Chief executive Stephen Orr said the increased gold sales and reduction in cash cost to produce exceeded expectations and reflected the fourth consecutive quarter of increasing sales and declining costs, he said in Oceana's financial statements released yesterday for the first quarter ending March.
"With production increasing and commodity costs declining, our unit cash costs of $US279 per ounce will be in the lowest quartile for the industry over this period," Mr Orr said.
Oceana is the country's largest gold producer and between its Macraes pit and underground operations and Reefton pit on the West Coast has produced more than 2.5 million ounces since 1990 and remains on target to produce a record 280,00 to 300,000 ounces this year.
Oceana's operating profit increased from $US11.3 million in the quarter to March last year to $US17.4 million this year, including gains made from falling labour and oil costs, some hedging gains and a positive influence from the strength of the New Zealand dollar.
ABN Amro Craigs broker said Oceana had achieved a welcome turnaround, in increasing both gold production and sales and maintaining a continuing reduction in production costs for four quarters.
"Oceana should be happy with that result, having achieved a turnaround. But there remains balance sheet concerns, especially with current liabilities [still] exceeding current assets," Mr McIntyre said, when contacted yesterday.
For the quarter to December, Oceana's current assets were booked at $US45 million and had increased by March to $US64.8 million.
However, in the same period, its current liabilities had increased almost 8%, from $US89 million in December to $US98 million, for the quarter to March.
Similarly, Oceana's accumulated deficit rose from $US67.9 million to $US109.4 million, from the December to March quarter, driven largely by interest costs, increasing capital expenditure and costs associated with having mothballed its northern Philippines gold-copper development - which requires a large outside capital boost to resume development.
Mr McIntyre said current liabilities had increased largely because Oceana was locked into hedging contracts (contracts to provide gold at an earlier predetermined price), and it had been unable to make the most of near-record daily spot global prices around $US850 to more than $US950 recently.
"There remain impediments on its balance sheet which need a capital injection soon," Mr McIntyre said.
