-- Australia's biggest gold miner cuts output guidance for this FY
-- Newcrest cites heavy rain, setbacks at major mines
-- Also says the weak U.S. dollar, cost inflation are hitting the industry
(Adds details on production and guidance in the third-fourth and seventh-ninth paragraphs)
By Robb M. Stewart
Of DOW JONES NEWSWIRES
MELBOURNE -(Dow Jones)- Newcrest Mining Ltd. (NCM.AU), Australia's largest gold producer, cut its output target for this financial year Tuesday after heavy rains hit some operations and major projects struggled.
The Melbourne-based company had already reduced its production guidance in December, and in February it warned that its target for the year was at risk due to continuing disruptions at its Lihir operation in Papua New Guinea.
Newcrest and the wider industry face continued cost inflation in energy, labor and supplies, a situation that has been compounded in regions including Australia, where currencies have experienced sustained strength against the U.S. dollar in which gold is sold. Lower-than-anticipated early output from the company's Cadia East project in Australia and long-running underinvestment at a processing plant at Lihir have together knocked production, it added.
"These industry and operating conditions have been present for a while, but it is now apparent that the impacts have become more significant over the past 12 months and particularly in the last quarter," the company said in a statement.
Newcrest has revised its gold production estimate to between 2.25 million and 2.35 million ounces for the year through June from its previous forecast of 2.43 million-2.55 million ounces. It cut its outlook for copper output to 70,000-75,000 metric tons for the year against an earlier forecast of 75,000-80,000 tons.
Newcrest produced 2.7 million ounces of gold in 2010-11. Before December, the company had been expecting production to rise to as much as 2.925 million ounces.
Newcrest said it produced 532,237 ounces of gold and 18,072 tons of copper in the March quarter, down 12% and 10%, respectively, on year. Compounding reliability issues at the Lihir plant, the mine and the Cadia Valley mine in Australia as well as the Hidden Valley mine in Papua New Guinea were hit by heavy rain, it said.
The company said it remained confident in the long-term potential of Lihir and expected the Cadia East development will hit targeted medium-term production, but for the remainder of the year, Lihir's monthly output will fall short of earlier expectations. Lihir's production should be between 700,000 and 900,000 ounces for 2012-13, while Cadia Valley is forecast to produce 400,000-500,000 ounces of gold, it said.
Newcrest plans to update its forecasts for its other assets in August, when it releases its financial results for the year, but said it expects output from its existing assets to grow over the next five years at a compound average 5%-10% a year.
-By Robb M. Stewart, Dow Jones Newswires; +61 3 9292 2094; firstname.lastname@example.org
(END) Dow Jones Newswires
April 23, 2012 21:06 ET (01:06 GMT)
Copyright (c) 2012 Dow Jones & Company, Inc.