Lihir & Cadia continue to do the heavy lifting.

　　NCM has reported a solid Mar Q & marginally improved FY16 guidance. Cadia& Lihir continue to perform well, with higher output helping to offsetdowngrades at Gosowong, Telfer & HV. FY16 guidance is unchanged at 2.4-2.6Moz (DBe 2.48Moz). Improved AISC guidance is driven by lower sustaining& stripping capex with no improvement in operating costs. The sustainability ofthe performance at Lihir & Cadia is of great importance, especially withongoing uncertainty at smaller assets. We continue to give NCM the benefit ofthe doubt, with flat Group prod'n & lower costs in coming years & realisticmine life assumptions. Despite this, the stock remains expensive. Sell.

　　Only Telfer & Gosowong below DB forecasts, unexpected result from HV.

　　NCM produced 637koz at AISC of US$723/oz, better than DBe of 623koz atUS$792/oz. Lihir and Cadia delivered 5-6% more gold than forecast, whilstHidden Valley (HV) benefited from a return to open pit mining which appearsto have targeted a small higher grade zone. The cost performance at HV wasremarkable, with AISC of US$542/oz (US$1,589/oz in Dec Q) and second onlyto Cadia in the period; the contribution to Group costs was notable given AISCwould have been 1.4% higher QoQ (rather than 4% lower) had HV printed theaverage AISC over the last 18 months of US$1,517/oz. Cadia continued topush stockpiles through the mill, with the 25.2Mtpa remaining below installednameplate capacity of 26Mtpa; grade continues to surprise to the upside.

　　Despite ongoing operational issues, Lihir managed to lift plant throughput by2% QoQ & unexpectedly maintain grade +3g/t. Gold recovery was downmaterially (70.6% from 76.9% in Dec Q) due to the failure of the 2nd CCD train& shutdown of autoclave 4; more ore was directed to the flotation plant,impacting overall recovery losses. We also believe autoclave recovery is likelyto suffer from increased amounts of high-sulphur concentrate in the feed.

　　FY16 gold guidance unchanged, AISC costs down 3% but implies weak Jun Q.

　　Production guidance remains at 2.4-2.6Moz, despite the ongoing prod’ndisruption at Gosowong (Kencana offline) & downgrades at Telfer & HV. Lowersustaining and stripping capex has driven a 3% reduction in AISC guidance toUS$770/oz (at the mid point). However, with just 53% of stripping capex and68% of sustaining capex spent YTD, new guidance implies a lift in spending inJun Q and higher ASIC. We currently forecast 2.48Moz at US$764/oz for FY16.

　　PT (1xP/NPV) $11.30/sh (unchanged), 1.57x P/NPV; maintain SELL.

　　Our PT is unchanged. We continue to make a number of optimisticassumptions leading into FY17, with improvements at a number of assetsincluding a significant lift in YoY milling rates at both Cadia (24.8Mtpa fromCadia East only) & Lihir (14Mtpa up from 12.8Mtpa exit rate in Jun Q). Upsiderisks: Operational outperformance, higher Au prices, lower FX.