Newcrest Mining Ltd. (ASX:NCM, Financial) released operating results for fiscal fourth-quarter and full-year 2017 on July 24.
The Australian mining company closed the quarter reporting 551,815 ounces of gold produced – a 7.8% decrease from the previous quarter, and 12,968 ounces of copper produced – a 41.3% decrease from the prior quarter.
For the fourth quarter, Newcrest Mining reported an all-in sustaining cost (AISC) of $902 per ounce of metal sold, which represents a 26.5% increase from the third quarter of fiscal 2017, for a margin of $360 per ounce considering an average realized gold price of $1,262 per ounce. Despite an increase in the price of gold of $28 per ounce from the prior quarter, the gold margin per ounce of gold sold decreased by nearly 31%.
Gold production for the year fell 2.4%, from approximately 2.44 million ounces of gold in 2016 to 2.38 million ounces of gold in 2017. Annual copper production increased 1%, from 83,070 tons in 2016 to 83,941 tons in 2017.
For fiscal 2017, the AISC per ounce of metal sold was $787 – a 3.3% increase year over year. The average realized gold price per ounce of $1,263 (8.3% higher than 2016) led to a gold margin per ounce of $476. The latter represents an approximately 17.8% increase from a year ago.
The disruption to production at Cadia, one of the company's assets in the Australian state of New South Wales, due to a seismic event on April 14 in addition to timing issues with the presentation of throughput’s higher head grade at Bonikro in Côte d’Ivoire, impacted production for the quarter and the entire year.
In a report dated July 19, the company gave an update on Cadia and announced the recommencement of operations at the Panel Cave 2.
The company also reported decreases in the quarterly gold production at Gosowong (-14.09%) due to a lower head grade of mineral processed and in the yearly gold production at Telfer (-16.5%) due to a higher proportion of waste rock to ore mined and processed.
Despite multiple operating issues, Sandeep Biswas, the company's managing director and CEO  said the overall fourth-quarter performance was remarkable with Lihir mine in Papua New Guinea representing “a record for quarterly mill throughput rate and gold production.”
At Lihir, the gold production, which usually represents approximately 35% to 37% of Newcrest Mining’s total annual production, was 276,230 ounces in the last quarter of fiscal 2017, a 20.3% increase from the prior quarter. It produced 940,060 ounces of gold for the entire year, a 4.4% increase from 2016.
Newcrest's financial results for the fourth quarter and full-year 2017 will be released Aug. 14.
Newcrest Mining is trading around 19.76 Australian dollars ($15.63) per share, up 18 cents or 0.92% from the previous trading day, with a market capitalization of AU$15.141 billion, a price-book (P/B) ratio of 2.10, a price-sales (P/S) ratio of 4.26, a price-earnings (P/E) ratio of 34.79 and an EV/Ebitda ratio of 11.28.
The average analyst target price is AU$17.75 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. The current target price represents a 10.2% downside in the current market value per share.
Disclosure: I have no positions in Newcrest Mining Ltd.
