Newcrest announces another downgrade

Business, Main Stories

The National – Tuesday, June 14, 2011

NEWCREST Mining, which under departing chief executive officer Ian Smith has gained a reputation for hitting mining targets, has announced another guidance downgrade at its big Lihir gold project  that could wipe out US$170 million of full-year revenue.
Newcrest said a high-voltage switchgear failure in the power station at the Lihir mine had interrupted production.
The switchgear controls the amount of electricity that flows to various parts of the plant.
Its failure meant some parts of the plant could not get the power needed.
The outage would be the main contributor to a 120,000-ounce drop in 2010-11 production guidance from the midpoint of previous guidance, Newcrest said.
Based on current gold prices, this represents lost full-year revenue of about US$170 million.
Full-year production is now forecast to be 2.7 million oz, down from April guidance of between 2.785 and 2.855 million oz.
Newcrest, then  cut guidance by 100,000oz because of a third-quarter rains in Australia, a drought in PNG and civil unrest in Ivory Coast.
In its March quarter report, Newcrest flagged production guidance of 2.82 million oz (+/- 35,000 oz).
Meanwhile, a director from the New Ireland Mesalum Sumlin told Radio New Zealand that PNG needed legislation to regulate the practice of marine disposal of mine tailings.
The call from Sumlin is the latest expression of concern from New Ireland’s provincial government over mining operations in the province.
Sumlin said the province remained frustrated at a lack of consultation by developer Newcrest over its plans to upgrade production at the Lihir gold mine.
He said this added to concern at the environmental impact of Lihir’s marine tailings system, a practice which has no legal guidelines in PNG.
“We are simply telling the government, you have got to legislate for the deep sea tailings placement system. It’s now increasing. They’re doing it at Ramu, they did it at Misima, they’re doing it at Lihir, they’re doing it on Simberi.
“And you know Simberi is just a sister island off Lihir, and you’ve got two mines doing this tailing displacement at sea. There’s already bleaching to the coral reefs,” he added.