OceanaGold raises production estimate

OceanaGold Corp [NZX: OGC] expects 2015 production to increase while costs fall after the gold miner takes control of Waihi Gold Mine later this year.

The acquisition of the Waihi mine from Newmont Mining Corp is awaiting approval from the Overseas Investment Office.

Once completed, OceanaGold expects to assume the economic benefits and costs associated with Waihi from July 1, the Melbourne-based miner says.

The company increased its 2015 production estimates, and reduced its costs forecast to reflect lower copper and diesel prices and a weaker New Zealand dollar.

The miner raised its forecast for gold production in calendar 2015 to a range of 380,000 to 410,000 ounces, from a previous estimate of 295,000 to 335,000 ounces, reflecting a lift in its Didipio mine in the Philippines, its Macraes and Reefton mines in New Zealand, and the addition of Waihi.

It also lifted its expected 2015 copper production forecast to a range of 22,000 to 23,500 tonnes, from a previous estimate of 21,000 to 23,000 tonnes, reflecting increased output from Didipio.

The company lowered its expected 2015 cash costs to a range of $US420-470 per ounce sold from a previous forecast of $US450-530 per ounce, while its estimate for "all-in sustaining costs" fell to a range of $690 to $US740 per ounce sold from a previous range of $US770-840 per ounce.

"The inclusion of the economic benefit from Waihi not only increases our production but also further reduces our unit cost base," managing director Mick Wilkes says. "Waihi is a solid asset in a highly prospective gold region that will generate significant free cashflows and further insulate our business in a lower gold price environment."

The company plans to look at ways to further reduce costs, and increase productivity and reserves, and extend the mine life after the transaction is finalised, he says.

OceanaGold lowered its copper price assumption to $US2.30 a pound from $US2.70 a pound. It lowered its expectation for the New Zealand dollar to 65USc, from 78USc, and its diesel price assumption to 60USc a litre from 70USc a litre.

The company said it will draw on its $US225 million revolving credit facility to finance the $US101 million acquisition cost of Waihi.

OceanaGold shares, which trade in New Zealand, Canada and Australia, increased 1.1% to $2.86 on the NZX.

(BusinessDesk)