Newcrest share price slumps despite earnings guidance boost

plummeting gold share priceplummeting gold share price

Shares in Newcrest Mining Ltd (ASX: NCM) are tracking lower today and now trade at $26.62 apiece, a 1.33% loss on the day. Meanwhile, spot gold is now fetching US$1,884 per ounce after trading down the past few sessions.

Newcrest also released its quarterly earnings update today, reporting a “stronger performance in the March 2022 quarter”.

Newcrest grows portfolio, updates guidance

Key takeouts from the company’s report today include:

  • Gold production of 480 thousand ounces (koz) and copper production of 31kt
  • All-In Sustaining Cost (AISC) of $1,008 per ounce, a 10% drop for the period
  • AISC margin of $809/oz
  • Cadia PC1-2, Red Chris Block Cave and Havieron Stage 1 Feasibility Studies on track
  • Addition of a Tier 1 mine in a world class jurisdiction to Newcrest’s unrivalled asset portfolio
  • Strong drilling results at Red Chris and Havieron continue to expand the higher grade footprint

What else happened this period for Newcrest?

For the quarter, gold production was 10% higher than the same time last year. Newcrest says this was driven by three main factors: higher mill throughput at Cadia; the addition of production from Brucejack; and improved gold head grade and recovery at Lihir.

Throughout the quarter Newcrest saw gold production of 480koz and copper production of 31kt. This was realised on a lower AISC compared to last year and an AISC margin of $809/oz.

“Newcrest’s AISC for the March 2022 quarter of $1,008/oz2 was 10% lower than the prior period, reflecting a higher realised copper price, higher gold and copper sales volumes, lower sustaining capital expenditure and the benefit of a weakening Australian dollar against the US dollar on Australian dollar denominated operating costs,” the company said.

Injury rates were also reported down which the company says is a reflection of its “Safe Hands” intervention program, prioritising the reduction of hand injuries.

Aside from that, Newcrest also advanced on feasibility studies and drilling programs at its Havieron and Red Chris Block Cave sites.

Management commentary

Speaking on the results, Newcrest Managing Director and Chief Executive Officer, Sandeep Biswas said:

Newcrest delivered an excellent operational and safety performance during the quarter, building momentum for a strong finish to the financial year and positioning us well to meet our updated Group FY22 guidance, which reflects the addition of Brucejack and our operating and financial performance to date.

With the Cadia SAG mill motor operating at full capacity and an improved performance at Lihir, gold and copper production increased for the third consecutive quarter, driving the continued decline in our All-In Sustaining Cost. It was also very pleasing to see further reductions in our injury rates and progress made against our sustainability commitments.

What’s next for Newcrest?

The gold giant also updated its projections for the remainder of FY22. This has come on the back of completing the Pretium transaction, it says.

“Higher gold production and a lower All-In Sustaining Cost is now anticipated, with production stripping and major capital expenditure expected to be lower due to COVID-19 related disruptions to projects and reduced activity at Lihir,” the company noted.

Lihir is expected to deliver around the bottom of its original production guidance range (approximately 700koz) for FY22 with a strong fourth quarter anticipated due to lower planned maintenance and improved pumping capacity in Phase 14 which is expected to increase delivery of higher grade ore to the mill.

Newcrest share price snapshot

In the last 12 months, the Newcrest share price has held gains and is less than 1% higher in that time. This year to date it has spiked 9%, although it has levelled off in recent weeks.

The post Newcrest share price slumps despite earnings guidance boost appeared first on The Motley Fool Australia.

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Motley Fool contributor Zach Bristow has no position in any of the stocks mentioned. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. has no position in any of the stocks mentioned. The Motley Fool Australia has no position in any of the stocks mentioned. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Bruce Jackson.

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