At time of writing, the share price of Newcrest Mining Limited [ASX:NCM] is down .06%, trading at $31.59. At one point trading as low as $31.31.
But gold is up today (again), so what could be behind the move downwards?
You can see in the chart below that NCM shares have been on a strong run from a low in September 2018:
The latest news impacting the Newcrest share price centres around comments by Papua New Guinea’s treasurer about LNG and mining companies paying more to extract resources from the country.
Newcrest has a major mine in Papua New Guinea, its Lihir operation.
Despite bullish gold sentiment, comments drag NCM share price down
With gold having recently broken the AU$2000 mark, the growing excitement around gold has been a key factor in Newcrest’s strong rally over the last nine months.
A few days ago we looked at Northern Star Resources Ltd [ASX:NST], so today we will be looking at the biggest Aussie gold-stock on the ASX.
These are the comments from PNG’s treasurer as reported by Reuters two days ago:
‘I am putting each of the project partners in all of these projects on notice that the concerns of our people must be addressed through dialogue and negotiations with the state and that we expect all parties to contribute to a fair and equitable outcome.’
Reuters also reported that:
‘He also said the government would put on hold talks with the owners of the Wafi Golpu gold project, Newcrest and South Africa’s Harmony Gold, until the state negotiating team has talked to the Morobe provincial government about its aspirations for the project.’
Approximately 65 kilometres south west of Lae, the Wafi-Golpu deposit is expected to commence production in 2020 with an annual production of 320,000 ounces of gold and 150,000 tonnes of copper at a peak in 2025.
It will be a mammoth mine, with Newcrest estimating the cost to build stage one of the project to be US$2.3 billion.
So it makes sense that the NCM share price is trading slightly down since the comments came out, as it is possible new arrangements with the PNG government will impact the profitability of Newcrest’s next big project.
The company has an attractive all-in Sustaining Cost (AISC) as you can see below:
ASIC is an important factor for gold miners as it reflects the full-cost of keeping the operation running.
Gold in Aussie dollars an important consideration
A final remark.
There is a lot of focus in gold media about the price of the metal in US dollar terms.
However, it is worth noting that in Aussie dollar terms, gold has actually been a solid run since as early as 2000 and built further momentum in the aftermath of the GFC:
Something to consider if you are an Aussie investor interested in gold.
For Money Morning