OceanaGold cites Merrill report, NZ gold price for stock surge

Friday 23rd January 2009

OceanaGold Corp. said a jump in its stock price this month may reflect a surge in the price of gold in kiwi dollars and a Merrill Lynch report that said New Zealand's biggest gold miner was the cheapest such company it covered.

The owner of the South Island's Macraes Goldfield, site of the nation's largest gold mine, was responding to a query from the Australian Securities Exchange. Its shares, which are listed in New Zealand, Australia and Toronto, jumped 43% to 40 cents on the ASX between January 16 and January 28 while trading volumes rose.

Merrill Lynch listed OceanaGold as "the cheapest gold stock under their coverage and forecast that we would achieve our 2008 public guidance as well as materially improve performance during 2009," the company said in a statement. "Our share price and volumes have strengthened since this report was published" on January 12, it said.

The company is finalizing its results for the year ended December 31 and said its gold production was broadly in line with the 265,000 to 275,000 ounces it forecast on July 31. Cash costs were on track at US$560 to US$595 an ounce.

Still, since October 20, the New Zealand dollar gold price has increased by almost 30% to $1,600 to $1,650 an ounce, helped by a rise in the US dollar gold price and a weakening kiwi dollar. There had been "exceptional volatility" in the New Zealand dollar price between January 19 and January 22, with a gain of about 8%, the company said.

By Jonathan Underhill

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