THE year 2013 has been a challenging year for Newcrest Mining Ltd (Newcrest) as gold prices fell during the year, chairman Don Mercer (pictured right) said.
In the 2012-13 report highlight, Mercer said the company was experiencing a decade of sustained growth.
However, in the early final quarter of financial year 2013, a significant and rapid gold price decline hit hard the world’s gold miners.
Mercer said the decline in gold price had caused gold producers around the world to adjust their business and operating plans.
The lower production this year made it very challenging for Newcrest.
However, Mercer said that the management had responded to address this.
“The company responded decisively to the weakness in the gold price culminating in June 7 announcement of a range of key actions as we moved to manage for the best cash outcome rather than maximum production.
“These actions included a reduction in capital expenditure in 2014, the elimination of higher cost ounces from the production profile, the acceleration of significant cost reduction programme across the business and the decision not to pay a final dividend for the 2013 financial year.”
Managing director and chief executive Greg Robinson had shared the same sentiments, saying the decline in gold prices had really affected Newcrest.
He said gold price fell by about one-third from almost US$1,800 per ounce in early October last year to US$1,200 per ounce in late last June.
“In response to lower commodity prices than earlier expectations, a detailed business review of capital, cost and production was conducted to maximise free cash flows.”
Meanwhile, Robinson said that volatile gold market coupled with some technical operating challenges resulted in lower output.
“Gold production was 8% below expectations, due to maintenance issues in the older plant at Lihir and highly variable ground conditions at Gosowong (Indonesia)”.