OceanaGold raises 2015 production estimate to reflect Waihi acquisition
By Tina Morrison
Sept. 1 (BusinessDesk) - OceanaGold Corp expects 2015 production to increase while costs fall after the gold miner takes control of Waihi Gold Mine later this year.
The acquisition of the Waihi mine from Newmont Mining Corp is awaiting approval from the Overseas Investment Office this month, and once completed, OceanaGold expects to assume the economic benefits and costs associated with Waihi from July 1, the Melbourne-based miner said in a statement. The company increased its 2015 production estimates, and reduced its costs forecast to reflect lower copper and diesel prices and a weaker New Zealand dollar, it said.
The miner raised its forecast for gold production in calendar 2015 to a range of 380,000 to 410,000 ounces, from a previous estimate of 295,000 to 335,000 ounces, reflecting a lift in its Didipio mine in the Philippines, its Macraes and Reefton mines in New Zealand, and the addition of Waihi. It also lifted its expected 2015 copper production forecast to a range of 22,000 to 23,500 tonnes, from a previous estimate of 21,000 to 23,000 tonnes, reflecting increased output from Didipio.
The company lowered its expected 2015 cash costs to a range of US$420 to US$470 per ounce sold from a previous forecast of US$450 to US$530 per ounce, while its estimate for "all-in sustaining costs" fell to a range of US$690 to US$740 per ounce sold from a previous range of US$770 to US$840 per ounce.
"The inclusion of (the) economic benefit from Waihi not only increases our production but also further reduces our unit cost base," said managing director Mick Wilkes. "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."
The company plans to look at ways to further reduce costs, and increase productivity and reserves, and extend the mine life after the transaction is finalised, he said.
OceanaGold lowered its copper price assumption to US$2.30 a pound from US$2.70 a pound. It lowered its expectation for the New Zealand dollar to 65 US cents, from 78 US cents, and its diesel price assumption to 60 US cents a litre from 70 US cents a litre.
The company said it will draw on its US$225 million revolving credit facility to finance the US$101 million acquisition cost of Waihi.
OceanaGold shares, which trade in New Zealand, Canada and Australia, increased 1.1 percent to $2.86 on the NZX.