Newcrest Cadia panel cave costs climb

Gold and copper major Newcrest Mining’s Cadia panel cave 1-2 (PC1-2) feasibility study has increased projected metal recovery over an expected 16-year life, versus last year’s prefeasibility study, but increased capital and operating costs, the latter fourfold.

Newcrest’s August 2021 PFS had the new panel cave yielding 3.5 million ounces of gold and 660,000t of copper from 258 million tonnes of ore extracted over about 17 years. Average annual production of 205,000oz gold and 39,000t of copper at AISC of A$54/oz (US$41/oz) from 15,000Mtpa throughput was slated in the PFS.

This week’s FS outlined average annual output of 231,000oz gold and 42,000tpa copper at AISC of A$198/oz (US$148/oz) from 17Mtpa over 16 years, with 280Mt drawn for 3.7Moz gold and 670,000t copper.

Newcrest said projected average AISC in the FS was higher “on a real basis” because of “higher operating costs, with inflationary pressures across labour, steel, electricity and processing consumables”.

“In addition, copper recovery assumptions are lower, treatment and refining charges are increasing with market conditions deteriorating for shipping, freight, refining and smelting charges, and general and administrative costs are higher due to increasing insurance charges.

“These costs were partly offset by a higher copper price assumption.”

FS capex at circa-A$1.44 billion (US$1.1 billion) is 28% higher than the PFS number due to “a 10% increase in the extraction footprint, inflationary pressures, primarily across labour, contractors, steel, electricity and explosives, and an additional contingency allowance to account for increased volatility”.

Newcrest said FS engineering produced an “enhanced footprint design and productivity compared to the PFS”, featuring adaptation of “the well proven extraction level layout used at Cadia East to increase ore mined and significantly improve safety”.

An optimised materials handling system would have two crushing stations north and south of the cave footprint to “improve efficiency, utilisation and reduce production loss”.

Newcrest said its A$120m PC1-2 early works program had ventilation and other critical path development activities underway.

“Development of PC1-2 is expected to sustain total Cadia mine production at approximately 35Mtpa as production from the current operational PC1 and PC2 caves begin to decline from FY24,” the company said.

“The first draw bell for PC2-3 was successfully fired in September 2022, with first production expected during the March 2023 quarter.

“The PC1-2 cave is expected to take approximately 6-7 years to reach its maximum production capacity following blasting of the first draw bell.”

 

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