OceanaGold annual profit tanks on low commodity prices, expansion costs

Friday 19th February 2016

OceanaGold Corp, the gold and copper miner, said its annual profit halved due to low commodity prices and extra costs from its purchase of the Waihi Gold Mine and construction of the Haile Gold Mine in South Carolina.

Profit fell to US$53.1 million, or 14 cents per share, in the 12 months ended Dec. 31, from US$111.5 million, or 36 cents, the year earlier, the Melbourne-based company said in a statement. Revenue declined 9.8 percent to US$508 million.

OceanaGold expanded its portfolio during the year, acquiring the Waihi mine from Newmont Mining Corp and undertaking construction of the Haile mine, where commercial production is slated to start in early 2017. Since its end of year balance date, the company has also invested C$13.8 million to increase its stake in Gold Standard Ventures Corp to 19.9 percent from 13.9 percent, to help finance the development of GSV's Railroad Pinion gold project within the Carlin Trend area of North Central Nevada where it says recent drill results have demonstrated encouraging results. The company said today it has a significant pipeline of organic growth and exploration opportunities in the Australasian and Americas regions.

Its cash position improved, with its accounts showing it held US$185.5 million of cash and cash equivalents at the end of its financial year, up from US$51.2 million a year earlier. The company will pay a second annual dividend of 4 US cents a share on April 29.

"With a strong financial position and high operating margins, our business is moving from strength to strength as we invest in further growth this year," chief executive Mick Wilkes said. "We are very pleased to announce our second annual dividend. This dividend demonstrates the robustness of our business and our commitment to enhance shareholder wealth."

The company's shares rose 3.1 percent to $4.28, the highest since October 2012.

For 2016, OceanaGold expects to produce between 385,000 to 425,000 ounces of gold from its mines in New Zealand and the Philippines, compared with 419,153 ounces in 2015. It expects to produce 19,000 to 21,000 tonnes of copper from its Didipio operation in the Philippines, compared with 23,109 tonnes in 2015, and it forecast 'all-in sustaining costs' of US$700 to US$750 per ounce, from US$709 per ounce in 2015.

The company said it had restructured a US$250 million revolving credit facility with substantially lower margins and longer tenure, hedged 90 percent of its expected diesel consumption for 2016 and 2017, and hedged its gold production at its Macraes gold mine in Otago for 2016 and 2017.

BusinessDesk.co.nz

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