Newcrest Mining Ltd. (ASX:NCM, Financial) announced July 19 the Panel Cave 2 at its Cadia mine is back in production following a seismic event on April 14.Â
No serious injuries were reported among the company's employees.Â
Cadia is one of the company's producing assets in the Australian state of New South Wales.
The damage to the mine seemed to be minimal. The company has closely worked with local inspectors to ensure the mine is safe.
In order to bring the mine back into operation, a "test and response" phase was conducted. This process involved extracting 480,000 tonnes of ore while monitoring seismic response levels. The ore drawn from this procedure has since been processed.Â
The company says Cadia's Panel Cave 2 is back to normal operating activities. At Panel Cave 1, however, operations are expected to resume during the third quarter of the year.
Investors hope the temporary interruption in operations at the Cadia mine will not have a significant impact on Newcrest Mining’s production for the remainder of 2017. The miner will provide revised guidance as soon as the whole asset is again operating at its normal capacity.
Concerning the company’s production beyond fiscal 2017, Newcrest Mining ensured investors in a news release that it will not be significantly impacted by the seismic event.
The Australian mining company usually produces about 30% of its total gold production and between 75% and 78% of its total copper production from Cadia.
Newcrest Mining is trading around 19.53 Australian dollars ($18.20) per share, down 17 cents or -0.86% from the previous trading day, with a market capitalization of AU$14.96 billion, a price-book (P/B) ratio of 2.07, a price-sales (P/S) ratio of 4.21, a price-earnings (P/E) ratio of 34.38 and an EV/Ebitda ratio of 11.34.
The company's forward P/E ratio is 27.51. Multiplying that number by the full-year forecasted EPS of 58 cents yields a value of AU$15.96 per share. If multiplied by the 2018 EPS forecast of 71 cents, the forward P/E ratio yields a value of AU$19.53 per share, which is where the stock is currently trading.
The average analyst target price is AU$17.31 per share, which ranges between a low of AU$9.89 and a high of AU$24. The recommendation rating is 3.2 out of 5.
Operating issues at the Cadia mine due to the seismic event in April have likely influenced analysts’ opinions on Newcrest Mining, whose recommendation rating fell to 3.2 from 2.9 three months ago.
Disclosure: I have no positions in Newcrest Mining Ltd.
