All-In Sustaining Cost of A$988 per ounce was 7% higher than the previous quarter primarily due to a 24% increase in sustaining capital expenditure per ounce and a 15% reduction in by-product credits per ounce compared to the previous quarter, partially offset by lower site operating costs. Each operation again had an All-In Sustaining Cost below the average realised gold price for the quarter of A$1,450 per ounce.

Newcrest Managing Director and Chief Executive Officer, Greg Robinson, said: "Newcrest continues to maintain a sharp focus on cost reduction initiatives across the entire business. Our year-to-date All-In Sustaining Cost of A$998 per ounce is A$285 per ounce lower than last financial year which has enabled us to expand our All-In Sustaining Cost operating margin to A$462 per ounce this quarter despite the lower gold price environment."

Exploration activities continued during the March 2014 quarter with positive drilling results at Wafi-Golpu and Gosowong.

During the quarter the Company announced that it had completed arrangements to extend the tenor of its existing bilateral bank loan facilities providing a smoother and longer average maturity profile with no material change to terms and conditions and no increase in interest cost.

(1)  All-In Sustaining Cost metrics as per World Gold Council Guidance Note on Non-GAAP Metrics, released 27 June 2013. Newcrest Group All-In Sustaining Cost will vary from quarter to quarter as a result of various factors including production performance, timing of sales, the level of sustaining capital and the relative contribution of each asset.
(2) March 2014 quarter All-In Sustaining Costs in USD terms are converted to USD at an average A$:US$ exchange rate for the quarter of $0.896.
(3) Subject to market and operating conditions - refer to Newcrest's Forward Looking Statements disclaimer on page 22.
(4) Refers to financial years ending 30 June.

Guidance(5)

Subject to market and operating conditions(5)

  • Full year production guidance is maintained for both gold and copper, with gold production expected to be around the top end of the guidance range (2.3 million ounces); and
  • Full Year Group All-In Sustaining Cost $M - including exploration, production stripping and sustaining capital expenditure - is expected to be at or below the lower end of the guidance range.

Guidance for the 2015 financial year will be provided in due course following completion of the budgeting process for 2015 which will be around the time of release of the June 2014 Quarterly results. At this stage, subject to completion of the budgeting process and market and operating conditions:

  • Cadia Valley production for the 2015 financial year is likely to be below that of the 2014 financial year principally due to lower gold and copper grades at Ridgeway, subject also to Cadia East Panel Cave 2 development rates. For the 2014 financial year, Cadia Valley is expected to produce above the guidance range(3) (480,000 to 530,000), principally due to unexpectedly higher grades at the Ridgeway operations, which are not expected to continue in the 2015 financial year. Overall, Cadia Valley gold production is expected to be around 700,000 ounces in the 2016 financial year with a further increase in production expected in the 2017 financial year(3); and
  • as part of its focus on cash maximisation, Lihir is likely to again have an elevated level of stockpile feed in the 2015 financial year such that production in the 2015 financial year is likely to be in the same range as for the 2014 financial year(3).

(5) Refer to Newcrest's Forward Looking Statements disclaimer on page 22 of the report

Forward Looking Statements

These materials include forward looking statements. Often, but not always, forward looking statements can generally be identified by the use of forward looking words such as "may", "will", "expect", "intend", "plan", "estimate", "anticipate", "continue", and "guidance", or other similar words and may include, without limitation, statements regarding plans, strategies and objectives of management, anticipated production or construction commencement dates and expected costs or production outputs.

Forward looking statements inherently involve known and unknown risks, uncertainties and other factors that may cause the company's actual results, performance and achievements to differ materially from any future results, performance or achievements. Relevant factors may include, but are not limited to, changes in commodity prices, foreign exchange fluctuations and general economic conditions, increased costs and demand for production inputs, the speculative nature of exploration and project development, including the risks of obtaining necessary licenses and permits and diminishing quantities or grades of reserves, political and social risks, changes to the regulatory framework within which the company operates or may in the future operate, environmental conditions including extreme weather conditions, recruitment and retention of personnel, industrial relations issues and litigation.

Forward looking statements are based on the company and its management's good faith assumptions relating to the financial, market, regulatory and other relevant environments that will exist and affect the company's business and operations in the future.  The company does not give any assurance that the assumptions on which forward looking statements are based will prove to be correct, or that the company's business or operations will not be affected in any material manner by these or other factors not foreseen or foreseeable by the company or management or beyond the company's control.

Although the company attempts and has attempted to identify factors that would cause actual actions, events or results to differ materially from those disclosed in forward looking statements, there may be other factors that could cause actual results, performance, achievements or events not to be as anticipated, estimated or intended, and many events are beyond the reasonable control of the company.  Accordingly, readers are cautioned not to place undue reliance on forward looking statements.  Forward looking statements in these materials speak only at the date of issue. Subject to any continuing obligations under applicable law or any relevant stock exchange listing rules, in providing this information the company does not undertake any obligation to publicly update or revise any of the forward looking statements or to advise of any change in events, conditions or circumstances on which any such statement is based.

Ore Reserves and Mineral Resources Reporting Requirements

As an Australian company with securities listed on the Australian Securities Exchange ("ASX"), Newcrest is subject to Australian disclosure requirements and standards, including the requirements of the Corporations Act and the ASX. Investors should note that it is a requirement of the ASX listing rules that the reporting of ore reserves and mineral resources in Australia comply with the 2012 Edition of the Australasian Code for Reporting of Exploration Results, Mineral Resources and Ore Reserves (the "JORC Code") and that Newcrest's ore reserve and mineral resource estimates comply with the JORC Code. Newcrest ceased its listing on the Toronto Stock Exchange ("TSX") on 4 September 2013, but will remain subject to certain Canadian disclosure requirements and standards until it ceases to be an Ontario Securities Commission registrant. Prior to that, Newcrest will continue, in accordance with the requirements of National Instrument 43-101 - Standards of Disclosure for Mineral Projects of the Canadian Securities Administrators, to report its ore reserves and mineral resources estimates in compliance with the JORC Code, along with a reconciliation to the material differences between the JORC Code and the applicable definitions adopted by the Canadian Institute of Mining, Metallurgy and Petroleum (CIM Definition Standards). In relation to the December 2013 Resources and Reserves Statement, released to the ASX on 14 February 2014, the reconciliation is set out in Newcrest's Canadian News Release dated 14 February 2014, and is available at www.sedar.com and at Newcrest's website www.newcrest.com.au.  Except as otherwise noted in that document, there are no material differences between the definitions of Measured, Indicated and Inferred Mineral Resources, and Proven and Probable Reserves, under the CIM Definition Standards and the equivalent or corresponding definitions in the JORC Code.

Competent Person's Statement

The information in this report that relates to Exploration Targets, Exploration Results, Mineral Resources and Ore Reserves and other scientific and technical information, is based on information compiled by Mr C. Moorhead. Mr Moorhead is the Executive General Manager Minerals and a full-time employee of Newcrest Mining Limited. He is a shareholder in Newcrest Mining Limited and is entitled to participate in Newcrest's executive equity long term incentive plan, details of which are included in Newcrest's 2013 Remuneration Report. Ore Reserves growth is one of the performance measures under that plan. He is a Fellow of The Australasian Institute of Mining and Metallurgy. Mr Moorhead has sufficient experience which is relevant to the styles of mineralisation and types of deposits under consideration and to the activity which he is undertaking to qualify as a Competent Person as defined in The JORC Code 2012 and is a Qualified Person within the meaning of National Instrument 43-101 - Standards of Disclosure for Mineral Projects of the Canadian Securities Administrators ("NI 43-101"). Mr Moorhead consents to the inclusion in this report of the matters based on his information in the form and context in which it appears including sampling, analytical and test data underlying the results.

A copy of the release be found on Newcrest's website: www.newcrest.com.au and on SEDAR: www.sedar.com.

SOURCE Newcrest Mining Limited

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