Ground Breakers: Gold major Newcrest eyes copper growth to capture decarbonisation narrative

Two million ounce per annum gold giant Newcrest Mining (ASX:NCM) may be checking its shoulder as Northern Star (ASX:NST) attempts to close in on its title as Australia’s biggest.

But NCM has an ace up its sleeve — its exposure to copper.

Newcrest has released a slew of expansion studies this morning, including the hotly anticipated PFS on its Havieron gold-copper project in WA’s Paterson Province.

One of the key takeaways is its plan to expand its copper production by 37% by 2030 to almost upwards of 175,000tpa, something that will also help the gold major lower its all in sustaining costs to an outlandish US$500/oz as copper production and prices provide by-product credits.

Newcrest says the growth of its copper production profile from around 130,000t in 2022 will advance its ESG objectives and enable it to participate in decarbonisation opportunities.

Numbers out on Havieron development

PFS results announced today show Havieron, a 70-30 joint venture with AIM-listed explorer Greatland Gold, would produce 1.4Moz of gold over 9 years at a cost of $397m, with capital payback of 4 years, an NPV of $228m and an IRR of 16%.

It would deliver 160,000ozpa at average all in sustaining costs of US$743/oz and copper by-products of around 100,000t over the life of mine, with ore processed through a modified version of the existing Telfer mill.

Newcrest says there remains upside through new discoveries at Havieron and the extension of open pit mining or caving from 2024 onwards, after the WDS5 cutback approved in August runs up in 2023.

Meanwhile, a new expansion of the Lihir mine in Papua New Guinea could turn it into a 1Mozpa producer for 10 years from FY24.

The Phase 14A cutback would deliver an additional 400,000ozpa for the first five years at a capital cost of just $179m and an IRR of 37%.

The study has added 1Moz of high and medium grade reserves to the mine plan to offset the processing of lower grade stockpiles.

Early works at Lihir are due to start in December with first ore to be delivered by the middle of 2022.

Red Chris a long life, Tier 1 mine

A block cave development at the Red Chris mine in Canada is a bigger task, with Newcrest expecting to spend more than US$2 billion to develop a mammoth operation which will produce 4.9Moz of gold and 1.5Mt of copper over 31 years.

Importantly, that copper will help generate by-product credits that will deliver an average AISC of negative US$144/oz.

A feasibility study will be due in the second half of 2023 on the development, which incorporates an initial ore reserve of 8.1Moz gold and 2.2Mt of copper.

First ore is expected in FY2027.

Newcrest Mining share price today:

Commodity prices drive market higher

Iron ore, aluminium, lithium and gold stocks all drove the Materials sector higher as prices rose overnight.

The price of the steelmaking commodity climbed after Dalian and Singapore Futures exchanges saw heavy buying to US$135/t, levels not seen in several weeks and 45% up on recent lows of US$93/t.

Aluminium, which has seen big gains recently amid supply chain shortages caused by smelter outages in China, surged 3.3% to a 13 year high of US$3045/t.

$6.5 billion capped Alumina (ASX:AWC), the 40% owner of the Alcoa World Alumina and Chemicals business, was up 3.26% near 12 month highs at $2.22.