NEWCREST Mining is in talks with potential Chinese joint venture partners to quickly develop the O'Callaghan's tungsten deposit at its Telfer operations in Western Australia, which holds one of the world's biggest resources of the metal.
Chief executive Ian Smith said recent drilling at the deposit had shown the ore resource was at the upper end of previous estimates.
"This is a deposit of world significance," Mr Smith said yesterday.
"We're getting fairly excited about it."
Mr Smith said Newcrest had people in China this week to talk about the project with potential partners.
China has about 60 per cent of the world's tungsten resources, followed by Canada, which has 15per cent.
O'Callaghan's, a distance of 10km from the Telfer gold and copper mine, was discovered a little more than a year ago and is thought to hold about 4 per cent of global tungsten resources.
Mr Smith would not give an indication of O'Callaghan's value, but said Newcrest in the next 12 months planned to have the resource nailed down, a mining plan ready, and a better idea of its worth.
The company had previously hoped to have a resource statement out by the end of the last financial year.
Newcrest is yet to decide whether to sell the deposit or use the tungsten as credits to reduce goldmining costs at the big Telfer mine.
It is also investigating whether to expand the existing plant to produce the tungsten, or to reduce gold output. Newcrest, the third-biggest listed Australian miner after BHP Billiton and Rio Tinto, yesterday said it had met full-year production guidance for gold, producing 1.63million ounces, and had just beaten copper forecasts of 85,000 to 88,300 tonnes with production of 89,900 tonnes.
"Management credibility continues to build as forecasts are shown to be robust and reliable," Credit Suisse analyst Michael Slifirski said yesterday in a note to clients.
As well as touting the prospects of O'Callaghan's, Mr Smith was buoyant on the growth prospects of the Hidden Valley project in Papua New Guinea, and the Gosowong operation in Indonesia.
The Hidden Valley plant is due to be commissioned in September. The projected rate of production is 250,000 ounces a year but Mr Smith said he remained confident production would exceed 300,000 ounces in 2010 and 400,000 ounces in 2012.
Despite the positive news on output and growth prospects, Newcrest's shares took direction from a fall in gold prices and finished down 57c at $30.39.
Newcrest said fourth-quarter gold production was 397,826 ounces, up 9 per cent on the previous quarter, but down from 435,120 ounces a year earlier. Group net cash costs fell from $516 an ounce in the March quarter to $476 an ounce, but this was still well up on the previous year's $254 an ounce when copper credits were higher.
Newcrest received $1223 an ounce for its gold in the fourth quarter, down from $1352 an ounce the previous quarter.
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