NEWCREST Mining plans to develop a new tungsten deposit at the huge Telfer mine in Western Australia, rather than sell it, in a move that could limit gold output in favour of other metals.

Managing director Ian Smith said the deposit, about 10km from the Telfer plant, could fundamentally change the production profile of the big Pilbara mine and would boost revenue appreciably.

The intention to develop the O'Callaghans deposit comes as Newcrest tries to cut costs at Australia's biggest gold mine and is an about-face on plans flagged three months ago to shore up and sell the deposit.

"We mainly consider O'Callaghans as a way we can configure Telfer to push it further down the cost curve for the long term," Mr Smith said yesterday after the company's annual meeting in Melbourne.

"The Chinese have restricted exports of tungsten so there is a restriction in supply points around the world."

In July, Mr Smith's view was: "We don't see ourselves as a tungsten or molybdenum miner."

Resource project buyers have lost their appetite over the past three months as global markets have gone into meltdown, but Mr Smith said Newcrest would still sell at the right price.

To mine O'Callaghans, which also contains copper, lead and zinc, the plant at Telfer would need to cut back on ore from the main pit, meaning reduced gold production of up to 10 per cent.

A timetable for developing the deposit, which was only discovered about five months ago, is expected to be revealed later this year with a resource statement.

Mr Smith also said the current market turmoil could throw up acquisition opportunities.

"There are a whole range of opportunities in mergers and acquisitions and they will probably get better over the upcoming six to 12 months," he said.

Mr Smith said construction, exploration and mining equipment was becoming easier to get, with shorter lead times. – The Australian