Page 1 of 1

Nicholas Grove is a Morningstar journalist.

Newcrest Mining (NCM) recorded gold production from ongoing operations of 579,073 ounces for the December quarter, up 3 per cent on the preceding September quarter, the gold miner said on Tuesday.

The figure was down about 20 per cent on the same quarter in the previous year.

In a statement, Newcrest said increased production at its Gosowong and Lihir operations was partly offset by lower production at Cadia Valley, following a ground slip in November that prevented access to the open pit.

Copper production for the December quarter was 18,171 tonnes, which Newcrest said was slightly lower than the previous quarter.

Gross cash margin increased by 1 per cent to A$1042 per ounce due to a higher realised gold price of A$1648 per ounce during the quarter, Newcrest said.

Cash costs of A$606 per ounce were 2 per cent higher than the previous quarter, reflecting reduced by-product credits associated with a lower achieved copper price, the company said.

Newcrest said its major expansion projects at Cadia and Lihir continued in line with plan during the quarter, with the completion of the major Cadia East project tie-ins and the commencement of power supply from the new Lihir power plant.

Exploration drilling during the quarter identified new zones of high-grade mineralisation at Gosowong, Lihir, Telfer and Wafi-Golpu, while initial results from new drilling programs in Cote d'Ivoire and Indonesia are encouraging, the company said.

Last month, Newcrest lowered it gold production guidance from continuing operations for the 2012 financial year by around 6 per cent to 2.430 million to 2.550 million ounces following production disruptions at Cadia Valley and Lihir, and lower feed grades and recoveries at Telfer.

Morningstar analyst Mathew Hodge said the production downgrade was not particularly surprising, and followed a weak first quarter where gold production missed his forecast by over 90,000 ounces.

Despite rampant capital cost inflation doing Newcrest no favours as it progresses through its growth phase, and the risk of capital costs blowing out and projects being delayed, Hodge said he likes Newcrest and the gold and copper exposure it brings to a diversified portfolio.

"We like the low cash costs, the record of exploration success, industry-leading mine life and growth prospects - in particular Wafi-Golpu," he said.