Oceana Gold is expecting increased productivity from its
Reefton opencast mine on the West Coast after gold grades at
Reefton did not meet earlier expectations.
Guidance for Oceana's full calendar year are a "conservative"
230,000 to 250,000 ounces of production at a cash cost per
ounce of $US900-$980 ($NZ1125-$1225) per ounce, chief
executive Mick Wilkes said in a trading update earlier this
week.
"Although the Macraes open pit and Frasers underground [mines
at Macraes, in East Otago] have performed to plan, our
expectations for the Reefton mine at the beginning of the
[2011] year were higher than they should have been," Mr
Wilkes said.
There was a "negative reconciliation" between mined gold
grades and expectations from Oceana's geological model during
2011, particularly at Reefton, with the company being "more
cautious on predicted grades", although there had been more
accurate reconciliations recently, he said.
Craigs Investment Partners broker Peter McIntyre said
Reefton's lower gold grades would have been "disappointing"
for Oceana, but in the year ahead, gold and copper prices
globally looked positive.
"This could be a good year for Oceana, but headwinds remain
in the volatility of the [New Zealand] dollar," he said.
Mr Wilkes said Oceana's budgets had been struck using a
"conservative" exchange rate of US80c and oil at more than
$US100 per barrel.
The recently strengthening kiwi struck US80c yesterday and
oil was sitting at $US100.47c yesterday morning.
Mr Wilkes expected production and operating costs for this
year to be similar to the past three quarters of 2011, but
with production to "increase significantly" during 2013, when
the Didipio gold and copper mine boosted production by 70,000
ounces of gold, plus copper, during 2013.
The year 2013 was also expected to see better gold grades
recovered from the Macraes open pit, with total gold
production at 300,000-350,000 ounces, but operating costs
expected to be below $US500 per ounce, because of copper
by-product credits.
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