Oceana sets 500,000oz gold target

Macraes mine in east Otago has been the mainstay of operations for decades. Photo: Peter McIntosh
Macraes mine in east Otago has been the mainstay of operations for decades. Photo: Peter McIntosh
Oceana Gold has boosted its exploration and capital expenditure programme for 2017 to $US252 million ($NZ345.9 million), as it targets more than 500,000oz of gold in a calendar year for the first time in its 27-year history.

Its Macraes mine in east Otago has been the mainstay of operations for decades, and while other Oceana mines are challenging its production dominance, it is getting its fair share of exploration, works and expansion funding within the wider group during 2017.

Oceana, now the country's largest gold miner accounting for about 98% of output, produced within guidance 416,741 oz of gold in 2016 overall, and 21,123 tonnes of copper from Didipio in the northern Philippines, the latter commodity a by-product of the gold mining which hugely offsets production costs.

Oceana chief executive Mick Wilkes said it was the fifth consecutive year the company had achieved output and cost-of-production guidance, and he expected further production gains and stronger profit margins in calendar 2017.

''We expect 2017 to be another solid year of performance across our business with higher production and stronger margins,'' Mr Wilkes said.

He set 2017 gold guidance in a range of 550,000 to 610,00 oz, while copper production was expected to decline from last year's 21,100 tonnes to a range of 15,000-17,000 tonnes.

The all in sustaining costs to produce an ounce of gold in 2016 was $US708; consolidated across all its mines, while Mr Wilkes has set those costs in 2017 to be in a range of $US600-$US650.

Mr Wilkes said Oceana had a ''solid pipeline of organic growth opportunities'' across its portfolio of mines, with expansion at Macraes, Haile in South Carolina delivering its first gold this month and Didipio underground developments forging ahead.

While exploration funding for Macraes, at up to $US8 million for the year, was at the lower end of most of the four mines, between $US50 million and $US60 million will be spent, largely on pre-stripping costs

''At Macraes, pre-stripping costs are mainly associated with the Coronation North mine, where mining is expected to commence with the removal of overburden in February, and ore mining in May,'' Mr Wilkes said.

In late December Oceana received resource consents, spread over three different councils, for expansion of Coronation North, which could add up to three years years to the mine life.

Mr Wilkes said the 2017 gold production increase was ''primarily driven'' by the high-margin gold expected from Haile in South Carolina and increased production from Macraes, where deposits at Coronation North should be higher grades than is traditionally mined at Macraes.

At Waihi in the North Island, drilling was focusing on known underground gold veins and a large exploration target below the Martha Pit, which has been closed for open pit mining since a slip in April last year.

At Didipio, in the Philippines, development of the underground shaft was on schedule, the decline was now 2.1km long from the portal, a second underground portal and two fresh air vents were under way and first ore for milling was expected by the end of the year.

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