Second-quarter production is throwing up challenges for East Otago-based Oceana, with full-year production guidance downgraded and unyielding production cost pressures surfacing. In the face of the volatile spot global price plunge in gold, Oceana's share price plunged from $3.45 in late March to $2.09 in mid-April before retracing to $2.62 last week; trading yesterday around $2.41.
The quarterly profit decline was attributed to factors, including the declining spot gold price, the stubborn strength of the New Zealand dollar and less gold sold.
An Overseas Investment Office (OIO) decision released yesterday granted Oceana consent to purchase 1624ha of farmland at Matheson Rd, near Hyde. With Oceana acquiring the land for gold mining, the OIO said there was expected to be ''substantial'' benefits, including job retention, increased export receipts and operational efficiencies for Oceana.
Craigs Investment Partners broker Peter McIntyre said Oceana had done well to keep production cash cost ''well contained'' for the period, but as with all other major miners, the company had to keep careful watch on costs, especially with the wavering gold price.
Because of large wall-slump within the Frasers pit late last year, Oceana is expecting its second-quarter production to be lower but then to ''rebound'' during the third quarter once ore extraction ''returns to normal levels''.
The 2013 production guidance has been dropped from a range 285,000-325,000oz to 235,000-255,000oz, with cash costs on the latter possibly up by $US150 to a maximum $US950 per ounce.
The average profit margin per ounce fell from $US1068 in the quarter to December to $US945, reflecting the lower average gold price, plus higher production costs.
Gold production for the quarter to March was down from the previous quarter to December by 12%, from 76,844oz to 67,463oz, while gold sales were down for the same period by 16%, from 69,761oz to 58,585oz.
Revenue for the quarter was up from $US88.5, for the same quarter a year ago to $US95.6 million. Average spot gold prices eased from $US1706 the previous quarter, to $US1632.
Oceana is still commissioning its Didipio gold and copper mine, in Luzon in the northern Philippines, which mined 6877oz of gold and 3663 tonnes of copper, but which were not booked on its balance sheet.
