Newcrest quarterly gold output drops, costs climb; on track to meet 2021 guidance

(Reuters) - Newcrest Mining Ltd, Australia’s top gold producer, on Thursday posted a drop in first-quarter output and outlined a jump in costs, sending its shares down to a four-month low.

The miner, however, said it is on track to meet its 2021 production guidance and expects both gold and copper production to increase in the second quarter.

Newcrest’s gold production fell to 503,089 ounces in the three months ended Sept. 30, from 511,636 ounces a year earlier, hurt by lower output from its Lihir and Cadia mines. Still, the figure came slightly ahead of the 501,000 ounces production estimate of brokerage UBS.

All-in sustaining costs for the group in the quarter stood at $980 per ounce, compared with $899 a year prior.

The increase in costs was primarily driven by the impact of a strengthening Australian dollar and Canadian dollar on the operating costs of its Cadia, Telfer and Red Chris projects as well as lower gold production, Newcrest said.

“While we had planned for a slower start to the year... this was slower than we had forecast, owing mainly to lower throughputs at Telfer and Lihir which flowed down to lower production and increased costs,” RBC Capital Markets analysts said in a client note.

Shares of the company fell more than 3% to hit their lowest level since June 19, outpacing a decline of 1.8% in the broader Australian benchmark.

The company, which remains entangled in a tiff surrounding royalty division for the Wafi-Golpu project, also said it expects to re-engage with Papua New Guinea and progress discussions on a special mining lease for the same.

Newcrest, which began trading on the Toronto Stock Exchange earlier in the month, added that the secondary listing supports its growth strategy in the Americas and broadens its access to fresh institutional investment markets, as it looks to take advantage of high bullion prices.

Reporting by Shruti Sonal and Soumyajit Saha in Bengaluru; Editing by Maju Samuel and Christopher Cushing