OceanaGold Corp’s first-quarter profit fell 72 percent as operating costs rose but it remains upbeat that full-year production will improve.
The mining company has extended the life of its cornerstone Macraes mine in Otago and is still looking for ways to extract more from the site.
“The company expects production in the second half of 2019 to be stronger than in the first half while costs are expected to be lower,” it said in a release to the Australian stock exchange.
Net profit was US$12.4 million in the three months through March versus US$44.5 million a year earlier, the Melbourne-based company said. Among other things, profit was impacted by a US$4.6 million write-off of capitalised exploration after deferred exploration costs at two Argentine projects were written off because it terminated an agreement with Mirasol Resources when exploration results didn’t meet its expectations.
Quarterly revenue fell 9 percent to US$179.5 million while earnings before interest, tax, depreciation and amortisation were US$16 million, down 59 percent.
OceanaGold’s all-in sustaining costs per ounce were US$1,026, up 28 percent on the year. The lift was largely due to higher mining costs at its Haile gold mine in South Carolina, a bigger capital investment, and lower gold sales.
Production was steady, with consolidated gold production at 125,681 ounces and copper production of 3,910 tonnes.
Gold production at its largest producer – the Macraes project on New Zealand’s South Island – was 51,215 ounces, up 13 percent on the year due to higher grades, but down 12 percent on the quarter due to lower mill feed, a slightly lower head grade and reduced recoveries.
Looking ahead, OceanaGold said production is expected to be lower in the second and third quarters before increasing in the fourth quarter on higher grades. It continues to look for ways to extend the life of the mine.
OceanaGold kept the mine open after discovering a new zone of gold mineralisation at Macraes in 2016. A potential standalone underground mine at Golden Point is among the miner’s plans to extend Macraes’ for even longer and early drilling results show economic mining grades.
At Waihi, the company produced 15,100 ounces of gold, down from 18,500 in the same quarter a year earlier and 17,600 in the December quarter. Production is expected to be “slightly higher in the second quarter from higher mill feed and improved grades.” Second-half production is also expected to be slightly stronger than in the first half of the year.
OceanaGold is also advancing mine development and managing plans and ongoing resource drilling after it received permits for the Martha Underground project at Waihi in early February. Over the course of the year, it will complete a feasibility study for the Waihi operation while continuing its resource drilling and mine plans for Martha Underground.
At Haile, it produced 25,717 ounces of gold, down from 37,000 in the same quarter a year earlier as the mine remained saturated for much of the quarter following heavy rainfall. In March, however, it produced 12,189 ounces, a 95 percent improvement on the two previous months. The company expects production will keep improving.
Increased production from Didipio in the Philippines helped offset the slide in New Zealand production and at Haile. It produced 33,600 ounces of gold versus 25,700 in the same period a year earlier. All of the copper was also produced at Dipidio.
Looking ahead, Didipio production is expected to increase as average grades increase with the continued ramp-up of underground operations, it said.
Overall, OceanaGold still expects to produce 500,000 to 550,000 ounces of gold in 2019, and 14,000 to 15,000 tonnes of copper at an all-in sustaining cost of US$850 to US$900 an ounce.