Exploration at Oceana Gold's Blackwater mine near Reefton
on the West Coast (pictured in October) could be in for a
boost. Photo supplied.
Triple-listed Oceana Gold has sold 30 million shares to a
syndicate of underwriters for $C93 million ($NZ114 million)
with an option for them to increase their stake 15% to $C108
In a show of confidence, Oceana said yesterday it was
considering its dividend policy during the next 12 to18
months, having had only one owner, which paid one dividend,
during the 22-year lifespan of the Macraes project.
In a presentation to markets yesterday, Oceana said it had
increasing cash flows from its four operating mines: two at
Macraes in East Otago; Reefton on the West Coast; and the
Didipio gold/copper deposit in the Philippines, which is on
track to produce concentrate by next month. Oceana expected
''strong cash flows heading into 2013 onwards'', which could
be used to repay debt, undertake studies on expansion at
Didipio and Blackwater near Reefton, consider a dividend
policy over 12-18 months, or examine opportunities to acquire
other development-stage projects.
Returns from the Philippines are also expected to massage
escalating gold production costs, at present above US$1000
($NZ1215) an ounce, down to perhaps $US600 an ounce.
The cash raised in the Canadian offer would be used to reduce
outstanding debt and provide balance-sheet and operating
flexibility, the company said.
Craigs Investment Partners broker Peter McIntyre said with
its Philippine operation on target to move shortly from
development to production of its gold/copper deposit, and
other good news from its New Zealand operations, Oceana was
in a good position to seek new capital.
He said share value would probably be diluted for New Zealand
shareholders, who could not participate in the share issue,
and the share value was likely to decline.
After the announcement yesterday, Oceana's shares were
unchanged at $4.10.
The syndicate of underwriters is led by Citigroup Global
Markets Canada Inc and Macquarie Capital Markets Canada Ltd,
and includes Cormark Securities Inc, GMP Securities LP and
BMO Capital Markets.
They have agreed to buy 30 million common shares, including
common shares represented by ASX-listed Chess depository
interests, with an option on a further 15%.
Those securities will be offered in each province of Canada,
with the exception of Quebec, in short-form prospectus and
possibly in Australia, but on a private-placement basis.
For its quarter to September, Oceana hit a stumbling block
with low ore grades and the strong New Zealand dollar
undermining after-tax profits, which plunged from $US10.9
million a year earlier to a $US397,000 loss. Oceana
downgraded its full-year production estimate from
230,000oz-250,000oz to 225,000-230,000oz.