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OceanaGold first quarter profit soars as Didipio operation comes on steam

OceanaGold [NZX: OGC], which operates the Macraes goldfield in Otago, boosted first-quarter profit by 730 percent as its Didipio operation in the Philippines came on steam with new gold and copper production.

Net profit jumped to US$58.9 million in the three months ended March 31 from US$7.1 million a year earlier, the Melbourne-based company said in a statement. Revenue surged 78 percent to a record US$170.4 million, with more than half of its sales from the Philippines. Gold production was 86,568 ounces, with 30,480 ounces from the Didipio operation.

"We had another strong quarter of production and financial results with record quarterly, Ebitda (earnings before interest, tax, depreciation and amortisation) and net earnings on the back of higher sales and lower operating costs," managing director Mick Wilkes said. "The Didipio process plant is well on track to increase throughput rates to 3.5 Mtpa (million tons per annum) by the end of the year and will continue generating strong free cash flows."

OceanaGold wrote down the value of its New Zealand operations last year, with the Macraes set to close in 2017 and the Reefton mine to be mothballed next year. In the face of declining gold prices the miner is winding down its New Zealand interests to focus on its Philippines gold and copper operations. The spot gold price has declined 11 percent in the past 12 months, and fallen 22 percent over the past two years.

Mining at the Macraes operation was suspended this month after a pit wall failure, though the company doesn't expect that to impact on its 2014 production guidance.

OceanaGold still anticipates gold production to be in the range of 275,000 and 305,000 ounces, a drop-off due to the decline in its Macraes operations. Copper production is forecast between 21,000 to 24,000 tonnes.

The shares, which are also listed in Australia and Canada, fell 3.6 percent to $2.64 on the NZX yesterday, having climbed 54 percent this year.

(BusinessDesk)