Oceana Gold appears on track to produce its target record gold production for calendar 2017, in a range of 550,000-600,000 ounces, with its South Carolina Haile mine now onstream.
However, a disparity continues in the crucial all-in sustaining costs to produce an ounce of gold. Didipio, in the Philippines, is the star performer of Oceana’s four mines, while at Macraes, in East Otago, costs are more than 27 times that of Didipio: $US1188 against $US40 ($NZ1737 against $NZ58.50).
Gold in New York was trading around $US1266 yesterday.
A total 408,394oz was produced from Oceana’s four mines in New Zealand, the Philippines and South Carolina for the three quarters to September, and 387,046oz was sold during the period.
Revenue for the three quarters was down less than 1% at $US478.3 million, earnings before interest, tax, depreciation and amortisation rose 19.8% to $US259.8 million and after-tax profit declined 11.4%, from $US93.8 million a year ago to $US83.1 million. There is $US61.2 million cash in hand.
Oceana chief executive Mick Wilkes said he was pleased with the third-quarter performance, with higher gold production and “steady” financial results.
The company’s outlook said it expected to achieve “full year consolidated production” as per guidance.
While Macraes produced more gold in the quarter, 36,878oz, than the other three mines, Didipio has produced more for the year to date:137,534oz against Macraes’ 115,205.
While the collective results of the portfolio of mines are good, Oceana has always maintained the individual mines have to stand on their own merits in regard to the crucial all-in sustaining costs.
Didipio can offset its costs by selling by-product copper and silver, while Macraes must process a lot of relatively low-grade gold-bearing ore.
The company said gold production was expected to continue to ramp up at Haile, while at Macraes, higher grades of gold-bearing ore from its Coronation North targets would begin to be processed in the fourth quarter.
Haile, a more than $US380 million project, was started less than two years ago and its ramp-up stumbled over plant commissioning issues, costing an estimated $US3 million-$US4 million at the time.
Mr Wilkes said technical issues at Haile’s processing plant had been resolved, meaning the formal start of commercial production began on October 1.
“We continue to ramp up operations at Haile, with positive results, and expect stronger production again next quarter,” Mr Wilkes said in a statement.
Waihi, in the central North Island, was expected to continue “steady” production, which would offset reduced production at Didipio, in Luzon, which was processing lower-grade gold-bearing open-pit ore as it continued developing underground operations.
Earlier this week, Canadian junior explorer Mirasol Resources struck a joint-venture deal with Oceana for one of its subsidiaries in Argentina that holds a gold-silver prospect.
The Claudia prospect is in Santa Cruz province. Oceana could earn an up to 75% interest and must commit $US1.75 million to exploration in the first year, NZResources.com reported.
