Oceana Gold has raised the possibility it could again extend the life of its Macraes gold mine in East Otago.
Oceana chief executive Mick Wilkes says the company has been investigating ways to extend the mine's life by three to five years.
''I am pleased to report that initial drilling has produced significant results that demonstrate the potential for increased reserves at the Macraes operations,'' he said yesterday.
It marks another turnaround since Oceana signalled Macraes, which employs about 500 staff, may be ''wound down by the end of 2017''.
Only three months ago, Oceana announced it would extend its Frasers underground operation at Macraes by a year to 2017, and open-pit operations were expected to produce for another two to three years.
During the past two years, Oceana has laid off about 300 staff and contractors at its East Otago and West Coast operations.
The layoffs came as it sought to cut $100million in costs, prompted by a depressed gold price, rising energy costs and a high New Zealand dollar.
Oceana's Reefton open pit, which employs 250, remains under a cloud and could be mothballed at the end of this year.
''Changes to macro-economic conditions such as lower fuel costs and a weaker New Zealand dollar have resulted in significant benefits to our New Zealand operations,'' Mr Wilkes said.
Oceana's gold and copper mine in the Philippines has made it one of the most efficient, cash-rich, mid-tier producers in the world. Sales of the copper by-product have offset gold production costs.
Oceana is about to take ownership of Newmont's Waihi operation in the central North Island, for $132.2million.
In March, Oceana said it was boosting Macraes exploration to $8million over two years.
Mr Wilkes said drilling in the first quarter to March focused on a 30km-long strike zone, and Oceana also continued drilling at the existing Frasers underground mine site, using five drilling rigs.
Craigs Investment Partner broker Peter McIntyre said the news was positive for Oceana, given it was ''operating Macraes on a tight budget''.
He emphasised that advances in geology and machinery meant brown fields (existing) projects, like Macraes, could continue ''making efficiencies'', which had potential to push out the mine life.
The early stages of its latest drilling exploration programme, from 176 test holes, delivered ''significant results''.
Drilling focused on four areas: Coronation north and south, with 70 holes totaling 6.85km; Innes Mill (72 holes, 6.76km); and Frasers underground (34 holes, 5.63km).
Mr Wilkes said the ''new potential'' at Macraes would complement the Waihi operation.
They would form a standalone New Zealand business unit, generating ''significant free cashflows'', as did the Didipio mine in the northern Philippines.
''As we await additional assay results, we will continue to drill our primary targets at the Macraes goldfield to further identify mineral resources that will have the potential to increase the mine life at Macraes.''
