Newcrest Mining Ltd. (ASX:NCM; TSX:NM) is Australia’s largest gold miner, making it one of the biggest such firms in the world. It consistently ranks among the top 5 largest gold companies in the world with a market capitalization over $11 billion. The company posted a huge miss for its total gold output last quarter, however: gold production across its operations in the South Pacific and West Africa fell by 13% from the previous quarter.
The reason, surprisingly, was the prolonged shutdown of two particular mines this year due to worker deaths on-site.
In two separate incidents in different countries, Newcrest employees perished on the job in July and September. The more recent incident took the life of a mine technician working at the company’s Ridgeway Mine in Australia. Earlier this summer, in mid-July, an employee lost their life at Newcrest’s Hidden Valley Mine in Papua New Guinea.
The Ridgeway Mine death caused that mine to close for 11 days, while the mishap at Hidden Valley suspended operations for 33 days. These two work stoppages in the wake of tragedies accounted for the lower output. Compared to over 673,500 troy ounces of gold produced from April through June, the most recent three-month stretch saw only 583,745 oz in output. Bloomberg had forecast output of 622,000 ounces.
In response to the lower-than-expected output and a quarter fraught with the bad publicity of worker deaths, shares of Newcrest fell by the most in more than 2 months, shedding more than 5% on the trading day. Believe it or not, shares are still up almost 30% on the calendar year, as Newcrest has weathered the storm in commodities that has forced several of its peers to completely restructure their operations and debt servicing in order to stay afloat. Following a steep dip in July and August, Newcrest’s stock recovered back to new 2-and-½-year highs. The company undoubtedly benefits from some of the industry’s lowest all-in sustaining costs (AISC) below $800 per ounce.
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