Newcrest points to stronger half

Reuters.

Sydney - World no. 3 gold producer Newcrest Mining pointed to a stronger second half for fiscal 2013 on Friday as expansion work boosts output and costs fall.

Newcrest reported first-half underlying profit of A$320 million, down 48 percent on the same period a year ago due to spending on mine upgrades, and in line with market forecasts.

“For the remainder of the 2013 financial year, Newcrest expects higher production in line with achieving the bottom end of guidance and a subdued cost environment,” the company said.

Melbourne-based Newcrest said two closely watched expansion projects - at its Gosowong mine in Indonesia and a $1.3 billion plant upgrade at the Lihir mine in Papua New Guinea - will enable it to produce a full-year gold yield at the lower range of its 2.4 million ounces to 2.5 million ounces guidance.

“Achieving guidance will be primarily dependent on the speed of the Lihir plant ramp-up and access to high grade ore stopes at Gosowong,” the company said.

Newcrest shares rose 3.5 percent to A$24.14 in early trade in a flat overall market.

Newcrest operates mines in Australia, Papua New Guinea, Indonesia and Ivory Coast.

The stock has dropped around 20 percent since its most recent peak in September, far outpacing a 3 percent drop in the US dollar gold price and a 1.6 percent fall in the Australian dollar price.

Gold stocks globally have failed to match the huge gains in the gold price in recent years, due to rising costs and a proliferation of exchange-traded gold funds, which provide investors with direct exposure to gold commodity markets.

Newcrest said half-year gold sales fell 22 percent versus the same period a year ago, while copper sales slipped 7 percent.

The strength of the Australian dollar, and currencies in Papua New Guinea and Indonesia were putting added pressure on its margins, it added. - Reuters