Newcrest Mining Ltd. (ASX:NCM, Financial) closed up 2.9% at 21.30 Australian dollars ($15.07) per share on the Australian Securities Exchange on Oct. 24 after posting production results for the first quarter of fiscal 2019.
Thanks to the improved grade of the material processed and the access to full processing capacity of the mill facility at the Cadia mine in New South Wales, the Australian miner's gold production increased from 522,917 ounces in the prior-year quarter to 548,351 ounces, reflecting a 4.9% increase. Production from the Telfer mine in Western Australia also underpinned the growth, driven by an improvement in the ore grade and gold recovery rate.
Higher production from the Cadia and Telfer mines offset lower production at the Lihir mine in Papua New Guinea and the Gosowong mine in Indonesia. Production at Lihir was affected by mill maintenance, a lower grade of ore processed and a decrease in the gold recovery rate.
Unplanned power outages at Gosowong also impinged on operations during the quarter.
Due to an increased volume of gold produced and placed on the market, the all-in sustaining cost per ounce of metal decreased from $898 in the year-ago quarter to $778. As a result, the all-in sustaining margin increased 8.6% to $441 despite a lower gold price of $1,219 realized from the sale of one ounce. In the comparable quarter of 2018, Newcrest Mining realized $1,304 per ounce.
Copper production also increased by 49.4% to 24,923 tons as a result of improved operating performances at the Cadia mine.
Gold accounts for about 85% of Newcrest Mining’s total revenues, while copper makes up the remaining 15%.
The Investing.com graph indicates that following Wednesday’s jump, the share price is now above the 200-day simple moving average line. The stock was already trading well above the 100- and 50-day SMA lines. The market capitalization is about AU$16.34 billion.
Source: Investing.com
While the stock declined nearly 5% over the 52 weeks through Oct. 24, it outperformed the VanEck Vectors Gold Miners ETF (GDX, Financial), which fell nearly 11% over the same period.
Newcrest Mining is trading with a price-book ratio of 2.21 versus an industry median of 1.74 and an EV-to-EBITDA ratio of 11.02 compared to an industry median of 9.3.
The trailing 12-month earnings before interest taxes depreciation and amortization margin was 43.3% versus an industry median of nearly 24%, when the bullion averaged $1,296.97 per troy ounce on the London market and Copper futures averaged $3.059 per pound.
The 14-day relative strength index is 71, suggesting it is overbought.
The stock is granting a forward dividend yield of 1.46% as of Oct. 24.
According to the most recent estimates, the stock has a recommendation rating of overweight and an average target price of AU$21.80 per share.
For fiscal 2019, the company is guiding gold production ranging between 2.35 million and 2.6 million ounces and a copper production of 100,000 to 110,000 tons. The miner's forecast is a zero to 10.6% increase in the production of gold and a 28% to 41% growth in the production of copper from last year. To accomplish this target, Newcrest Mining must increase the output over the next three quarters, which is the near-term catalyst to watch.
Disclosure: I have no positions in any securities mentioned in this article.
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