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Newcrest clears path for $1.3bn Cadia expansion


Newcrest Mining has completed a pre-feasibility study for a proposed block cave development at the Cadia gold operation in New South Wales, setting the stage for a feasibility study and early works program to begin.

The Cadia PC1-2 pre-feasibility study found the total cost of the development would be around $1.3 billion.

It represents another step in Newcrest’s block caving at Cadia and will further enhance the site’s production capacity and mine life.

According to Newcrest, the PC1-2 cave has a net present value of $2 billion with a 17-year mine life at 15 million tonnes per year.

A total of 258 million tonnes at 3.5 million ounces of gold and 660,000 tonnes of copper is expected to be produced across the mine life.

Newcrest anticipates that the average all-in sustaining cost (AISC) would be $54 for every ounce of gold produced. The PC1-2 cave will deliver a real, after tax internal rate of return of 21.5 per cent.

“The study underpins an optimised mine design which we expect will deliver higher gold and copper grades and enable the deferral of capital expenditure in the medium term,” Newcrest chief executive officer Sandeep Biswas said.

“We have significant financial headroom to fund the construction of PC1-2, together with our other organic growth options, from our expected cash flow generation over the development period and our strong balance sheet.”

Newcrest can now move to the feasibility stage and early works program for the PC1-2 cave. The company has approved $120 million in funding for the early works program, which will start in the December 2021 quarter with a feasibility study now underway.

“This project, together with the expansion project currently in progress, is expected to sustain Cadia’s position as one of the largest, lowest cost and long life gold mines in the world,” Biswas said.

“The team at Cadia is passionately committed to building on this world class asset, driving employment and other benefits for the local community and other stakeholders, and maintaining a focus on innovation, continuous improvement and sustainable development.”

Newcrest achieved record mine and mill performance at Cadia in the 2021 financial year, producing 765,000 ounces of gold and 106,000 tonnes of copper at the site for the year.

The company also produced 737,000 ounces of gold at the Lihir operation Papua New Guinea and 416,000 tonnes of gold at the Telfer operation in Western Australia.

A total of 2.1 million ounces of gold were produced by Newcrest in the 2021 financial year along with record copper production of 142,700 ounces.

Newcrest also delivered a record AISC margin of 49 per cent at $876 per ounce off the back of a $911 per ounce AISC.

The miner has provided a full dividend of $US0.40 ($0.55) per share, which is 129 per cent higher than the previous year.

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