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Exciting times for Oceana Gold

OceanaGold

While its fourth and final quarter of the year is yet to be analysed and announced, OceanaGold is doing well with the final quarter expected to be strong. By PETER OWENS.

All over the world the gold-mining industry is hard-pressed, however OceanaGold is doing well both here and offshore. The company recorded All-In Sustaining Costs of $708 per ounce and cash costs of $465 per ounce on sales of 276,104 ounces of gold and 17,167 tonnes of copper in the first nine months of the year. Then comes the bottom line.

Oceana reported revenue of $364.4 million and net profit of $30.4 million for the first nine months of 2015, including revenue of $109.6 million and a net profit of $6.9 million in the third quarter. In the present state of gold mining and in fact, mining generally, that is a very good result!

The company’s “golden nest egg” is the mine it operates in Didipio in the Philippines. This mine not only produces viable quantities of gold, but also copper for which there is good worldwide demand.

At Didipio, the mining operations are focused on completing Stage 4 of the open pit while transitioning to mining ore from Stage 5. Over the past quarter, the operation increased ore inventories and by the end of the third quarter, nearly 15 million tonnes of ore was stockpiled on the surface for future processing. The company expects to have over 20 million tonnes of ore stockpiled when the open pit operations are completed and underground ore feed commences at the end of 2017.

The development of the underground at Didipio continues to advance well with 570 metres of development completed to date. In the third quarter, the company completed the construction of the overhead powerline connecting the Didipio plant to the national grid. It is currently commissioning the powerline which it expects to complete early in the fourth quarter. Once on grid power, the company expects to reduce operating costs.

Meanwhile at Macraes in East Otago, the company continues to receive encouraging results from its brownfields exploration programme at Coronation North and in the underground at Frasers. Drilling of these primary targets along the 30-kilometre strike length is planned for the next 18 months as the company seeks to further increase the reserve life at the operation.

At Reefton on the West Coast mining operations were largely complete by the end of the third quarter as the operation transitions into a care and maintenance phase.

The advantages gleaned from the Didipio operation have seen Oceana in an expansive mode and it received regulatory approval for the purchase of Newmont Mining’s Waihi interests back in October. Waihi financial results will now be reported to the company’s financial statements.

Oceana has also acquired other interests outside of New Zealand and has announced the completion of its acquisition of Romarco Minerals, while development of the Haile Gold Mine in South Carolina continues to progress well and is on track for commissioning by the end of 2016.

As part of the Romarco transaction, Oceana acquired $144 million in cash along with $10 million of debt thus increasing its cash balance as at October 2, 2015 to $190 million with a total debt of $109 million. In the third quarter, it expanded its revolving credit facility by $100 million which will be drawn down to finance the purchase of the Waihi acquisition.

Oceana chief executive, Mick Wilkes says, “The past six months have been an exciting time for OceanaGold. With the addition of the Haile and Waihi assets, we have further strengthened and transformed the company into a leading mid-tier gold producer with low-cost production growth, significant cash-flow generation and a solid pipeline of organic growth opportunities.

“Over the course of the next 12 months, we will advance comprehensive exploration programmes across our portfolio to unlock value at each site while optimising our existing operations.”

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