Newcrest eyes 50% increase in production

NEWCREST mining has plans to increase its production by 50% at the cost of US$9 billion – most of it dependent on its PNG resources.
Among its PNG resources is its 50% interest in the Wafi-Golpu project, which was being developed with Harmony Gold of South Africa.
Industry analysts reported yesterday that faith in its five-year ambitious growth plan had maintained the company in the “buy” recommendation despite downward slides in its share prices in the last 48 hours spurred by its announcement at close of business on Monday to cut back on its production guidance for the full year to 2.55 million ounces – down from 2.925moz.
Shares dropped to US$30.16 at about 2pm yesterday, their lowest level since September 2009, but analysts were not abandoning the stock, BusinessDay’s Peter Ker noted.
In April this year, the shares were trading at US$42.42.
“The company has an ambitious five-year, US$9 billion plan to increase its production by 50%, and that strategy is largely focused on new projects in PNG rather than the existing mines whose decline prompted yesterday’s announcement,” Ker said.
“Faith in that growth plan was enough for UBS analysts to maintain their ‘buy’ recommendation on the stock, despite warning the company it had reached an important juncture in its evolution and needed to give the market more detail about its growth schedule,” he said.
Guidance for 2011-12 capital expenditure was set to remain at between US$2 billion and US$2.2 billion with its Lihir and Cadia Valley projects on schedule and within budget, the company said.