Newcrest Mining Ltd. (ASX:NCM, Financial) reported operating results for the quarter ended Dec. 31, 2016, on Jan. 29.
The Australian gold miner produced 615,000 ounces of gold during the quarter, flat on a quarter-over-quarter basis, and 25,000 tonnes of copper, 6.1% more than the previous quarter.
The company also produced 266,203 ounces of silver, a 30.7% decline on a quarter-over-quarter basis. In the previous quarter, it produced 384,098 ounces of silver.
In the first six months of fiscal 2017, the company produced 1,230,213 ounces of gold, 48,899 tonnes of copper and 650,301 ounces of silver. The production of gold and copper in first-half 2017 represents a 2.1% and 25.6% increase on a year-over-year basis, while the production of copper declined 35.1% compared to the same period of fiscal 2016.
Newcrest expects to produce between 2.35 million and 2.60 million ounces of gold and between 80,000 and 90,000 tonnes of copper in fiscal year 2017.
During the quarter, Newcrest sustained an all-in sustaining cost (AISC) of $751 per ounce of gold, a 4.9% decline from the previous quarter.
The realized gold price per ounce of gold sold was $1,229, down $99 per ounce or -7.5% from the previous quarter; the gold margin (realized gold price per ounce minus AISC per ounce of gold) was $478 per ounce, a decline of 11.1% from the previous period.
From the wholly-owned Cadia Valley, where Newcrest runs one of the most extended gold mining operations in Australia, the company produced 179,173 ounces of gold (approximately 29.1% of the company’s total quarterly production), an 8.3% decrease on a quarter-over-quarter basis due to the lower gold grade of ore processed during mine reshaping, and 19,383 tonnes of copper (approximately 77.5% of the company’s total quarterly production), a 3.2% increase on a quarter-over-quarter basis.
From its Lihir operations in Papua New Guinea, Newcrest produced 227,498 ounces of gold (approximately 37% of the company’s total quarterly production), a 10% increase on a quarter-over-quarter basis, as a "result of higher mill and autoclave throughput and improved recovery.” In the previous quarter, the company produced 206,760 ounces of gold at Lihir.
From the Telfer mines in Western Australia, the company produced 111,277 ounces of gold (approximately 18.1% of the company’s total quarterly production of gold), flat on a quarter-over-quarter basis, and 5,793 tonnes of copper (approximately 23.2% of the company’s total quarterly copper production), a 17% increase on a quarter-over-quarter basis.
At Bonikro in the Ivory Coast, a total of 31,775 ounces of gold were produced during the quarter. This represents a 9.1% decline from the previous quarter ended Sept. 30, 2016.
At Gosowong, an Indonesian mine, a total of 64,991 ounces of gold were produced during the quarter. This figure represents a 12.7% increase on a quarter-over-quarter basis.
Newcrest is looking at growth opportunities in Wafi-Golpu, a gold project the company is developing in Papua New Guinea in a joint venture with Harmony Gold (HMY, Financial).
The company estimates that the Golpu deposit contains approximately 11 million ounces of gold and approximately 4.8 million tonnes of copper as ore reserves.
The miner is also engaged in brownfields exploration activities in Telfer, Gosowong and Bonikro, and in greenfield exploration activities in West Africa, Australia, Indonesia, New Zealand and Nicaragua.
Newcrest Mining is trading around 21.53 Australian dollars ($16.25) per share, up eight cents or 0.37% from the previous trading day, with a price-book (P/B) ratio of 2.34 and a price-sales (P/S) ratio of 5.
The company has a market capitalization of AU$16.49 billion and an enterprise value of AU$18.32 billion. The stock is trading at 13.77 times the EBITDA.
The company has 765.79 million shares outstanding, of which 760.72 million is float.
As of the most recent quarter, the company had AU$53 million in cash on hand and total debt of AU$2.16 billion.
Over the last 12 trailing months, the company generated approximately AU$1.24 billion from operations.
The average analyst target price is AU$17.07 per share, which ranges between a low of AU$9.76 per share and a high of AU$25 per share.
The majority of analysts suggest holding shares of Newcrest Mining and the recommendation rating is 2.8. The recommendation rating ranges between 1.0 (Strong Buy) and 5.0 (Sell).
Disclosure: I have no positions in Newcrest Mining Limited.
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