Newcrest Mining Ltd., Australia’s largest gold mining company, said third-quarter gold output rose six percent amid increasing production of the precious metal at its Cadia Hill and Cracow mines.

Gold production was 390,096 ounces in the three months ended March 31, Melbourne-based Newcrest said today in a statement to the Australian Stock Exchange. That compares with 367,790 ounces a year earlier.

Production at the Cadia mine in New South Wales state may be affected should average rain not fall by the end of next month, the company said. Newcrest cut its full-year output forecast for the Telfer mine in Western Australia to 620,000 ounces of gold after rains cut production in March and April.

“The market and ourselves will keep wondering when this planned 1 million ounce per annum mine will settle into stride,” Geoff Breen and David Haddad, Sydney-based RBC Capital Markets analysts, said of the Telfer revision in a report today.

Shares of Newcrest fell 54 cents, or 2.3 percent, to A$23.26 on the exchange at the 4:10 p.m. Sydney time close.

Full-year group gold and copper output is forecast to fall about 2 percent, chief executive officer Ian Smith said during a telephone conference.

Production from Telfer is now expected to be 620,000 ounces of gold, down from a previous estimate of between 675,000 ounces and 700,000 ounces, Newcrest said. The mine’s copper output is forecast at 27,000 metric tons, down from between 31,000 metric tons and 33,000 tons. Production guidance for 2008 of around 800,000 ounces was maintained.

Telfer Study

A study into reducing mining costs at Telfer, which is both an underground and open pit operation, has started, the company said in the statement. Total costs at Telfer for the quarter rose to A$754 ($624) an ounce from A$440 a year earlier.

Gold production from its Cadia mine rose 54 percent to 70,535 ounces of gold and copper 25 percent to 6,376 tons from the previous quarter, it said. A lack of rain at the mine could see a reduction in production rates from June.

“The probability of that is about 50:50,” Smith said. “We are putting together a whole range of contingencies there.”

Newcrest’s total copper output was 21,628 tons in the quarter, compared with 23,219 tons in the same period a year earlier. Treatment and refining charges were settled at $60 a dry metric ton, down from $95 a ton in 2006.

Gold production at the company’s 70 percent-owned Cracow mine in Queensland state rose 25 percent from a year earlier to 24,214 ounces.

To contact the reporter on this story: Jesse Riseborough in Melbourne at jriseborough@bloomberg.net

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