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AusIMM 2015 bright spots

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A couple of bright spots in an otherwise subdued AusIMM conference were presentations by OGC and Waikaia Gold. By Peter Owens.

Oceana Gold Corporation is listed in three countries, Australia, New Zealand and Canada. It is without question now our largest gold producer. It has international interests and operations. Waikaia Gold is a small privately-owned gold mining company which operates one mine at Freshford in northern Southland.

Both these companies are doing well despite the low price of gold on the international market. In a bright session, which contrasted vividly with most of the presentations, representatives of both companies delivered very positive addresses to the 260- odd delegates at the AusIMM Conference in Dunedin, the annual conference of the New Zealand branch of the Australian Institute of Mining and Metallurgy.

Triple-listed Oceana Gold (OGC), as the country’s largest producer, has just released guidance it could book a boost of more than 20 percent in its overall gold production this year, following on from its recent $132 million purchase of the Waihi gold mine in the North Island.

OGC chief operating officer Michael Holmes told delegates his company had just upgraded its production guidance for the calendar year. In doing this OGC was increasing from 335,000 ounces of gold/silver to 410,000 ounces, with an additional 500 tonnes of copper boosting outside expectations to 23,500 tonnes this year. Holmes admitted the increase in gold production was included in expectation of a sizeable contribution from the Waihi goldfield this year.

Holmes also admitted that the open pit Reefton operation had become uneconomic, and “was not making financial sense’’ and it was being prepared to be put into “care and maintenance’’, which would be completed by the end of the year. No one was surprised by this admission. About 120 jobs are expected to go when the mine closes. There was considerable interest in another admission by Holmes. That was that the Reefton mine would continue to be owned by OGC. Holmes said it could be reopened, depending on the price of gold in the future.

Turning to the new combined gold tungsten operation at Macraes in east Otago, Holmes said this was moving to the feasibility study stage, but it would need a large investment for the construction of a new mill. If this investment is forthcoming, Holmes forecasts a project of between eight to 10 years for the company.

OGC chief executive, Mick Wilkes, said in a statement the inclusion of Waihi’s economic benefit not only increased OGC’s production but also further reduced its unit cost base. “Waihi is a solid asset in a highly prospective gold region that will generate significant free cash flows and further insulate our business in a lower gold price environment.”

In Freshford, northern Southland, privately owned Waikaia Gold’s milestone has been producing more than one tonne of fine alluvial gold during the past 22 months from its dredging operation in the Waikaia valley.

Waikaia Gold’s technical manager, Noel Becker, updated the conference on the company’s operations. There has been a long leading-up period, but it started producing gold in October 2013. To get it started, investors ploughed about $18 million into the start-up operation, which included a built-for-purpose floating dredge.

The area had been previously mined between 1901 and 1923 with up to 17 dredges and it was reported gold was extracted worth £4 million. However, they only dredged to a depth of six metres. Waikaia Gold’s dredge has been positioned at about 20 metres below the grass line and the processed ore is used to reinstate the farmland as the dredge moves forward.

Becker told the conference that since October 2013 the operation had delivered more than 30,000 ounces of fine alluvial gold averaging 0.3mm 0.4mm in size, and is expected to deliver 15,000 ounces to 30,000 ounces per year.

He estimated remaining mine life to be six to seven years, as the dredge works its way alongside the Waikaia River, near Freshford, towards the Waikaia township. About 20 staff are employed, plus 15 contractors, many of whom are locals.

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