Oceanagold Reports Second Quarter 2016 Results
Oceanagold Reports Second Quarter 2016 Operational And Financial Results
(All financial figures in US Dollars unless otherwise stated)
(MELBOURNE) OceanaGold Corporation (TSX/ASX/NZX: OGC) (the “Company”) is pleased to release its financial and operational results for the quarter and half year ended 30 June 2016. Details of the consolidated financial statements and the Management Discussion and Analysis (“MD&A”) are available on the Company’s website at www.oceanagold.com
• Continued to advance the construction of the Haile Gold Mine which remains on track for first ore in the mill at the end of 2016.
• Consolidated production of 225,339 ounces of gold and 12,244 tonnes of copper in the first half of 2016 including 102,557 ounces of gold and 6,272 tonnes of copper produced in the second quarter.
• Consolidated year-to-date All-In Sustaining Costs of $722 per ounce and cash costs of $456 per ounce on sales of 233,293 ounces of gold and 10,858 tonnes of copper.
• Revenue of $330.8 million with an EBITDA of $155.2 million and a net profit of $63.2 million in the first half of 2016.
• Revenue of $169.8 million with an EBITDA of $77.3 million and a net profit of $39.7 million in the second quarter.
• Increased liquidity through amendment of the revolving credit facility from $250 million to $300 million with existing multinational banking group.
• Exited the second quarter with $221 million in total liquidity including $104 million in cash
• Continued exploration success at Coronation North with significant intersections.
• Recorded Total Recordable Injury Frequency Rate of 3.37 per million man hours worked.
Mick Wilkes, President and CEO said, “I’m pleased to announce another strong quarter of operational and financial results where we continued to deliver consistent positive results while maintaining our focus on the highest standards of safety and environment. We have bolstered our balance sheet from strong cash flows generated by our business, expanding our revolving credit facility and monetising the Haile mining equipment under a sale and lease arrangement.” He added, “I am very pleased with the significant progress made at the Haile Gold Mine as we continue to advance the project towards commissioning, which we confidently expect to commence at the end of this year.”
Table 1 - Production and Cost Results Summary
In the United States, construction of all major infrastructure at Haile is tracking to schedule and budget. The ROM pad retaining wall was completed in the second quarter and the crusher is well advanced. In the quarter, the SAG and Ball mills were installed with lubrication systems in place to enable pre-commissioning activities. The fine grinding circuit and CIL tanks have been constructed while flotation tanks construction commenced. Construction of the Tailings Storage Facility, a critical path item, continues to advance well and is on schedule while the first phase of the PAG cell was completed and accepting PAG material. Mining operations have transitioned to 24-hour operations and continue to mine overburden in the Mill Zone pit and have stockpiled approximately 0.19 million tonnes of oxide ore for future processing.
As at the end of the second
quarter, the Company had spent approximately $246 million of
the $380 million estimated capital cost while the capital
spent and committed as at the end of the quarter was
approximately $330 million.
At Didipio, the operation produced 90,887 ounces of gold and 12,244 tonnes of copper in the first half of the year including 44,076 ounces of gold and 6,272 tonnes of copper in the second quarter. The slight quarter-on-quarter decrease in gold production was expected and as a result of a lower head grade. Mining of Stage 5 of the open pit was completed during the quarter, ahead of schedule while development of the underground continues to advance well. Production from the underground is expected at the end of 2017.
On the North Island of New Zealand, the Waihi operation continued to track to guidance with 63,523 ounces of gold produced including 26,540 ounces in the second quarter. Quarter-on-quarter gold production decreased as a result of less ore mined from Correnso underground. The Company continues to develop access drives to Correnso Deeps and the Daybreak and Empire veins. On July 1, 2016, the Company transitioned operations to owner-mining and expects to achieve cost reductions and productivity enhancements.
On the South Island of New Zealand, the Macraes and Reefton operations produced 70,929 ounces of gold in the first of half including 31,941 ounces produced from Macraes only in the second quarter. The decrease in production at Macraes on the previous quarter was a result of a lower head grade. Sales of Reefton production from the first quarter were completed in the second quarter and the asset remains under care and maintenance with a focus on water treatment, plant maintenance and rehabilitation.
On June 7, 2016, the Company provided a comprehensive update of its exploration program with strong drill results reported. Subsequent to this announcement, extensive exploration activities have been carried out across the Company’s operating regions including Coronation North where drilling has demonstrated further potential mineralisation extensions to the southeast of the previous drilling.
Table 2 - Financial Summary
Consolidated All-In Sustaining Costs (“AISC”) for the first half of 2016 was $722 per ounce while consolidated cash costs were $456 per ounce on sales of 233,293 ounces gold and 10,858 tonnes of copper. Second quarter cash costs were $476 per ounce on sales of 115,906 ounces of gold and 6,113 tonnes of copper.
For the first half of 2016, the Company reported revenue of $330.8 million and a net profit of $63.2 million while EBITDA was $155.2 million. In the second quarter, the Company recorded revenue of $169.8 million with a net profit of $39.7 million, which was higher than in the first quarter. The increase in earnings was a result of higher average gold price received partly offset by slightly higher mining costs and corporate costs associated with redundancies related to restructuring of the Waihi asset. Operating cash flow for the quarter was $91.5 million, which was significantly higher than in the previous quarter on account of higher gold prices and reduction in working capital following the sale of inventory build-up at Didipio in the first quarter.
In the second quarter, the Company expanded its revolving credit facility from $250 million to $300 million with its existing banking group and under the same competitive terms and rates. In addition, the Company received $34 million from the sale of the mining fleet at Haile under a lease back arrangement with Caterpillar. As at the end of the second quarter, the Company had immediate available liquidity of $221 million including nearly $104 million in cash and $117 million undrawn from its revolving credit facility. Total debt at the end of the quarter stood at approximately $228 million.
Mick Wilkes went on to say, “After a strong first half of the year, the Company is well positioned to achieve its production and cost guidance for the year. We will continue to operate safely while seeking to unlock the organic growth potential of our assets. As ever, we are strongly committed to working with all of our stakeholders to deliver meaningful benefits to communities and superior returns to shareholders, as we have done so in the last several years.”
Second Quarter 2016 Results
The Company will host a conference call / webcast to discuss the results at 7:30am on Friday 29 July 2016(Melbourne, Australia time) / 5:30pm on Thursday 28 July 2016 (Toronto, Canada time).
Playback of Webcast
If you are unable to attend the call, a recording will be available for viewing on the Company’s website a few hours after the completion of the webcast.
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