OceanaGold falls short of target

OceanaGold, the Australian miner listed in New Zealand and Canada, has reported growth in gold production in the fourth quarter for 2011, but the total still appeared to fall below projected levels.

The company's shares (OceanaGold (NZX:OGC) were up 3.36% to $3.08 in late trading.

The Melbourne-based company has reported gold production levels in the three months to the end of December last year came at a total of 65,750 ounces, an improvement of 11% compared to the third quarter.

This brings 2011’s total production of gold for the company to 252,499 ounces, equating to revenues of US$106.6 million in the three months, bringing the average gold price to US$1705 per ounce.

“This was slightly below expectations for the quarter and subsequently the year,” said the company in a recent statement.

Operational expenditures for the fourth quarter totalled US$55.6 million, which excludes depreciation & amortisation, general & administrative expenses, and year-end inventory adjustment.

Unaudited cash costs were US$890 per ounce for the fourth quarter, with the full year 2011 including a year end adjustment for inventory, the audited cash costs were US$875 per ounce which is within the guidance range of US$850 to $890 per ounce.

The bulk of the fourth quarter production came from the Macraes Goldfield in Otago, with 44,451 ounces produced, up by 5% on the previous three months.

OceanaGold’s Reefton site on the West Coast produced a total of 21,299 ounces of gold, which the company said showed “significant improvements” on the third quarter with better grade and recoveries, but lower mining and milling throughout meant that results fell short of their target.

Progress at OceanaGold’s Didipio Project situated in the Philippines continued to make significant progress, having reached a number of infrastructure construction milestones, with mining expected to start before March 2012.

The project cost US$30.9 million to develop in the quarter, taking the total project expenditure to US$65.6 million.

OceanaGold’s NZX-listed shares remained unchanged at $2.98 and have slumped down by 22.6% over the past twelve months through the 2011 year.

Tackling future prospects head on, OceanaGold stuck with the 230,000 to 250,000 ounce guidance for the 2012 calendar year at a cash cost of US$900 to $980 per ounce.

Looking ahead even further, 2013 production is expected to grow to 300,000 to 350,000 at a cash cost of just under $US500 per ounce with Didipio coming on stream.