Oceana Gold has taken a third-quarter tumble with low ore
grades and the strong New Zealand dollar undermining
after-tax profits, crashing from $US10.9 million ($NZ13.2
million) a year ago to a $US397,000 ($NZ482,000) loss.
Crucial cash costs to produce each ounce of gold remained
beyond $US1000 at $US1081, while Oceana has downgraded
full-year production forecast from 230,000oz-250,000oz down
Full-scale production mining at its development gold and
copper mine Didipio, in the northern Philippines, cannot come
quickly enough for Oceana.
The inclusion of Didipio's gold and copper equivalents are
expected to dilute overall production cash-costs to possibly
$US600 an ounce.
Oceana said while production guidance for the full calendar
year was towards the lower end of earlier expectations, it
expected higher grades from the open pits of Macraes in East
Otago and Reefton on the West Coast would contribute to a
For the quarter, revenue stood at $US91.2 million from sales
Craigs Investment Partners broker Peter McIntyre said Oceana
would be "deeply concerned" over rising production costs and
had used some gold from inventories to boost sales, with
actual production for the quarter at 49,514oz, almost 9600oz
less than a year ago.
"Once Didipio is on stream that'll be very positive to
keeping cash costs in check ... and likely why Oceana's share
price has been so strong during the past year," he said.
A working capital draw-down of $US20 million during the
quarter left a cash balance of $US24.2 million, while Oceana
finalised a $US225 million corporate credit facility.
The Didipio project is more than 90% complete, with $46.8
million spent during the quarter and taking spending to date
to $US207.8 million. A revised budget for construction and
commissioning estimates a further $US39.2 million will be
spent, including $US27 million working capital; all totalling
$US247 million since June 2011.
Commissioning is under way now and Oceana has a minimum
five-year agreement in place with Trafigura, a private Dutch
multi-national commodity trading company, to buy 100% of its