Newcrest boss Sandeep Biswas vows to turn around Lihir THE...

Newcrest boss Sandeep Biswas vows to turn around Lihir

• THE AUSTRALIAN
• JANUARY 31, 201512:00AM

Barry FitzGerald

Resources Editor
Melbourne

THE troublesome Lihir goldmine in PNG has continued to dog Newcrest, Australia’s biggest listed gold producer, but the Melbourne group’s managing director of seven months, former Rio Tinto executive Sandeep Biswas, yesterday staked his reputation on a turnaround at Lihir by the end of this year.
Lihir was acquired by Newcrest in a $9.5 billion takeover in 2010.
The turnaround would see Lihir achieve the 12 million tonnes of annual grinding and processing that billions of dollars of previous investment were meant to make its nameplate capacity.
Maintenance and reliability issues in recent years have seen Lihir fall well short, removing any chance of it being the million- ounce-plus gold producer it was meant to be.
Back in October when he was even newer to the job, Mr Biswas warned there were no short cuts in making the long-promised turnaround at Lihir take shape.
“Lihir is fixable but it will take time to get it right,’’ he said at the time.
There was no silver bullet found in the December quarter, but Mr Biswas reported progress was being made.
Newcrest’s production report for the period, released yesterday, showed processing rates of 2.6 million tonnes (10.4 million tonnes annualised) was still well short of where it should be.
The result was that while there was a 4 per cent increase in output from the preceding September quarter to 160,803 ounces — and a reduction in the cost of production (in US dollars) — Lihir performed below company expectations, due mainly to unplanned maintenance issues.
Newcrest has promised to replace on-site management, and said the technical team was “intensifying efforts on reducing operating costs’’. This has been said many times before. The difference this time is that management, under Mr Biswas, is saying things should be humming come December.
The latest disappointment at Lihir was nevertheless severe enough to more than offset what share price joy there might have been for particularly strong December quarter production results at the Cadia operation in NSW, and at Telfer in Western Australia. Newcrest shares fell 14c to $13.56.
The fall was not as big as that suffered by the broader gold market, thanks to the good news on Cadia and Telfer. Those operations underpinned an increase in full-year production guidance from Newcrest from 2.2-2.4 million ounces to 2.3- 2.5 million ounces, and an increase in copper guidance from 75,000-85,000 tonnes to 90,000-100,000 tonnes.
Newcrest lowered its all-in sustaining cost guidance for all operations for the full year. With the help of the fall in the dollar, Newcrest’s cost in the second (December) quarter was $963 an ounce. Against a realised price for the quarter of $1402 an ounce, its margin was $439 an ounce.