OceanaGold keeps cash costs low

MICHAEL BERRY
Last updated 13:39 22/01/2013

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OceanaGold Corporation kept last year's cash costs below its target of just more than US$1000 (NZ$1196) an ounce by squeezing out slightly more gold from its Kiwi mines than it had forecast.

The publicly-listed goldminer dug up 232,909 ounces last year down 7 per cent from the previous year.

It sold 230,119 of those ounces for an average cash cost of US$940 an ounce; it had expected costs to be between US$1000 and US$1050.

Production had dropped in 2011, too, down 6 per cent from 268,602 ounces in 2010.

The final quarterly production report of 2012 was announced to the NZX today, the shareprice was unmoved.

Gold production leapt 55 per cent compared to the previous quarter and the unaudited cash costs came to US$638 an ounce.

The much cheaper cash costs were due to an increase in the gold sold during the quarter, the announcement said.

The company made US$119 million in the fourth quarter from selling 69,761 ounces at an average price of US$1705.

OceanaGold managing director Mick Wilkes said 2013 was a "transformational" year for the company because of the Philippine Didipio project which was running ahead of schedule.

It had consistently met milestones throughout construction and was now producing copper-gold concentrate, he said.

"Another major milestone was also met last week when the first truckloads of concentrate were delivered to the port."

The Didipio processing plant had been running at production levels well above expectations during commissioning, he said.

If the plant's throughput had been extrapolated for a year it would have hit 2.4 million tonnes.

However, a "minor incident" had highlighted problems that would affect the plant's long-term reliability when cranked up to the aimed-for annual throughput of 3.5 million tonnes year.

The plant has been stopped for a few weeks while improvements are made to the waste-product outflow system.

Wilkes said he was pleased the strong finish to 2012's production allowed the company to meet its guidance and was pleased with the grade of gold coming from the company's Macraes mine, in Otago, and its Reefton mine.

OceanaGold spent US$4.1m on exploration during the year, most of it at the historic Blackwater mine as well as to the north and south of the site. Results of the third drill at Blackwater are expected by March.

Scout drilling at Mogambos and D'Beau, Philippines, had found new gold and copper-gold prospects which the company would investigate.

An extension of the company's exploration permit was expected soon.

OceanaGold's financial results will be released February 14.

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- The Press

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