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Oceana Gold has taken a third-quarter tumble with low ore grades and the strong New Zealand dollar undermining after-tax profits, crashing from $US10.9 million ($NZ13.2 million) a year ago to a $US397,000 ($NZ482,000) loss.
Crucial cash costs to produce each ounce of gold remained beyond $US1000 at $US1081, while Oceana has downgraded full-year production forecast from 230,000oz-250,000oz down to 225,000-230,000oz.
Full-scale production mining at its development gold and copper mine Didipio, in the northern Philippines, cannot come quickly enough for Oceana.
The inclusion of Didipio's gold and copper equivalents are expected to dilute overall production cash-costs to possibly $US600 an ounce.
Oceana said while production guidance for the full calendar year was towards the lower end of earlier expectations, it expected higher grades from the open pits of Macraes in East Otago and Reefton on the West Coast would contribute to a "strong finish".
For the quarter, revenue stood at $US91.2 million from sales of 54,750oz.
Craigs Investment Partners broker Peter McIntyre said Oceana would be "deeply concerned" over rising production costs and had used some gold from inventories to boost sales, with actual production for the quarter at 49,514oz, almost 9600oz less than a year ago.
"Once Didipio is on stream that'll be very positive to keeping cash costs in check ... and likely why Oceana's share price has been so strong during the past year," he said.
A working capital draw-down of $US20 million during the quarter left a cash balance of $US24.2 million, while Oceana finalised a $US225 million corporate credit facility.
The Didipio project is more than 90% complete, with $46.8 million spent during the quarter and taking spending to date to $US207.8 million. A revised budget for construction and commissioning estimates a further $US39.2 million will be spent, including $US27 million working capital; all totalling $US247 million since June 2011.
Commissioning is under way now and Oceana has a minimum five-year agreement in place with Trafigura, a private Dutch multi-national commodity trading company, to buy 100% of its gold/copper concentrate.