OceanaGold to lift gold output at cheaper cost in 2013 as Didipio comes on stream

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OceanaGold, which operates the Macraes gold mine near Dunedin, sees gold production climbing by as much as 44% in 2013 and at a much cheaper production cost as its Didipio mine in the Philippines kicks off.

The Melbourne-based company sees gold production of between 285,000 ounces and 325 ounces at a cash cost of between US$650 per ounce and US$800/oz, it said in a statement. The gold miner expects to extract between 225,000 ounces and 230,000 ounces this financial year at a cost of between US$1,000/oz and US$1,050/oz.

"We have had a strong finish to the year as expected with production from New Zealand on track to meet the revised guidance," managing director Mick Wilkes said. "We expect strong production next year in New Zealand and with Didipio on stream as planned."

The gold miner cut its annual forecast production and posted a third-quarter loss as its margins were squeezed and it earnings were eroded by lower interest income and losses on forward contracts to secure US dollar bank loans.

OceanaGold's Didipio operation began milling activities last month and has produced its first saleable copper-gold concentrate, Wilkes said.

"The process plant is now running in steady-state and the remainder of commissioning activities this year will focus on increasing throughput and improving recoveries and concentrate grade," he said.

The bulk of next year's production will continue to come from New Zealand, which is forecast to produce between 235,000 oz and 255,000 oz of gold at a cash cost of between US$8890/oz and US$950/oz. Didipio is expected to produce between 50,000 oz and 70,000 oz of gold and 15,000 tonnes and 70,000 tonnes of copper at a cash cost of negative US$370/oz to negative US$50/oz.

Earlier this month OceanaGold raised C494 million in a fully underwritten public offer in Canada to repay debt and strengthen its balance sheet.

The shares fell 1.4% to $3.45 on the NZX yesterday, and have gained 27% this year. The stock fell 1.4% to A$2.75 on the ASX and is rated an average 'outperform' based on nine analyst recommendations compiled by Reuters, with a median target price of A$4.15.


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