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Oceana’s general manager at Macraes, Dale Oram, was upbeat and candid in his presentation at the New Zealand branch of the Australian Institute of Mining and Metallurgy annual conference this week, in front of most of the 220 delegates attending.
He said in the long term Oceana wanted to continue on its path of geographic diversity and eventually operate five to seven mines; it at present has two in New Zealand, one in the northern Philippines and a soon to be fully commissioned new mine in the state of South Carolina in the United States being handed over on October 1.
Mine companies are constrained by regulation on reporting their estimates of proven or probable gold in the ground, which affects their estimates of mine life; Macraes formally has a 2019 pit life and 2020 underground and Waihi 2019.
‘‘Our New Zealand operations have a low mine life at present,’’ he said.
While Oceana had just formally closed its Reefton operation, Mr Oram was bullish on prospect developments at Macraes and Waihi; either pits or underground targets, several of which have yet to be formally included in estimate data.
Mr Oram said of $US35 million-$US40 million being spent by Oceana gold this calendar year, the company was ‘‘heading towards 50% of that being spent in New Zealand’’.
‘‘We’re calling 2017 the year of [test] drilling,’’ Mr Oram said.
Oceana’s Macraes operations since 1990 had delivered more than 4.5million ounces of gold and the group of Oceana mines is on track to deliver more than 500,000oz for the first time this calendar year.
‘‘We’re pushing for a 10-year mine life there,’’’ Mr Oram said of Macraes.
‘‘Significant’’ drilling work was continuing at the Coronation prospect at Macraes, while the relatively new and adjacent Coronation North pit was delivering a 20% better than expected grade of gold.
Mr Oram believed it would have a three-year mine life.
He estimated Macraes prospects Golden Point and Round Hill could turn into a 1.4million ounce operation.
‘‘That could get us a 10 to 12-year mine life extension,’’ he said.
‘‘Macraes has survived very well on its low grade ore body; there’s no fat in 1 gram [of gold extracted from 1 tonne of ore],’’Mr Oram said.
Macraes is Oceana’s most expensive mine when it comes to cost-per ounce of gold to produce.
Its overall average of around 2 grams per tonne is considered marginal, which makes keeping costs down crucial to its longevity.
Other Oceana interests include exploration and some joint ventures in Myanmar and Laos, Nevada and Argentina, but Mr Oram provided no further details.
Its Haile mine development in South Carolina was soon to be commissioned, the first gold had been produced and would soon start showing up on Oceana’s quarterly reports.
Since Oceana took ownership in Waihi about 18 months ago, in a $132million deal, the $100million debt component had been paid back, Mr Oram said.
Waihi was taken over with an estimated gold resource of 360,000oz and about 300,000oz had been recovered, but the test drilling programme had since pushed estimates out to a remaining resource of 570,000oz, he said.
‘‘At Waihi we believe we’ve got 1million ounces there, which we want to turn into real numbers,’’ he said.
On the question of the Blackwater mine near Reefton, still held by Oceana, Mr Oram was reluctant to confirm industry speculation it was for sale, admitting only a ‘‘maybe’’ for sale, or a joint venture operation. Blackwater, 37km south of Reefton, beneath the abandoned township of Waiuta, in the foothills of the Victoria Range, produced 740,000oz of gold from 1908 until the shaft collapsed and the mine was closed in 1951.
Mr Oram believed Blackwater required exploration spending of around $40million, requiring a 3km decline tunnel from Snowy River Valley, plus two egress and access tunnel drives.
The bottom of the lowest mined level of the Blackwater mine was about 1000m deep.
‘‘We know it’s down there,’’ he said based on some test drilling results.However, drilling from the surface was too difficult and exploration drilling would have to be done from new tunnels.
An October 2014 preliminary economic assessment by Oceana estimated about 120,000 tonnes of ore per year from Blackwater could yield 58,000oz, recovering a total estimated 570,000oz.
Mr Oram said the size of Haile’s big pit, ‘‘large ore bodies’’ and potential for underground mining had pushed its mine life out to 2024.
Didipio in the Philippines, which is Oceana’s cheapest producer of gold, costs being offset by sales of by-product copper, has a mine life to 2032, by which time Mr Oram said it would be a fully underground operation.