Macraes mine life extended

OceanaGold is further extending its Macraes pit mine life in Otago out towards 2021 with a new drilling plan seeking extra gold reserves.

Mick Wilkes, chief executive of the Australia-headquartered gold miner, said OceanaGold was drilling around the Macraes open pit.

"It looks like we might have another two years of open pit mine life there in addition to current reserves," he said.

Investor relations officer Nova Young added that the extra drilling programme potentially took the mine life from around 2019 to 2021, though she understood there might be extra consents needed from the local authority for the period after 2020.

The company was also drilling at its Blackwater, Reefton mine below previously mined workings, with gold found in the first hole.

"This gives us great encouragement that the ore body continues well below previous workings," Wilkes said.

Despite maintenance of plant at Macraes and Reefton and unforeseen difficulties at the Frasers underground mine, near Macraes, OceanaGold was maintaining its guidance for the full 2012 calendar year at 230,000 to 250,000 ounces of gold at a cash extraction and production cost of between US$900 and US$980 (NZ$1167- $1271) an ounce.

This guidance is unchanged from December 2011. Gold prices were currently above US$1600 per ounce.

"We're expecting the second half to be better than the first half. That's why we haven't changed our guidance," Young said.

The difficulties at Frasers included higher than expected ground movement due to the mining. Some of the areas had been closed, but more recently a redevelopment had been completed "and we've seen a turnaround in underground operations".

Wilkes said the company recently took senior managers to view its Didipio project in the Philippines. The gold and copper mine plant should be commissioned in the December quarter with production to start soon after. There were now around 1300 people working on the project with all mechanical equipment on site ready for assembly. "The project [cost] overall is a little higher than our first estimates and we will provide more details in the near future."

The best prospects the company had at the moment was an area known as Mogambos, only five kilometres north of the yet to be commissioned plant, which had surface expressions of high grade copper and gold anomalies. "It's 1km wide and 2km long and obviously we're very keen to drill that."

There was a hiccup in terms of mining aspirations with a "fair bit" of exploration done, but drilling of prospects on hold due to a freeze on issuing permits across the Philippines at the moment, Wilkes said.

"We haven't been able to drill these prospects, not for want of trying, but we're waiting on the government to renew the exploration permit for drilling."

The budget for New Zealand operations in 2012 was US$10 million while in the Philippines it was between US$5 and US$10m.

The Press