The impact of the gas crisis will cost Newcrest Mining Ltd an extra $40 million up to when the Varanus Island gas facility resumes partial production in August.
The impact of the gas crisis will cost Newcrest Mining Ltd an extra $40 million up to when the Varanus Island gas facility resumes partial production in August.
The gold miner said today that it had reached an arrangement for interim gas supply from the North West Shelf which was sufficient for full production until the end of September, if required.
The company said the gas supply, which coupled with partial gas supplies from Apche Energy Ltd's Varanus Island facility, was sufficient to maintain full production at its Telfer mine in Western Australia.
This will reduce Telfer's reliance on diesel for power generation.
However the miner said there were increased costs associated with the interim arrangements.
"The combination of additional maintenance and energy costs during June will add approximately $15 million to costs. During July and August increased costs will add approximately $25 million against plan," Newcrest said in a statement.
Gold production in June at Telfer has been impacted by 20,000 to 25,000 ounces, resulting in full year production of about 590,000 ounces in 2007/08.
Telfer gold production is expected to be in the range of 700,000 to 750,000ozs in 2008/09.
Shares in Newcrest jumped over 12 per cent in morning trade to a high of $29.05 before settling at $28.69 at lunchtime today.
Below is the full Newcrest announcement.
Newcrest Mining Limited has secured sufficient energy supplies to maintain full production at its Telfer mine in Western Australia. Apache Energy recently announced it will resume partial gas supplies from its Varanus Island facility by mid-August.
This, coupled with an interim gas supply from the North West Shelf, and ongoing diesel supplies mean that both production trains at Telfer can continue to operate at full capacity.
Newcrest has reached an arrangement for interim gas supply from North West Shelf sufficient for full production until the end of September, if required. This will substantially reduce Telfer's reliance on diesel for power generation. Supply of other key consumables is sufficient to sustain production.
There are increased costs associated with the interim arrangements. The combination of additional maintenance and energy costs during June will add approximately $15 million to costs. During July and August increased costs will add approximately $25 million against plan.
Gold production in June has been impacted by 20,000 to 25,000ozs plus associated copper resulting in full year production at Telfer of approximately 590,000ozs in the 2007/08 financial year. Telfer gold production is expected to be in the range of 700,000 to 750,000ozs for the 2008/09 financial year.
Newcrest is keeping its insurers fully appraised of the situation.
