The National, Monday 24th September 2012
THE trouble-plagued Lihir goldmine in New Ireland continues to drag on Newcrest Mining, which last Friday lowered its production forecast for the September quarter, limiting any chance it could hit the upper range of its year target.
Newcrest shares fell 2.9% to close at $A28.92 yesterday after an electrical fault reduced the mine to 25% of its output. It would take 10 days to resume full production, Newcrest estimated.
Morningstar analyst Mathew Hodge said Lihir had been “a troublesome place ever since it started’’.
“It’s a very expensive place to do business,’’ he said.
“It’s inside a volcano, and the ore is very difficult to treat – it’s not liberated easily.
“It’s a bit like [Anaconda’s failed] Murrin Murrin [nickel mine], requiring high pressures and high temperatures, which brings additional maintenance costs.’’
Hodge said Newcrest had “obviously found more issues than they expected when they made the takeover’’ of Lihir Gold for A$10.6 billion in 2010.
Newcrest said gold production for the September quarter was expected to be about 460,000 ounces.
Deutsche Bank’s Brett McKay calculated this new target was 40,000 ounces lower than expected after factoring in 15,000 ounces lost at Lihir due to last Friday’s electrical fault, the 10,000 ounces lost when a conveyor broke down at the Ridgeway mine in NSW, and another 5,000-ounce reduction from another Lihir shutdown in August.
Newcrest said that despite the lower September quarter output Lihir would hit its target for the year of 700,000 to 900,000 ounces. – Sydney Morning Herald