A strong finish to Oceana Gold's calendar year gold production has prompted expectations of an 8% earnings boost to forthcoming 2014 results, by brokers Forsyth Barr.
Sales of by-product copper from its Philippines mine have made Oceana one of the lowest-cost gold producers in the world, but declining copper prices are beginning to pinch earnings outlooks.
Combined production from Macraes in East Otago, Reefton on the West Coast and Didipio in the northern Philippines beat Oceana's own guidance expectation, but for Forsyth Barr broker Andrew Rooney, Didipio was ''the standout performer'' of the three mines.
''Oceana had a great finish to 2014, with production from Didipio up by 8600oz, Macraes up 6000oz and Reefton up 10,400oz, all increasing gold production in the fourth quarter, against the third quarter,'' he said.
Forsyth Barr had increased its 2014 earning guidance, up 8% for earnings before interest, tax, depreciation and amortisation, to $US239 million ($NZ326.3 million).
However, Mr Rooney expected returns from copper sales during 2015 would decrease by $US13 million to $US193 million, on Oceana's assumption the copper price would be trimmed by $US50c per pound down to $US2.70.
He said Forsyth Barr had trimmed its copper expectations from $US2.99 to $US.2.81.
Mr Rooney cautioned that Oceana had ''tweaked'' its 2015 cash cost of production, following recent declines in the global copper price and declining strength of the New Zealand dollar against its US counterpart.
Didipio's production and sale of copper as a by-product of the gold-mining operations offsets the cost per ounce of producing gold by several hundred dollars compared with New Zealand costs.
Mr Rooney said while gold production costs would increase at Didipio, with the fall in the kiwi, the net effect would be that Oceana was not changing its cost guidance for 2015 production.
Mr Rooney's target price per share was up 50c to $3.20, downgrading the rating from ''outperform'' to ''neutral''.
This was because Oceana's share price had enjoyed a ''strong run'', from $2 at Christmas to almost $3.
''The stronger gold price has more than offset the softening copper price, hence all gold stocks have risen,'' he said.
However, he noted Oceana's value story had declined, its negative risks had increased and it was one of the country's most volatile stocks, prompting the downgrade.
• Oceana will release its 2014 financial result on February 19.
