Newcrest Mining

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Newcrest Mining Limited (ASX: NCM) engages in the exploration, development, mining and sale of gold and gold-copper concentrate. Newcrest is an Australian based Company which initially incorporated in Victoria in 1980. Today it has become Australia’s leading gold mining company. Newcrest’s operations have since transgressed beyond Australia and into overseas nations, namely Indonesia, becoming a prominent trans-national mining corporation.

Presently, Newcrest’s primary gold and copper production in Australia is at Ridgeway, Telfer, Cadia Hill and Cracow and in Indonesia at Gosowong. Past and present exploration is being undertaken to further Newcrest’s interests overseas in The Americas, Asia, and Europe.

[edit] Background

Newmont Mining Corporation was founded in 1921 in New York by Colonel William Thompson as a holding company to invest in worldwide mineral, oil, and relations companies. The Newmont name is an abbreviation of where Thompson lived and worked; New York and Montana. Newmont is now the world’s largest gold producer. The Newmont Mining Corporation began an Australian subsidiary in 1966 and by 1971 they discovered Telfer, now the Company’s largest gold mine.

In 1980 the subsidiary became Newmont Holdings Pty Ltd and was based in Victoria, Australia. Seven years later it was listed on the Australian Stock Exchange as Newmont Australia Limited. When in 1990, the Company acquired 100% of Australmin Holdings Ltd and 92% of BHP Gold Mines Ltd it its current Company name.

Newcrest’s primary focus was within Australia until 1991, when it commenced exploration overseas. Newcrest was determined to become a significant and internationally recognised gold mining and exploration company. The Company established exploration offices and new companies offshore in Jakarta, Indonesia and Chile, South America.

In 1992, exploration discovered its first offshore gold in the Halmahera Islands, Indonesia. And in 1996, Newcrest stated that the Company wished to transform itself into a world-scale and internationally recognised producer. In 2002, years of exploration around Australia and overseas were paying dividends and the Newcrest group was capitalised at over $2 billion. As of October 12, 2004, Newcrest’s share price was at $15.90 fourth only to mining companies, Woodside Petroleum ($20.33), Placer Dome ($27.90) and RioTinto ($39.29) and even above BHP Billiton ($14.96).

[edit] Geography of Newcrest’s operations

Newcrest’s mining operations are presently located around Australia and in Indonesia. Telfer, a large open cut and underground mine in Western Australia. The mine has the potential to become the largest gold mine in Australia with production expected to average 800,000 ounces (25,000 kg) of gold per annum. Ridgeway is a large underground mine being developed by Newcrest. In its first full year of operation and metal production of 377,539 ounces (11,742.8 kg) of gold was in line with plan. Development of the Cadia Hill mine, NSW commenced in 1996 and production began in 1998. It produces 298,848 ounces (9,295.2 kg) of gold per year. At Cracow, Queensland, mining is expected to begin in December 2004, producing 95,714 ounces (2,977.0 kg) of gold per annum.

Gosowong, Indonesia, is an open pit mine opened in 1999. It is 82.5% owned by Newcrest, whilst Pt Nusa Halmahera Minerals owns the other portion as a joint venture partner. The mine has produced 772,018 ounces (24,012.4 kg) of gold and 812,815 ounces (25,281.4 kg) of silver over the first five years of production. Newcrest’s headquarters are located in Melbourne, Australia since having been integrated with Sydney in 1995. Other offices are based at major mine sites to help communication between miners and the head office.

A majority of Newcrest’s copper-gold concentrate is sold under long term contract to smelters in Japan. Feed for the Saganoseki Smelter and Refinery is transported to Japans southernmost island Kyushu, the concentrate is turned into 99.99% pure gold bullion which is sold to Asia’s metal market. However, Newcrest also operates in the sale of concentrate to merchants who deliver the material to various regional smelters under their own contracts.