Costs surge for OceanaGold Didipio project
Gold miner OceanaGold says costs associated with ramping up its Didipio project in the Philippines have escalated to US$220 million (NZ$276 million), a 19 per cent increase on the commencement cost.
The miner has received approvals from a group of large multi-national banks for a US$220 million credit facility to be used, if necessary, for the repayment of convertible bonds due to mature in December 2012 and December 2013.
The agreement with the banks is subject to final documentation.
Around US$50m of the credit facility is to be allocated for general working capital.
OceanaGold chief executive Mick Wilkes said the Didipio mine in the Luzon island area of the Philippines was fully financed and on track for commissioning in the fourth quarter of 2012, with the project now 70 per cent complete.
The credit facility was a vote of confidence and would allow OceanaGold to commission Didipio and generate strong cashflows in 2013.
''The project is currently at peak construction with more than 1600 workers at site with 98 per cent of these being Filipino nationals.''
Construction of the accommodation village and administration buildings was complete. Concrete installation was 98 per cent complete, and steel erection at the process plant was 65 per cent complete.
Outstanding work at the site included seven remaining power generators and the high and low voltage electrical switch rooms.
''All of the power equipment is expected at the site over the next 4-6 weeks ...,'' Wilkes said.
''All remaining major contracts, including mechanical, piping and electrical installation have been awarded and the contractors have commenced work on site.''
Wilkes said most of the contribution on top of the commencement cost of US$185m were increases in engineering design, infrastructure construction and site support costs.
As at June 30, US$161m of the total project cost had been spent, with a further US$24m committed in contracts. There was US$73m cash on hand at that date.
''Excellent progress has been made over the past few months with construction of the processing plant and tailings storage facility,'' Wilkes said.
''Mining is ramping up to full capacity and ore mining has commenced on schedule ... the increased capital cost for the project is consistent with industry cost pressures today.
Mining of the Didipio ore body had commenced on schedule this month in readiness for plant commissioning in the fourth quarter and to build ore stockpiles for production in 2013.
Hiring for the Didipio operations team had begun with approximately 60 per cent of the positions already filled.