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Sales of copper from Oceana's Didipio gold-copper mine in the northern Philippines are offsetting the high cost of gold extraction, whereas gold-only extraction in New Zealand is far less profitable.
New research by Craigs Investment Partners looks at the possibility the Macraes mine operations in East Otago and Reefton, on the West Coast, will close by the end of 2017, which has been signalled as a possibility by management.
Craigs broker Peter McIntyre said while management had indicated the mines' potential closure, that scenario was dependent on gold prices, continued cost savings and new areas under exploration, such as plans for the Coronation open pit at the Macraes site.
''Didipio in the Philippines is a new, long-mine-life, low-cost operation which generates strong free cashflow and underpins plans to pay debt off the balance sheet,'' he said.
While Oceana has made more than 200 staff and contractors redundant from Macraes and Reefton operations in recent months, it has reiterated that the New Zealand mines' futures and viability are closely linked to the price of gold.
Mr McIntyre said Macraes and Reefton mines operated at a higher cost than Didipio, but Oceana had recently put in place a hedging contract to protect its profit margins in New Zealand, as the operations wind down.
He estimated free cashflow from Macraes and Reefton combined, after expenses and costs, would total about $US180 million ($NZ204 million) by the end of 2017.
Between the ''persistently high'' New Zealand dollar and a gold price plunge last year, Oceana had revised the mine life of its New Zealand locations.
Reefton's mine life was down by two years, to be mothballed by late 2015, and the already 24-year-old Macraes mine's life was cut by three years, with Frasers underground to close mid-2015 and open pit operations by late 2017.
''We expect 2014 will represent the peak production year for Oceana,'' Mr McIntyre said.
Since Didipio opened in late 2012, Mr McIntyre said, it had to date produced 97,000oz of gold and 30 tonnes of copper, at a cash cost of negative $US856 ($NZ972).
''There's strong cashflow being dedicated to repaying debt and to reduce its gearing from 20% to 15% by the end of this year,'' Mr McIntyre said.
Oceana was part way into installing a $US7 million plant extension at Didipio.
When that was combined with using electricity from the national grid, instead of running generators, by mid-2015, it was expected to cut operating costs by about $US10 million a year.
''Didipio is one of the world's lowest-cost operating gold assets,'' he said.
During calendar 2014, Mr McIntyre said, forecast cash costs were in a negative $US725-$US650 range, in part from the strong copper by-product credit and the mine's low-cost base.
While Oceana's share price was poor for most of the last calendar year, during recent weeks it has been well up on last year, in a range of $3.36-$3.75.
Mr McIntyre said Craigs' 12-month price target for the stock was $3.20, and maintained a ''hold'' recommendation, given its ability to grow business in existing operations or by acquisition of other companies, such as its $12 million purchase of an El Salvadorean gold exploration company last October.