Miner looks to extract more gold from NZ

OceanaGold says it is looking forward to the test results from seven new exploration drilling sites as it looks to take advantage of high gold prices that have helped increase its reserves.

Yesterday, OceanaGold - which has the bulk of its operations in New Zealand - substantially upgraded its mineral reserves at its mines at Macraes and Reefton. Analysis of the Macraes mine in Otago showed additional reserves of 495,000 ounces of gold, with a further 122,000 ounces of gold reserves at the Reefton mine in Buller, the miner said.

Investor relations vice president Darren Klinck said the total of 617,000 of new mineral reserves could be added to the 1.444 million ounces of existing reserves - a December 2008 estimate.

A higher gold price had made it more economic to mine some of the less highly concentrated deposits.

"The previous calculations for the reserves were done at US$500 an ounce of gold, and that was a number used in 2007 . . . ," Klinck said. "We've now updated the gold price that we're using to calculate our economic reserves from US$500 to US$800 (an ounce).

Material that may not have been economic at US$450/ US$500 an ounce, now looks very economic and quite exciting."

OceanaGold had in July raised A$24.2 million (NZ$30.4m), through a placement to investors, with a large portion (around NZ$15m) of that allocated to "brownfields" exploration in New Zealand.

"That programme is focused on upgrading the resource into reserve, and we currently have seven drills turning at Macraes and Reefton on that programme," Klinck said.

"So we've ramped up quite significantly.

" I don't think there were any drills turning in July."

Further results from the seven drilling programmes were expected over the coming weeks and months, with the market to be informed of significant finds, Klinck said.

When the open-pit mine in Otago at Macraes was first commissioned in 1990 it had a seven year mine life, and was now in year 20, he said.

The Melbourne headquartered miner's share price has increased from a low of about 22 cents in December 2008 to close 5c lower at $2.00 yesterday.

It hit a recent trading peak of $2.50 late last month. The share price gains prompted an ASX query last month, with the miner citing gold prices and an increase in resources at Macraes in response. Klinck said the share price had since fallen from its peak as had the price of gold. But gold was still at the relatively high level of US$1119.90 an ounce.

- © Fairfax NZ News