OceanaGold expects annual copper, gold production to be flat

OceanaGold Corp [NZX: OGC], which operates the Macraes goldfield in Otago, expects its annual gold and copper production to be largely flat in the year and signalled costs may fall as much as 13 percent.

The Melbourne-based miner expects gold production to be between 295,000 ounces and 335,000 ounces in the year ending Dec. 31, that may eclipse last year's production of 325,732 ounces, it said in a statement. Copper production may be between 21,000 tonnes and 23,000 tonnes, short of the 23,059 tonnes produced last year.

All-In Sustaining Costs will range between $770 and $840 per ounce net of by-product credits, down from $868 it recorded in 2013. Cash costs will rise to between $450 and $530, from $426 a year earlier, reflecting the first full-year of operations at its Philippine-based Didipio copper and gold mine.

In the face of falling gold prices, OceanaGold has been scaling back its New Zealand gold mining production, and plans to close its Macraes goldfield in Otago in 2017, and mothball its Reefton mine mid-next year, as it focuses on its cheaper copper and gold production in the Philippines.

Looking ahead, OceanaGold expects total capital and exploration spend to be approximately $100 million across its operations in 2015, with New Zealand capital expenditure forecast to be $33 million, a result of lower costs at Macraes and the mothballing of Reefton, it said. At Didipio, capital expenditure will be approximately $63 million including $23 million for underground development and $10 million for the connection to the power grid.

"In this volatile and persistently challenging environment for gold producers, OceanaGold is uniquely positioned as one of the lowest cost producers globally underpinning strong free cash flows from our business," chief executive Mick Wilkes said. "Our team is committed to executing on our clear and defined strategy, delivering positive results to our shareholders and stakeholders in a safe and sustainable manner and we will continue to evaluate value enhancing opportunities to complement our current asset mix."

Shares of OceanaGold rose 6.1 percent to $2.45 and have gained 35 percent since the start of the year. The stock is rated a 'buy' according to one analyst surveyed by Reuters with a median price target of $1.94.

(BusinessDesk)