OceanaGold confident it has community support to expand Waihi operations

Thursday 28th June 2018

OceanaGold Corp is confident it has community support to expand its Waihi operations, where it accounts for almost half the local economic activity, after drilling signalled enough gold to sustain operations out to 2030.

Earlier this month the Melbourne-based company announced the intersection of high-grade mineralisation along two large veins beneath the Martha Pit at Waihi, on the southern end of the Coromandel peninsula. Gold has been mined in the area since the late 1800s.

The drilling was "successful in finding rock that contains a significant amount of gold in it. The grade of the rock is the amount of gold contained within it and when we say 'high-grade' it means there is a lot of it. This encourages us to continue drilling to determine whether we can develop an economic and geological model for a viable mine," a spokesman said in an emailed response to questions.

"Based on the drilling we have completed over the past few years along with historical geological data and interpretation, we believe we could discover enough gold to sustain the operations out to 2030," he said.

However, "there is a lot more drilling that we need to do to further define how much gold we have (newly discovered). This is a long process," he added. In a statement to the ASX the company said drilling would continue for the next 18 months.

Regarding the cost of production, OceanaGold said it is currently working on economic studies to quantify the metrics for the extension to the mine life at Waihi but "we do believe that the operating costs will be about the same as it has been historically however, we can’t say this for certain."

In late May the company lodged consents for an underground mine and the recommencement of open pit mining operations from phase 4 of the Martha Pit. Among other things, it involves mining a small ore body under residential properties over two years.

Regarding whether it may face challenges in obtaining consent the spokesman said the "Martha mine has been operating in the middle of Waihi for 30 years. Mining this close to town is always a challenge, but one we believe we have addressed and continue to be well aware of."

He said the consent application is extensive and the company will invite members of the community to present their views at the hearing.

However, "based on our polling and anecdotal evidence we believe we have significant community support. We are responsible for around 45 percent of the town’s economic throughput, and we have a strong community presence," he said.

"There are always some people who would prefer we were not mining in and around Waihi, but we know that we wouldn’t be able to operate without strong ongoing support from the wider Waihi community."

Last week OceanaGold lifted its production guidance for this current calendar year on the back of strong operating performance and improvements at its Didipio operation in the Philippines. It now expects to produce 500,000-to-540,000 ounces, up from a prior forecast of 480,000 to 530,000 ounces.

It operates the Didipio Gold-Copper Mine located on the island of Luzon in the Philippines. In New Zealand, it operates the high-grade Waihi Gold Mine and the largest gold mine in the country at the Macraes Goldfield in Otago, which is made up of a series of open pit mines and the Frasers underground mine. In the United States, the company operates the Haile Gold Mine in South Carolina.

OceanaGold also said it expects to produce 15,000-to-16,000 tonnes of copper with an "all in sustaining cost of production" of between US$725 and US$775 per ounce sold. The AISC incorporates costs related to sustaining production.

The shares were delisted from the NZX at the end of 2016, keeping its Australian and Toronto listings. The shares were recently up 0.5 percent to A$3.76 on the ASX having gained 8.1 percent so far this year.

(BusinessDesk)

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