Mining giant BHP also recently announced a cost over-run and miners around the world have been hit with cost upgrades.
OceanaGold's Didipio gold-copper project in the Philippines was now expected to cost $US320 million ($NZ418.3 million), of which $US40 million had been spent, chief executive Steve Orr said in a statement.
The original cost of the project was $US155 million.
Mr Orr also issued a reduced gold production guidance for this year of between 265,000 ounces and 275,000 ounces, at cash costs of between $US490 and $US520 an ounce.
The adjustment reflected an updated forecast for process recovery and mining challenges at the Macraes East Otago project. However, there had been measurable improvements in April.
Further allowance had been made for increasing fuel costs and a strong New Zealand dollar.
OceanaGold remained bullish about the Didipio project.
It was one of the highest grade gold-copper porphyries being developed in the world, Mr Orr said.
With current proven and probable reserves of 1.57 million ounces of gold and 200,000 tonnes of copper, the deposit had a 15-year mine life at 2.5 million tonnes per year of production.
Using a $US800 an ounce gold price and a $US3.50 per pound copper price, the project had a payback of three years measured from completion on June 30, 2009.
Among the changes made to reduce project risk were the addition of power generation through the purchase of a heavy fuel oil power plant, additional pumping capacity for the open pit, underground and tailings impoundment and increased concentrate storage capacity at the site.
Major increases to capital costs included $US44 million for infrastructure, $US28 million for engineering, procurement, construction and management, $US25 million for process plan, $US32 million for indirect costs and $US22 million contingency funding.
Last week, OceanaGold stopped construction work at Didipio following a dispute between local and national government.
Local government officials and villagers barricaded the mining area after failing to reach an agreement on mining permits.
ABN Amro Craigs broker Peter McIntyre said the news of the cost blow-out had not affected the company's share price in either Australia or New Zealand.
"I'm surprised the market took this so well. With the increase in Didipio, it will be difficult for the company to recover quickly. The risk for mining companies is getting the stuff out of the ground as cheaply as possible."
Some of the larger mining companies, like Newcrest, could be considering a takeover offer for OceanaGold, but with the cost of funding rising, merger and acquisition activity in the mining sector had slowed considerably, he said.
