The company entered into a five-year contract extension with EnergyAustralia, locking in a lower tariff until June 2023.

The new contract provides a base price around 20% lower than the previously contracted price for the 2018 financial year.

Newcrest had previously said increases in power costs would impact Cadia AISC by US$55-60 per ounce, but the new contract reduces the impact to $30-35/oz.

As a result of higher copper prices and current exchange rates, the company said FY18 AISC at Cadia was expected to be at the lower end of the previously announced guidance range of $255-295 million.

“The five-year extension provides an improved financial outcome to Newcrest, allows time for government policy and regulation to be better-defined, and time for Newcrest to identify, evaluate and potentially construct or contract a renewable energy supply that could contribute to Cadia’s long-term electricity requirements,” Newcrest managing director and CEO Sandeep Biswas said.

Cadia is set to produce 680,000-780,000 ounces of gold this financial year.

The company is working on taking mill throughput from 28 million tonnes per annum to 30Mtpa, which would require capital of only $10 million.

A feasibility study will also be finished next year into expansions beyond 30Mtpa.

Energy comprises roughly 15% of operating costs at Cadia.

Shares in Newcrest were down by 1.4% to A$22.93 this morning.