OceanaGold annual profit halves on low commodity prices, expansion costs

OceanaGold Corp [NZX: OGC], the gold and copper miner, said its annual profit halved due to low commodity prices and extra costs from its purchase of Waihi Gold Mine and the construction of the Haile Gold Mine in South Carolina.

Profit fell to $US53.1 million, or 14c per share, in the 12 months ended December. 31, from $US111.5 million, or 36c, the year earlier, the Melbourne-based company said in a statement. Revenue declined 9.8% to $US508 million.

OceanaGold expanded its portfolio during the year, acquiring the Waihi mine from Newmont Mining Corp and undertaking construction of the Haile mine, where commercial production is slated to start in early 2017. Since its end of year balance date, the company has also invested C$13.8 million to increase its stake in Gold Standard Ventures Corp to 19.9% from 13.9%, to help finance the development of GSV's Railroad Pinion gold project within the Carlin Trend in North Central Nevada where it says recent drill results have demonstrated encouraging results. The company said today it has a significant pipeline of organic growth and exploration opportunities in the Australasia and Americas regions.

Its cash position improved, with its accounts showing it held $US185.5 million of cash and cash equivalents at the end of its financial year, up from $US51.2 million a year earlier. The company will pay a second annual dividend of 4USc a share on April 29.

"With a strong financial position and high operating margins, our business is moving from strength to strength as we invest in further growth this year," chief executive Mick Wilkes said. "We are very pleased to announce our second annual dividend. This dividend demonstrates the robustness of our business and our commitment to enhance shareholder wealth."

The company's shares rose 3.1% to $4.28, the highest since October 2012.

For 2016, OceanaGold expects to produce between 385,000 to 425,000 ounces of gold from its mines in New Zealand and the Philippines, compared with 419,153oz in 2015. It expects to produce 19,000 to 21,000 tonnes of copper from its Didipio operation in the Philippines, compared with 23,109 tonnes in 2015, and it forecast 'all-in sustaining costs' of $US700 to $US750 per ounce, from $US709 per ounce in 2015.

The company said it had restructured a $US250 million revolving credit facility with substantially lower margins and longer tenure, hedged 90% of its expected diesel consumption for 2016 and 2017, and hedged its gold production at its Macraes gold mine in Otago for 2016 and 2017.

(BusinessDesk)