Underground mine life extended

Mick Wilkes.
Mick Wilkes.
Oceana Gold provided some welcome news to the local economy yesterday when it extended the mine life of Frasers Underground, at Macraes, to the end of 2016, a year longer than previously announced.

And, depending on economic conditions, the Macraes open pit mine life might be extended beyond 2017.

Last year, Oceana chief executive Mick Wilkes said because of the continued low price of gold, the Macraes open pit had a mine life until the end of 2017.

Mining would end at Frasers in mid-2015 and at Reefton at the end of this year.

Yesterday, in a market update, Mr Wilkes said the company would continue infill drilling at Frasers to increase reserves.

''With the weaker New Zealand dollar and lower fuel costs, the optionality at Macraes has significantly improved.''

As a result, the company would undertake a surface drilling programme targeting low-strip mineralisation, he said.

Success from that drilling programme, along with continued improvement in economic conditions could result in a mine life at Macraes beyond 2017 - in the current mine configuration.

The company would also continue to pursue external high quality, low-cost reserves and resources to further complement its businesses, he said.

Craigs Investment Partners broker Chris Timms said the announcement yesterday would initially be welcomed as positive, although future mine life was dependent on several factors.

Those included the price of gold, the cost of fuel and the New Zealand currency.

Oceana had set a cut-off price on operations at Macraes and Reefton at $US1250 ($NZ1668) an ounce of gold.

Yesterday, the mid-range for gold was $US1185, not too short of the cut-off.

Oceana was not setting an unrealistic price for continuing operations in New Zealand, Mr Timms said.

Mr Wilkes said additional reserves were defined at Frasers, extending the mine life out to the end of next year.

In each of the past several years, the company had successfully defined additional reserves at Frasers, resulting in additional mine life at the operation.

Didipio, the company's Philippines asset which had been the focus of attention in recent years, showed an increased in proven and probable reserves after depletion.

Didipio reserves were slightly higher due to the ''at depth'' expansion of the underground mine, he said.

Last year, the company completed the geophysical survey of the Didipio area to identify drill targets.

This year, Oceana continued drilling within the mine area to find additional sources of mill feed with promising results.

''Oceana Gold has a solid resource base from its portfolio of high quality assets. We have seen a year-on-year increase in resources at Didipio, driven by the strong results generated from the optimisation study.

''We continue to add mine life to our Frasers Underground operation, which has been extended by an additional year of production at similar rates to previous years.''

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