Home Page OceanaGold meets and exceeds targets - NZResources.com
Our Sponsor
Environment & Society and Education, Science & Technology articles are now Free to View!
26/2/2018 — Gold
OceanaGold meets and exceeds targets
By Simon Hartley

Record gold production and declining costs spurred OceanaGold Corporation (TSX & ASX: OGC) to post a record $US172 million ($NZ234.4 M) after-tax profit for 2017.

On the back of a record $US724.4 M revenue from its four mines net debt has been reduced, OceanaGold's cash-in-hand has been boosted and it has paid a rare dividend, of $US1 cent per share.

Crucial to the company is its all-in sustaining costs (AISC) to produce an ounce of gold, which declined from $US708/oz in 2016 to $US617/oz for 2017 - which makes it one the cheapest gold producers in the world.

OceanaGold's chief executive Mick Wilkes said the record revenue and profit was underpinned by record production, of 574,606 oz, and the sector-leading profit margins.

“In 2017, OceanaGold delivered sector leading earnings before interest, tax, depreciation and amortisation margin of 56% while achieving a return on investment capital of 10% which marked the eighth straight year of positive returns; one of only two gold companies to do so,” Wilkes said.

A separate OceanaGold report on 2016 operations in New Zealand said in January $330 M went into the economies of East Otago and Waihi for that year.

The company maintained earlier guidance of producing 480,000 oz to 530,000 oz of gold in calendar 2018.

Wilkes said fourth quarter operations had delivered significant results, including its relatively new Haile mine in South Carolina which contributed strongly on the back of a solid operational performance.

Haile's ore process plant achieved throughput rates higher than specified and with gold recoveries averaging 83%. The significant cash flow generation continued to strengthen OceanaGold's balance sheet.

In the fourth quarter alone, the company increased its cash-in-hand from $US61 M to $US73 M and also reduced its revolving credit facility from $US273 M to $US200 M, Wilkes said.

Net debt reduced by $US88 M in the fourth quarter with debt repayments amounting to $US78 M.

The cost producing an ounce of gold at Didipio in the northern Philippines was just $US70/oz; because of copper by-product sales offsetting the cost, $US509/oz at Haile, $US759/oz at Waihi and $US1,115/oz at Macraes.

Mick Wilkes said growth opportunities were identified mainly at Haile and Waihi, with “positive results” from test drilling “supporting the targeted objective” of increasing the Waihi mine life by a further 10 years.

No mention was made of Macraes in East Otago on Friday, but in February Wilkes said he expected a solid year from Macraes, with a 20% boost in production as OceanaGold mined higher ore grades from the relatively new Coronation North development.

*Simon Hartley is senior business reporter and assistant chief reporter for the Otago Daily Times.

Companies mentioned in article
Accessed via NZResources.com account: - no subscription / expired subscription