Newcrest Mining: Copper strength drives costs down

About the author:

Mat Collings
Author name:
By Mat Collings
Job title:
Former Morgans Analyst
Date posted:
23 July 2021, 9:00 AM
Sectors Covered:

  • Q4 production of 542koz of gold (+6% QoQ) and 39kt of copper (+10% QoQ) at US$797/oz AISC (-11% QoQ).
  • Higher copper prices and production reduced AISC, with Cadia and Telfer having strong quarters.
  • Annual production hit the mid-point of guidance for gold and copper.
  • Newcrest has a number of catalysts in the current quarter but will also be impacted by a partial Cadia shutdown which will see a sharp increase in reported costs
  • We maintain an ADD rating at a revised price target of (login to view).

Event: Newcrest reports Q4 production

Strong Q4 sees Newcrest Mining (ASX:NCM) hit FY21 guidance for copper and gold.

AISC improves 11% QoQ, driven by higher copper production and price, strong gold production, and the reclassification of capital spending at Red Chris.

FY21 AISC of $905/oz.


While Lihir fell short with unplanned downtime, lower head grade and decreased recovery, Cadia and Telfer enjoyed strong production which lifted the group’s results.

A sharp reduction in reported AISC at Red Chris is the result of capital works at the operation now being classified as growth rather than sustaining spend, with most other factors remaining steady at the Canadian operation.

Forecast and valuation update

Our revenue forecasts for FY22 and FY23 have lifted on the back of updates to our copper price deck

A summary of the impact is presented on Page 4.

Investment view

Copper revenue is growing in importance for NCM, and likely to become more important over the next 12 months as gold grades at Cadia begin to decline. 

NCM’s high quality asset base, growth projects and natural hedge through copper credits mean it remains a stable way to gain gold exposure on the ASX.

Price catalysts

Multiple upcoming catalysts in the September quarter, with feasibility studies for Lihir, Cadia and Red Chris all flagged by the company, with a Havieron study due by year end.


A major shutdown at Cadia in the current quarter remains a short-term risk, with production anticipated to be reduced by ~30% which will have a material impact on NCM’s headline production and cost numbers when Q1 is reported in October

Recent gold price volatility, along with currency risk for NCM’s global asset base, must also be considered.

Find out more

We go into further detail in our full research note, commenting on gold price and sentiment and providing an in-depth analysis of the performance of 17 ASX-listed gold producers.

Download full research note

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Disclaimer: The information contained in this report is provided to you by Morgans Financial Limited as general advice only, and is made without consideration of an individual's relevant personal circumstances. Morgans Financial Limited ABN 49 010 669 726, its related bodies corporate, directors and officers, employees, authorised representatives and agents (“Morgans”) do not accept any liability for any loss or damage arising from or in connection with any action taken or not taken on the basis of information contained in this report, or for any errors or omissions contained within. It is recommended that any persons who wish to act upon this report consult with their Morgans investment adviser before doing so.

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