OceanaGold’s Didipio Gold-Copper Project has successfully ramped up to commercial production rates in just three months from commencement of first ore through the mills in December 2012. This prompted the company to declare commercial production effective April 1.
During the June quarter Didipio produced 13,676 ounces of gold and 5710 tonnes of copper and in the first half of 2013 the mine produced 20,553 ounces of gold and 9383 tonnes of copper.
Cash costs on a by-product basis were negative $586 per ounce on gold sales of 11,086 ounces and copper sales of 5073 tonnes. Didipio’s cash costs are helping OceanaGold drive down its overall cash cost per ounce when considering its New Zealand gold operations.
Total gold production during the June quarter was 68,353 ounces and there were total gold sales of 70,706 ounces at cash costs net of by-product credits of $682 per ounce. Total revenue for the quarter was US$131.2 million. Utilizing the World Gold Council standard for calculating All-In Sustaining Costs, OceanaGold’s estimate for 2013 is $930-$1080 per ounce. Gold production was higher compared to the first quarter on account of increased production from Didipio and Reefton.
In New Zealand, production was higher quarter on quarter at Reefton due to additional tonnage mined, higher grade ore processed and better recoveries. At Macraes, second quarter production was lower than in the previous quarter as expected, due to the adjustments made to the mine schedule following the pit wall movement reported in January. Additionally, the mine experienced severe rain and snow in mid-June that hampered operations. The company expects production in New Zealand to progressively increase over the remainder of the year with the fourth quarter being the strongest quarter in 2013.
OceanaGold has been conducting a company-wide review of its operations to identify efficiencies and reduce costs. The final cutback at Reefton has been put on hold and as a result, the mine will transition into a care and maintenance phase mid-year 2015 unless there is a material improvement in the gold price. The company has also deferred pre-stripping on the Frasers 6 cutback at Macraes.
Operating expenditure over the next 18 months will be reduced by about $100 million and will include savings generated from deferring the final cutbacks at Reefton and Macraes, plus other operating and capital savings. The company-wide review is ongoing to identify additional opportunities to improve cash flow from operations.
OceanaGold’s managing director and CEO Mick Wilkes says, “Like the rest of the gold mining industry, the company is currently faced with tougher economic realities that require a proactive approach to ensure a healthy business plan. We are committed to preserving shareholder value and we will continue to operate based on this premise. To date, we have reduced our operating budgets by $100 million over the next 18 months and continue to look for additional opportunities to optimise our business.
“Didipio will continue to drive down our cash cost per ounce whilst increasing our production profile. With cash flows increasing over the next few years and with significant cost reductions at our New Zealand operations, the company is well positioned for the new economic environment in the gold industry.”