Cost savings across Oceana Gold's operations, including
about 150 recent redundancies, appear set to flow through its
Although the staff and contractor redundancies since
September, prompted by the flagging spot price of gold
hovering just over $US1200 ($NZ1442), have been swift and a
shock, more workforce pain may be in store.
Oceana said late last year it wanted to make savings of about
Its fourth-quarter operational report, and a snapshot of its
full-year operations which will be fully reported on February
20, show Oceana produced a record 115,219oz of gold in the
fourth quarter, which boosted full-year production slightly
beyond the top end of guidance to 325,732oz.
For 2015, there is a proposal to possibly mothball the
Reefton open pit which employs about 260 staff, also the mine
life of Frasers underground at Macraes ends in the middle of
that year. The Macraes open pit mine-life is set for the end
Oceana management has been asked repeatedly to verify the
number of redundancies, but has not done so.
Possibly softening those blows could be Oceana's proposed
Coronation pit on its northern Macraes boundary, in East
Otago, which gained 17, 35-year consents in December. But its
development, and Reefton's mothballing, are subject to gold
Oceana's chief executive, Mick Wilkes, said there had been a
strong finish to 2013, with record gold production which
exceeded expectations, and lower-than-expected gold and
copper production costs in both New Zealand and the
The new Macraes mine plan included reducing the open-pit
total ore movement, which cut equipment use and costs, and
reducing operating and support staff requirements ''over the
next two years'', he said yesterday.
''Unfortunately, these changes will also have an impact on
some of our workforce and contractors, whom I wish to thank
and acknowledge for their contribution to Oceana Gold,'' he
Crucially for Oceana, it kept its overall 2013 cash costs to
produce gold to $US426 per oz, having targeted $US550-$US650.
This was achieved by offsetting the cost with the credits
from Philippine copper production and sales.
Without the copper offset, New Zealand costs to produce an
ounce would have been $US740, or 73% higher than the overall
Craigs Investment Partners broker Peter McIntyre said Didipio
was proving to be a ''major contributor'' to Oceana's
earnings and balance sheet and its delivery of copper credits
was ''reducing Oceana's cash costs markedly''.
Oceana's guidance for 2014 production is 275,000oz to
305,000oz, at a cash cost of $US400-$US450 per ounce, with
Philippine Didipio mine copper production estimated at 21,000
tonnes to 24,000 tonnes.
Mr Wilkes said, ''In 2014, we expect to further reduce our
debt with the stronger production from Didipio and
realisation of cost savings and we will strive to look for
further efficiencies and initiatives, such as advancing the
power grid connection in the Philippines.''
Oceana Gold in 2013
• Produced more than 3.8 million ounces of gold, mainly from
Macraes over 23 years.
• Philippine operations during 2013, 66,277oz gold and 23,059
tonnes of copper.
• New Zealand operations during 2013, 259,455oz gold.
• Core debt reduced by $US45 million; fourth-quarter revenue
$US170 million; $US25 million cash at year end.
SOURCE: OCEANA GOLD