BUSINESSDESK: OceanaGold, which operates the Macraes gold mine near Dunedin, dipped into the red in the third quarter as its margins were squeezed, and expects to produce less gold at a higher cost.
The Melbourne-based company made a loss of $US397,000 in the three months ended September 30, from a profit of $US10.9 million in the same quarter a year earlier, it says in a statement. Gold sales shrank 12% to $US91.2 million, even as the cost of sales rose 6.4% to $US61.2 million, reflecting a stronger local currency and the cost of processing low grade ore.
OceanaGold cut its annual production to between 225,000 and 230,000 ounces of gold at a cash cost $US1000 to $US1050 per ounce, from 230,000 to 250,000 ounces at a cost of between $US900 and $US980 an ounce.
"The adjusted range is consistent with the current market consensus based on analysts covering OceanaGold which is 228,650 ounces of gold from the New Zealand mines at $US1023 per ounce," chief executive Mick Wilkes says.
"The company has commenced mining higher grade ore at both Macraes open pit and Reefton and as a result we expect production to be higher in the fourth quarter."
Last week, OceanaGold said its investigations into mining scenarios at Blackwater, south of Reefton on Coromandel Peninsula, was showing mineralisation that was consistent with historical records. It expects to complete the study in the second half of next year.
The company's bottom line was also hit by a lower interest income and losses on gold put options and forward rate contracts to secure US dollar banking facilities. Earnings before interest, tax depreciation and amortisation sank 36% to $US27.6 million in the quarter from a year earlier.
OceanaGold produced 49,514 ounces of gold in the quarter, down from 59,090 ounces in the same quarter a year earlier, with a cash cost of $US1081 per ounce sold, up from $US956.
Construction at its Didipio project in the Philippines was almost complete and will start milling in November, it said.
The spot price for gold rose 11% to $US1777.29 an ounce in the September quarter. Since then the price has dropped and recently traded at $US1709.34 an ounce.
OceanaGold shares, which are listed in Australia, New Zealand and Canada, fell 2.7% to $3.98 on the NZX yesterday and have rallied 48% this year.
This article is tagged with the following keywords. Find out more about MyNBR Tags
Most listened to
- Business Week in Review with Grant Walker & Andrew Patterson
- Matthew Hooton on what a National win in Mt Roskill could mean for Labour
- Tim Hunter on Sky's awkward Chinese problem
- Paul Goldsmith's attempt at insolvency law reform has been hijacked by a 'basked of deplorables' says Damien Grant
- First Retail Group's Chris Wilkinson on Pumpkin Patch's worsening situation