Video | Agriculture | Confidence | Economy | Energy | Employment | Finance | Media | Property | RBNZ | Science | SOEs | Tax | Technology | Telecoms | Tourism | Transport | Search

 


Update for Macraes Goldfield

Oceanagold Provides Update for Macraes Goldfield in New Zealand And Announces Full Year 2014 Production Guidance And Hedging for 2014 And 2015


(All references in US Dollars)

(MELBOURNE) OceanaGold Corporation (ASX: OGC, TSX: OGC, NZX: OGC) (the “Company”) announces that the Board of Directors has approved a new mine schedule for the Macraes Goldfield located in the Otago region on the South Island of New Zealand.

As a result of the prolonged and sustained drop in the gold price, the Company has re-optimised the Macraes mine plan to further reduce costs in order to sustain operations. The new mine plan includes a reduction in the total material movement schedule in the open pit resulting in lower equipment usage and a reduction in operating and support staff requirements over the next two years.

Based on the approved mine plan, the Frasers 6 open pit cutback has been redesigned and a smaller cutback is planned to commence in the second half of 2014. At the current gold price, the Macraes Open Pit has a mine life until the end of 2017 and the mine life for the Frasers Underground mine is to mid-2015. The new life of mine plan has resulted in a reduction in the gold production over the remaining life of the Macraes assets. Amongst other factors this change in mine plan will be taken into account in the impairment review now being carried out for the end of year financial results.

Mick Wilkes, Managing Director and CEO commented, “The Macraes Goldfield has been operating continuously for over 23 years producing over 3.8 million ounces of gold. During its life, Macraes has been a major employer and contributor to the Otago region and local economy. We have developed a strong long term relationship with the surrounding communities and have operated to the highest environmental and social engagement standards. The continuing lower gold price has necessitated the need to make changes to our business to ensure a sustainable operation at Macraes. Unfortunately these changes will also have an impact on some of our workforce and contractors, who I wish to thank and acknowledge for their contribution to OceanaGold. As part of our normal course of business we will continue to ensure that our business operates as efficiently as possible without compromising health, safety and the environment and we will continue to seek and evaluate suitable opportunities.”

FULL YEAR 2014 PRODUCTION GUIDANCE
In 2014, the Company is planning to produce 275,000 - 305,000 ounces of gold at cash costs of $400 - $450 per ounce net of by-product credits and All-In Sustaining Costs of $750 - $850 per ounce net of by-product credits. Copper production from Didipio is expected to be between 21,000 to 24,000 tonnes of copper in concentrate.
Full Year 2014 Guidance Gold Production (ounces) Copper Production (tonnes) Cash Costs (US$/oz)* All-In Sustaining Costs (US$/oz)*
Philippines 85,000 - 95,000 21,000 - 24,000 ($725) - ($650)* ($240) - ($210)*
New Zealand 190,000 - 210,000 - $840 - $925 $1,170 - $1,290
Total Company 275,000 - 305,000 21,000 - 24,000 $400 - $450* $750 - $850*

* Assumes copper by-product credits at $3.20/lb and NZD/USD $0.80 exchange rate

Total capital expenditure for the Company is forecast to be between $80 - $100 million which comprises $30 - $40 million in the Philippines and $50 - $60 million in New Zealand, which is significantly lower than prior year’s expenditure reflecting the cost savings announced during 2013 and the new Macraes mine plan announced today.

Additionally, total company exploration expenditure is forecast to be $5 - $10 million which includes exploration in the Philippines and costs to maintain the newly acquired assets in El Salvador.
Mick Wilkes added, “I am happy to announce the first full year of production guidance for the Didipio Mine in the Philippines. Didipio gold production in 2014 is forecast to be higher than the previous year due to the average gold grade of ore mined increasing as we go deeper into the ore body and throughput rates approaching 3.5 Mtpa. Significantly, copper production remains strong. For New Zealand, the new mine plans and reduced cutbacks have resulted in lower production guidance relative to 2013 however the cost savings we identified last year will continue to be realised. In 2014, we expect to further reduce our debt with the stronger production from Didipio and realisation of cost savings and we will strive to look for further efficiencies and initiatives such as advancing the power grid connection in the Philippines.”

ADDITIONAL HEDGING

In response to the continued lower gold price the Company has entered into a zero cost collar hedging program for 208,000 ounces partially covering production over the next two years at Macraes Open Pit and the Frasers Underground. The program entails a series of bought put options creating a floor of NZ$1,500 per ounce (US$1,230 assuming NZD/USD $0.82 exchange rate) for 208,000 ounces commencing in January 2014 through to December 2015. This was financed through the sale of an equal number of sold gold call options creating a ceiling over the same period with a strike price of NZ$1,600 (US$1,312) per ounce.

The impact of this is that in the event the spot gold price on maturity of the option is less than NZ$1,500 per ounce, the Company will nevertheless effectively receive NZ$1,500 per ounce. Should the spot gold price on maturity of the option fall between NZ$1,500 and NZ$1,600 per ounce the Company will sell the gold at the spot price. Where the spot price of gold is above NZ$1,600 per ounce on maturity of the option, the Company will effectively receive NZ$1,600 per ounce.

The Reefton production was similarly hedged with a zero cost collar which was announced on 27 June 2013.


ABOUT OCEANAGOLD
OceanaGold Corporation is a significant multinational gold producer with mines located on the South Island of New Zealand and in the Philippines. The Company’s assets encompass New Zealand’s largest gold mining operation at the Macraes goldfield in Otago which is made up of the Macraes Open Pit and the Frasers Underground mines. Additionally, on the west coast of the South Island, the Company operates the Reefton Open Pit mine. In April 2013, the Didipio Mine in the Philippines commenced commercial production. Late in 2013, the Company added the El Dorado Project in El Salvador through the acquisition of Pacific Rim Mining Corp. The Company expects to produce 275,000 to 305,000 ounces of gold in 2014 from the combined New Zealand and Philippine operations and 21,000 to 24,000 tonnes of copper in 2014 from the Philippine operations.
OceanaGold is listed on the Toronto, Australian and New Zealand stock exchanges under the symbol OGC.

CAUTIONARY STATEMENT

Statements in this release may be forward-looking statements or forward-looking information within the meaning of applicable securities laws. Any statements that express or involve discussions with respect to predictions, expectations, beliefs, plans, projections, objectives, assumptions or future events or performance (often, but not always, using words or phrases such as "expects" or "does not expect", "is expected", "anticipates" or "does not anticipate", "plans", "estimates" or "intends", or stating that certain actions, events or results "may", "could", "would", "might" or "will" be taken, occur or be achieved) are not statements of historical fact and may be forward-looking statements. Forward-looking statements such as production forecasts are subject to a variety of risks and uncertainties which could cause actual events or results to differ materially from those reflected in the forward-looking statements. They include, among others, the accuracy of mineral reserve and resource estimates and related assumptions, inherent operating risks and those risk factors identified in the Company’s most recent Annual Information Form prepared and filed with securities regulators which is available on SEDAR at www.sedar.com under the Company’s name. There are no assurances the Company can fulfil such forward-looking statements and, subject to applicable securities laws, the Company undertakes no obligation to update such statements. Such forward-looking statements are only predictions based on current information available to management as of the date that such predictions are made; actual events or results may differ materially as a result of risks facing the Company, some of which are beyond the Company's control. Accordingly, readers should not place undue reliance on forward-looking statements. The information contained in this release is not investment or financial product advice.


ends

© Scoop Media

 
 
 
 
 
Business Headlines | Sci-Tech Headlines

 

Media: Fairfax Moves To Create Modern Newsroom

Fairfax Media New Zealand continues its newsroom transformation this week, with a proposal to further organise its editorial operations into focused, local teams and specialist national topic areas. More>>

ALSO:

Dairy: Fonterra Forecast For 2015/16 Season

Fonterra Co-operative Group Limited has today reduced its forecast Farmgate Milk Price for the 2014/15 season to $4.40 per kgMS. Along with its previously announced forecast dividend range of 20-30 cents per share, the change amounts to a forecast ... More>>

ALSO:

BusinessDesk: SkyCity Lifts Minimum Convention Centre Investment To $430M

SkyCity Entertainment Group, the casino operator, has lifted the minimum it will invest in the Auckland International Convention Centre to $430 million and said total costs including land may be $450 million to $470 million. More>>

Statistics: Drop In Dairy Prices Leads Fall In Exports

Total goods exports fell $240 million (5.5 percent) to $4.2 billion in April 2015 compared with April 2014, Statistics New Zealand said today. More>>

BusinessDesk: APN's NZME Sees Future In Paywalls, Growth In Digital Sales

APN News & Media has touted a single newsroom concept for its NZME unit in New Zealand, similar to what Germany's Die Welt uses, saying an 'integrated sales proposition' is helping it win market share, including ... More>>

Labour Party: Global Milk Prices Now Lowest In 6 Years

The latest fall in the global dairy price has brought it to the lowest level in six years and shows there must be meaningful action in tomorrow’s Budget to diversify the economy, says Labour’s Finance spokesperson Grant Robertson. “Dairy prices ... More>>


BusinessDesk: NZ Inflation Expectations Creep Higher In June Survey

May 19 (BusinessDesk) - New Zealand businesses lifted their expectations for inflation over the next two years, sapping any immediate pressure on the Reserve Bank to cut interest rates, and prompting the kiwi dollar to jump higher. More>>

BusinessDesk: Lower Fuel Costs Drive Down NZ Producer Input, Output Prices

May 19 - Producer input and output prices fell in the first quarter, mainly reflecting lower fuel costs and weakness in prices of meat and dairy products. More>>

Media: Fairfax Media NZ Announces Senior Editorial Team

Fairfax Media New Zealand has today confirmed its new editorial leadership team, as part of a transformation of its newsrooms aimed at enhancing local and national journalism across digital and print. More>>

Science: Flavonoids Reduce Cold And Cough Risk

Flavonoids reduce cold and cough risk Research from the University of Auckland shows eating flavonoids – found in green tea, apples, blueberries, cocoa, red wine and onions – can significantly reduce the risk of catching colds and coughs. The research, ... More>>

BusinessDesk: RBNZ House Alert Speech The Catalyst For Government Action

Prime Minister John Key all but conceded that pressure from the Reserve Bank of New Zealand for concerted action on rampant Auckland house prices was one of the main catalysts for the government's weekend announcements about tightly ... More>>

BusinessDesk: How To Fall Foul Of The New Housing Tax Rules: Tips From IRD

Just because you rented out your investment property doesn't absolve you from paying tax, says the Inland Revenue Department in a summary of commonly made mistakes by non-professional property investors when it comes to their tax liability.More>>

Legal: Superdiversity Law, Policy And Business Stocktake Announced

Mai Chen, Managing Partner at Chen Palmer New Zealand Public and Employment Law Specialists and Adjunct Professor of Law at the University of Auckland, today announced the establishment ... More>>

Get More From Scoop

 
 
 
 
 
 
 
 
 
Business
Search Scoop  
 
 
Powered by Vodafone
NZ independent news