800 mine workers face wages freeze

MARTA STEEMAN
Last updated 17:07 21/06/2013

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Australian goldminer OceanaGold is looking at freezing the wages of several hundred staff at its two South Island mines.

The sustained fall in the gold price has triggered the hard look at the operating costs of the Macraes mine in Otago and the Globe Progress mine near Reefton on the West Coast.

OceanaGold will seek cost savings on other expenditure.

It may reduce the mine life of Globe Progress.

The company said it had about 800 employees and contractors at the two mines - its main mining operations.

In a Company Insight report to shareholders today, released on the New Zealand stock exchange, OceanaGold said it was reviewing its mine plan at its main New Zealand mine, Macraes, and "more particularly Reefton in light of the lower gold price".

"We're looking to minimise the amount of capital expenditure, particularly on restripping for future production, and we're also looking at wages freezes and reviewing all discretionary expenditure to reduce unit operating costs," it said.

"We will update the market on Reefton within the next six weeks but can expect that the mine schedule will likely reflect a shorter mine life with these new economic realities."

OceanaGold has shareholders in New Zealand, but the main shareholders are in Australia and Canada. It is listed on the sharemarkets of Canada, Australia and New Zealand.

The news on its new gold and copper mine, Didipio, in the Philippines, was more positive.

The sale of the byproduct, copper, was more than covering the cost of mining the gold and copper, plus the company was getting the price of the gold.

OceanaGold head of business development Darren Klinck said Didipio was a "very robust operation" and the reason for the quick commissioning of the mine in April.

The cost of production was higher at the New Zealand operations.

The big goldminers around the world were reviewing their costs with the fall in the gold price, he said.

Gold prices plunged in the United States today by US$87.80 (NZ$112.50), or 6.4 per cent, to US$1286.20 an ounce after the US Federal Reserve said it was contemplating an end to its bond-buying programme.

Traders view gold as insurance against inflation and a weak dollar, but that appears less of an issue now.

Gold hit an historical high of US$1900 in August 2011.

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- The Press

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