OceanaGold Q3 profit falls on lower gold price; shares drop

OceanaGold Q3 profit falls on lower gold price; shares drop

By Suze Metherell

Oct. 31 (BusinessDesk) - Oceana Gold, which operates the Macraes goldfield in Otago, reported a 61 percent drop in third quarter profit as a lift in production in its Philippines operations was offset by declining gold prices. The company's shares fell.

Net profit fell to US$16.9 million, or 5 cents per share, in the three months ended Sept. 30, from US$43.7 million, or 14 cents per share, in the same period a year earlier, the Melbourne-based company said in a statement. Sales dropped 22 percent to US$123 million. The company affirmed it was on track to meet ifs full year production and cost guidance.

OceanaGold has been scaling back its New Zealand gold mining production as it focuses on its copper and gold production in the Philippines. The price of spot gold was recently US$1,199.11 and has declined 10 percent in the past 12 months.

The triple-listed shares of the company dropped 8.4 percent to $2.30 on the NZX, the lowest in almost nine months. The stock has gained 47 percent since the start of the year.

The company's Philippines Didipio gold and copper mine had a cash operating margin of US$1,901 per ounce in the third quarter, down from US$2,675 for the same period a year earlier. Gold produced rose to 26,207 ounces, up from 18,011 a year ealier, while copper production increased to 7,078 tonnes from 6,150 tonnes and silver rose to 82,787 ounces from 75,227 ounces.

At its New Zealand operations, cash operating margin fell to US$217 per ounce, from US$449 a year earlier. The Macares and Reefton gold fields produced a total 41,145 ounces of gold in the three months, down from 56,686 a year earlier. Gold production at Reefton declined 45 percent from the second quarter as the operation focused on pit redesign following a minor pit wall failure resulting in less ore available for processing early in the quarter.

Mining and processing rates at Reefton returned to planned levels in the third quarter, it said.

OceanaGold said production is expected to step up in the fourth quarter, as mining operations advance at Didipio and mining and processing rates return to normal levels at Reefton.

"With stronger production expected in the fourth quarter and lower costs in New Zealand, the company expects to increase its cash position and repay additional debt," it said.

The company had current liabilities of US$97.3 million at Sept. 30, from US$129.5 million at Dec. 31, 2013, after paying US$30 million of debt in the first half of 2014, it said.

(BusinessDesk)

© Scoop Media