OceanaGold shares rose almost 8 per cent to their highest levels since May, after the company issued a presentation to the NZX about its gold mine plans in New Zealand and the Philippines.
OceanaGold has mines in Otago and on the West Coast of the South Island and is developing a gold and copper mine in the Philippines, which is expected to give the company high growth at lower cash mining costs.
"The growth outlook is golden," OCG said at the high profile "Diggers and Dealers" conference, in Kalgoorlie, Western Australia, attended by more than 2000 people from the mining sector.
OCG shares rose 21c to $2.86 yesterday, just shy of the $2.90 a share seen in early May, before dropping as low as $2.22 in mid-May. The international price of gold was about US$1610 an ounce yesterday, in line with average prices OCG received in the June quarter.
In the presentation, the company pointed to the prospect of lifting annual production to between 300,000 and 350,000 ounces a year, with cash costs dropping significantly to about US$600 an ounce, compared with recent costs of just above US$1000 an ounce.
OCG's mines in New Zealand are steady producers at up to 250,000 ounces of gold a year, from the Macraes open pit and Frasers underground mines north of Dunedin and the Reefton open pit on the West Coast.
The Didipio mine in the north of Luzon was expected to add another 100,000 ounces to annual production, after it is commissioned at the end of this year.
The Philippines mine is costing US$220m to develop and is expected to run for 16 years. The intention is to eventually lift gold production to 150,000 ounces a year at Didipio
Further acquisition and exploration could boost total annual production by another 200,000 ounces, OCG said in its presentation.
Its aim for 2016 was to lift annual production to 600,000 ounces of gold a year.
Exploration includes the Blackwater underground prospect at Reefton, with "favourable results" from initial drilling, with the potential for 750,000 ounces of gold.
Testing was continuing at Blackwater below historic mine workings, with a feasibility study planned for early next year.
It would have the potential to produce 50,000 ounces of gold a year at less than US$600 an ounce, well below average cash costs now.
- © Fairfax NZ News