Newcrest Mining Limited (ASX: NCM) shares will be on watch this morning after it announced news about its Cadia Expansion Project.
Newcrest is the largest gold producer listed on the Australian Securities Exchange and one of the world’s largest gold mining companies. As of 2018, its major operations in New South Wales’ Cadia Valley, Telfer in Western Australia, Gosowong in Indonesia, and Lihir in Papua New Guinea (PNG).
Newcrest’s Cadia News
The Newcrest Board has approved to the next step of ‘Execution’ for the first stage of two stages in the Cadia Expansion Project. Both stages will cost a combined $865 million to complete.
The first stage, which has just been approved, will cost $685 million. It comprises PC2-3 mine development, materials handling system upgrades, associated infrastructure and the initial works to increase plant capacity to 33mt per year. The PC2-3 mine is targeting production in FY23.
The second stage will cost $180 million and is still in the feasibility study phase. It includes further plant expansion to 35mt per year and recovery improvements with the targeted completion for late FY22, which is before the completion of the PC2-3 mine development.
Newcrest Mining said that the rate of ore mined from Cadia is expected to vary over time according to draw rates, cave maturity and cave interaction as further caves are developed.
From FY27 onwards, life of mine Cadia mining rates are generally expected to be in the range of 33mt to 35mt per year, with an average of 34mt per year used for financial evaluation purposes.
Newcrest Managing Director and CEO Sandeep Biswas said: “This expansion plan is an improvement on the previous 2018 pre-feasibility study, with an estimated additional 1.8 million ounces of gold production and 67kt of copper production and an estimated $800 million increase in projected free cash flow generation by Cadia over its life.
“The capital investment has an estimated 21.5% rate of return and ensures Cadia remains a Tier One asset for many years to come.”
Gold is certainly in high demand in the moment with ongoing political uncertainty in the UK, US and Hong Kong. But it’s probably best to buy gold shares when they’re at a low price rather than a high price. Gold is priced quite high at the moment.
If you’re worried about share makes I’d much rather buy shares of the reliable businesses in the free report below.
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