Gold miners Newcrest Mining and Harmony Gold report are reviewing capital expenditure at their two joint venture projects in Papua New Guinea because of weak gold prices.

Newcrest Mining’s Greg Robinson

Under the Morobe Mining Joint Venture banner, the two companies run the Hidden Valley gold and silver mine, as well as the prospective gold, copper and silver project at Wafi-Golpu in Morobe Province.

Harmony, the third-biggest producer of gold in South Africa, posted a net loss of US$13 million (K 28.5 million) in the March quarter, after a net profit of US$81 million (K177 million) in the previous quarter. The decline follows a 22% drop in gold sales and a decline in the gold price.

In a statement, Harmony’s chief executive Graham Briggs said the company would cut its capital expenditure by US$155 million (K340 million), but has ruled out mine or shaft closures.

Gold production at Hidden Valley declined 8% in the March quarter.

Newcrest’s Managing Director and Chief Executive Officer Greg Robinson has described the production and cost performance at Hidden Valley as ‘unacceptable’, saying that ‘a structured program to improve performance and assess the future of this operation is continuing with considerable focus’.

A new crusher being commissioned this month is expected to cut operating costs and Robinson has said Newcrest is wanting to reduce operating costs at Hidden Valley by 20% to 30% over the next 12 months.

Robinson says a review of the capital costs of the Wafi-Golpu project is underway to assess the viability of the project’s economics.