Australia's Newcrest invests $181 million to expand open pit at Telfer mine

MELBOURNE (Reuters) -Newcrest Mining Ltd said on Thursday it had committed A$246 million ($181.4 million) to expand open pit mining at its Telfer operations in Western Australia, which will extend the operations for at least two years.

Australia’s largest listed gold miner said in a filing it had entered into a contract for work to proceed from one pit to the next at the gold, copper and silver mines in the state’s remote Paterson province.

“This... is an investment in Telfer’s future which will ensure the operation is able to continue for at least the next two years,” Chief Executive Officer Sandeep Biswas said.

“With additional drilling, we believe there is the potential for further mine life extensions in the open pit and the underground beyond this time.”

Telfer hosts the largest gold processing facility in the state’s remote Paterson Province where it produces gold doré and a copper-gold concentrate, and has capacity to process more.

But as the open pit mines have neared end of life, concerns have grown that its processing facility would run out of feed and become uneconomic.

The announcement signals increasing confidence around Newcrest’s big exploration find Havieron, which is nearby, said RBC in a note, which could feed into the Telfer processing circuit and lengthen its life.

“We believe this opens up long-term optionality with Havieron and potential mine-life extension (at Telfer). The announcement today flags NCM’s confidence in Havieron,” it said in a report.

RBC values Havieron at around A$800m or ~A$1/sh for its 60% share in the project, which it owns with London-listed Greatland Gold and in which it can earn up to a 70% interest if it meets certain commitments.

Production stripping for the cutback will start next month, with first ore production expected to be delivered to the Telfer mine in March 2022, Newcrest said.

The announcement comes weeks after the miner reported a 5.4% drop in its June quarter output, following unplanned downtime at its Lihir mine in Papua New Guinea.

($1 = 1.3561 Australian dollars)

Reporting by Tejaswi Marthi in Bengaluru; Editing by Rashmi Aich and Michael Perry