You are not permitted to download, save or email this image. Visit image gallery to purchase the image.
Oceana Gold is expecting increased productivity from its Reefton opencast mine on the West Coast after gold grades at Reefton did not meet earlier expectations.
Guidance for Oceana's full calendar year are a "conservative" 230,000 to 250,000 ounces of production at a cash cost per ounce of $US900-$980 ($NZ1125-$1225) per ounce, chief executive Mick Wilkes said in a trading update earlier this week.
"Although the Macraes open pit and Frasers underground [mines at Macraes, in East Otago] have performed to plan, our expectations for the Reefton mine at the beginning of the  year were higher than they should have been," Mr Wilkes said.
There was a "negative reconciliation" between mined gold grades and expectations from Oceana's geological model during 2011, particularly at Reefton, with the company being "more cautious on predicted grades", although there had been more accurate reconciliations recently, he said.
Craigs Investment Partners broker Peter McIntyre said Reefton's lower gold grades would have been "disappointing" for Oceana, but in the year ahead, gold and copper prices globally looked positive.
"This could be a good year for Oceana, but headwinds remain in the volatility of the [New Zealand] dollar," he said.
Mr Wilkes said Oceana's budgets had been struck using a "conservative" exchange rate of US80c and oil at more than $US100 per barrel.
The recently strengthening kiwi struck US80c yesterday and oil was sitting at $US100.47c yesterday morning.
Mr Wilkes expected production and operating costs for this year to be similar to the past three quarters of 2011, but with production to "increase significantly" during 2013, when the Didipio gold and copper mine boosted production by 70,000 ounces of gold, plus copper, during 2013.
The year 2013 was also expected to see better gold grades recovered from the Macraes open pit, with total gold production at 300,000-350,000 ounces, but operating costs expected to be below $US500 per ounce, because of copper by-product credits.