Why OceanaGold's third quarter profit has fallen 59%

OceanaGold [NZX: OGC], which operates gold mines in Otago and Waihi, reported a 59% drop in third-quarter profit as planned maintenance reduced copper production at its Didipio mine in the Philippines, weighing on revenue.

Net profit fell to $US6.9 million in the three months ended September 30 from $US16.9 million a year earlier, with an 11% decline in revenue to $US109.6 million, and $US4.5 million of costs associated with recent acquisitions weighing on the bottom line, the Melbourne-based company said in a statement. Earnings before interest, tax, depreciation and amortisation fell 19% to $US35.1 million.

OceanaGold has been expanding its gold mining footprint with this year's acquisitions of Canada's Romarco Minerals and the Waihi mine in New Zealand, while also investigating ways to extend the life of the Macraes goldfield in Otago.

"With the addition of the Haile and Waihi assets, we have further strengthened and transformed the company into a leading mid-tier gold producer with low-cost production growth, significant cash flow generation and a solid pipeline of organic growth opportunities," managing director Mick Wilkes said. "Over the course of the next 12 months, we will advance comprehensive exploration programmes across our portfolio to unlock value at each site while optimising our existing operations."

The company produced 87,667 ounces of gold in the quarter, selling 78,639oz at an average price of $US1090 an ounce. It produced 5219 tonnes of copper, with sales of 5484 tonnes at an average price of $US2.34 per pound.

The miner affirmed guidance to produce between 380,000oz and 410,000oz of gold in the calendar year and between 22,000 and 23,500 tonnes of copper, with cash costs between $US420-and-$US470/ounce and all-in sustaining costs of between $US690-and-$US740/ounce.

The shares are listed in New Zealand, Australia and Canada and last traded on the NZX at $2.83, having gained 29% this year.

(BusinessDesk)