OceanaGold Corporation (TSX & ASX: OGC) has unveiled a 10-year corporate strategy for more expansion, in the process outlining plenty of potential for mine life extensions at its Macraes site in East Otago and Waihi in the central North Island.
OceanaGold’s general manager at Macraes, Dale Oram, was upbeat, and candid, in his presentation at the AusIMM New Zealand Mining Conference in Christchurch this week.
He said in the long term Oceana wanted to continue on its path of geographic diversity and eventually operate five to seven mines; it at present has two in New Zealand, one in the northern Philippines and a soon to be fully commissioned new mine on South Carolina; being handed over on October 1.
Mine companies are constrained by regulation on reporting their estimates of proven or probable gold in the ground, which affects their estimates of mine life; with Macraes formally having a 2019 pit life and 2020 underground, and Waihi out to 2019.
“Our New Zealand operations have a low mine life at present,” he said.
While having just formally closed its Reefton operation, Oram was bullish on prospect developments at both Macraes and Waihi; either pits or underground targets, several of which are yet to formally be included in estimate data.
As if to underpin his confidence, Oram said of $US35 million-$US40 M being spent this calendar year, the company was “heading toward 50% of that being spent in New Zealand.”
He said: “We're calling 2017 the year of drilling.
OceanaGold's Macraes operations had since 1990 delivered more than 4.5 million ounces of gold and the group of is on track to deliver its first ever more than 500,000 oz this calendar year.
“We're pushing for a 10 year mine life there,” Oram said of Macraes. Significant drilling work was continuing at the Coronation prospect, while the relatively new and adjacent Coronation North pit was delivering a 20% better than expected grade of gold, which he believes would have a three year mine life.
At Macraes prospects Golden Point and Round Hill Oram estimated it could turn into a 1.4 M oz operation.
“That could get us a 10 to 12 year mine life extension. Macraes has survived very well on its low grade ore body; there's no fat in 1 gram (per tonne of ore).
Macraes is the company's most expensive mine when it comes to cost-per ounce produced, with its overall average of around 2 g/t considered marginal by miners elsewhere. Other OceanaGold interests now include exploration and some joint ventures in Myanmar and Laos, Nevada and Argentina.
At its nearly commissioned mine development Haile in South Carolina, first gold has been produced and will soon start showing up on quarterly reports.
Since taking ownership in Waihi about 18-month ago, in a $132 M deal, Oram said the $100 M debt component had since been paid back. Waihi was taken over with an estimated gold resource of 360,000 oz and about 300,000 oz had been recovered, but drilling since then pushed estimates out to a remaining resource of 570,000 oz.
“At Waihi, we believe we've got 1 M oz there, which we want to turn into real numbers,” he said.
On the question of the Blackwater mine near Reefton still held by the company, Oram was reluctant to confirm industry speculation it was for sale, admitting only a “maybe” for sale or joint venture.
Blackwater is 37 km south of Reefton, at the abandoned township of Waiuta, in the foothills of the Victoria Range, and produced 740,000 oz of gold from 1908, until the shaft collapsed in 1951.
Oram believed Blackwater required exploration-development spending of about $40 M, with perhaps a 3 km decline tunnel from Snowy River Valley plus two egress and access tunnel drives. The mine went to a depth of about 1,000m but drilling in recent years have identified the structure extends deeper.
“We know it's down there,” he said, based on deep drilling. However, drilling from the surface was too difficult and it would have to be done from new tunnels.
An October 2014 preliminary economic assessment by OceanaGold said about 120,000 tpa from Blackwater could yield 58,000 oz per annum, recovering a total estimated 570,000 oz.
Oram said because of the size of Haile's big pit large ore bodies and potential underground, its mine life was out to 2024.
Didipio in the Philippines - OceanaGold's cheapest producer as it can sell by-product copper to offset costs - has a mine life to 2032, by which time it would be a fully underground operation.
*Simon Hartley is senior business reporter and assistant chief reporter for the Otago Daily Times.