/NOT FOR DISSEMINATION OR DISTRIBUTION IN
THE UNITED STATES AND NOT FOR
DISTRIBUTION TO US NEWSWIRE SERVICES./
(All financial figures in US Dollars unless
otherwise stated)
MELBOURNE, Jan. 30, 2017
/CNW/ - OceanaGold Corporation (TSX/ASX: OGC) (the
"Company") is pleased to release its full year and fourth quarter
2016 production report for the year ended 31
December 2016, in accordance with the Australian Securities
Exchange ("ASX") Listing Rule 5.1. Note that the numbers contained
in this document are unaudited and subject to finalisation. The
Company will release its complete 2016 audited financial and
operational results on 23 February
2017 (Toronto Eastern Standard Time).
Key Highlights
- Achieved 2016 consolidated production guidance range with
416,741 ounces of gold and 21,123 tonnes of copper.
- Recorded consolidated All-In Sustaining Costs1
("AISC") of $708 per ounce sold and
cash costs1 of $452 per
ounce sold.
- Recorded 2016 consolidated gold sales of 437,146 ounces and
copper sales of 21,413 tonnes.
- Commenced milling at Haile in December
2016 and achieved first gold pour in January 2017.
- Announced increased 2017 exploration budget reflecting strong
organic growth potential of the business.
- Announced 2017 production and cost guidance of 550,000 to
610,000 ounces of gold at a sector leading AISC of $600 to $650 per ounce sold.
__________________________________
|
1 Costs
are based on unaudited results
|
|
Mick Wilkes, President and CEO
said, "We are very pleased to report another year of delivering on
our commitments with solid operational and financial performance
across our business in 2016. For the fifth consecutive year, we
achieved our production and cost guidance while delivering on Haile
with the start of milling before the end of 2016 and first gold
pour 10 days ago. Despite recent inclement weather, commissioning
activities have met our expectations and continue to advance to
plan."
He went on to say, "We expect 2017 to be another solid year of
performance across our business with higher production and stronger
margins. The strategy we established six years ago and the
successes we have achieved along the way have allowed us to build a
profitable business that is insulated from low commodity prices and
has provided consistent positive returns to shareholders. Since the
start of 2013, we expect to increase our gold production by
approximately 150% while significantly reducing costs to achieve
sector leading margins. We have a robust business with high quality
assets and a solid pipeline of organic growth opportunities which
we are well-positioned to invest in to unlock significant
value."
Table 1 –
Unaudited 2016 Production and Cost Results Summary
|
|
|
|
|
|
|
Didipio
|
Waihi
|
Macraes &
Reefton
|
Consolidated
|
Fourth Quarter
2016 Results
|
Gold
Produced
|
ounces
|
30,695
|
29,280
|
42,453
|
102,428
|
Copper
Produced
|
tonnes
|
3,765
|
–
|
–
|
3,765
|
Gold Sales
|
ounces
|
35,260
|
27,665
|
42,733
|
105,658
|
Copper
Sales
|
tonnes
|
4,960
|
–
|
–
|
4,960
|
Cash Costs
|
$ per
ounce
|
(120)
|
427
|
743
|
372
|
2016
Results
|
Gold
Produced
|
ounces
|
147,150
|
116,028
|
153,563
|
416,741
|
Copper
Produced
|
tonnes
|
21,123
|
–
|
–
|
21,123
|
Gold Sales
|
ounces
|
149,663
|
116,169
|
171,314
|
437,146
|
Copper
Sales
|
tonnes
|
21,413
|
–
|
–
|
21,413
|
Cash Costs
|
$ per
ounce
|
1
|
473
|
832
|
452
|
All-In Sustaining
Costs2
|
$ per
ounce
|
239
|
735
|
1,099
|
708
|
|
|
|
|
|
|
|
|
|
|
|
|
Table 2 – 2016
Production and Cost Guidance
|
|
|
|
|
|
|
|
|
Didipio
|
Waihi
|
Macraes &
Reefton
|
Consolidated
|
Gold
Production
|
ounces
|
130,000 –
145,000
|
115,000 –
125,000
|
140,000 –
155,000
|
385,000 –
425,000
|
Copper
Production
|
tonnes
|
19,000 –
21,000
|
–
|
–
|
19,000 –
21,000
|
Cash
Costs
|
$ per
ounce
|
$20 – $70
|
$480 –
$530
|
$750 –
$800
|
$460 –
$500
|
All-In Sustaining
Costs
|
$ per
ounce
|
$300 –
$350
|
$700 –
$750
|
$1,000 –
$1,050
|
$700 –
$750
|
|
Notes:
|
- AISC calculation conforms to the methodology
outlined by the World Gold Council. It includes all cash costs,
corporate G&A, maintenance capital expenditures, capitalised
mining expenditures and exploration. It excludes development
capital expenditures such as the development of the Haile Gold Mine
and Didipio Underground.
|
Assumptions
|
- NZD:USD exchange rate of 0.65, Copper price: $2.00 /
lb on average for full year.
|
|
Operations
On a consolidated basis, the Company produced 416,741 ounces of
gold in 2016, broadly in-line with 2015 production and within the
production guidance range of 385,000 to 425,000 ounces. Copper
production of 21,123 tonnes was slightly higher than the top end of
the guidance range of 19,000 to 21,000 tonnes. Fourth quarter 2016
gold production of 102,428 ounces was 15% higher than in the
previous quarter, as expected, and due to increased production at
each asset.
On a consolidated basis, the Company recorded an AISC of
$708 per ounce on gold sales of
437,146 ounces and copper sales of 21,413 tonnes and within the
guidance range. Full year consolidated cash costs were $452 per ounce sold, which was slightly below the
cost guidance range.
In the Philippines, Didipio
slightly exceeded its 2016 gold production guidance range with
147,150 ounces produced, including 30,695 ounces produced in the
fourth quarter while copper production for the year was 21,123
tonnes including 3,765 tonnes produced in the fourth quarter.
Quarter-on-quarter gold production was higher, as expected, due to
increased head grade, partly offset by a lower mill feed. As stated
in the previous quarter, the Company shut the process plant down at
Didipio for planned maintenance and upgrade works, all of which
were completed before the end of the year.
In New Zealand on the South
Island, Macraes and Reefton combined to produce 153,563 ounces of
gold for the year which was in-line with the 2016 production
guidance range. Fourth quarter production at Macraes was slightly
higher than in the previous quarter due to higher head grades. The
Reefton operation produced 4,477 ounces of gold in 2016 before
being placed on care and maintenance in February 2016. In December, the Company announced
the Reefton operation would be closed with rehabilitation and
closure activities scheduled over the next few years.
On the North Island at Waihi, the operation achieved its 2016
production range with 116,028 ounces of gold produced following a
stronger fourth quarter of production of 29,280 ounces. The
quarter-on-quarter increase in production was previously forecast
and a result of a higher head grade and mill feed.
Development
Commissioning activities at the Haile Gold Mine in South Carolina, United States continue to advance well towards
commercial production in early 2017. Near the end of December 2016, the Company announced the start of
milling and on January 20, 2017, the
Company announced the first gold pour.
In the Philippines, development
of the Didipio Underground continues to progress to schedule, with
the decline now advanced a total of 2,100 meters from the primary
portal. During the fourth quarter, the Company also completed a
second underground portal ahead of schedule and two fresh air vent
raise bores to surface. First underground ore feed to the mill
remains on track for the end of 2017 as planned.
Exploration
In 2016, OceanaGold initiated an extensive exploration program
and throughout the year, announced solid drill results across its
operations. In the fourth quarter following a successful resource
definition drill program of the Horseshoe underground target at
Haile, drilling shifted to test the Palomino and Snake underground
targets and additional regional targets.
At Waihi, drilling continued to focus on resource extensions of
known veins in the underground, the large exploration target
beneath the Martha Open Pit, as well as near mine targets
surrounding the Waihi operations.
At Macraes, the Company continued to drill multiple targets
along the Hydes-Macraes Shear Zone with strong results at
Coronation North, Coronation, Nunns and Frasers Underground. In
the Philippines, the Company
initiated infill and at depth drilling of the Didipio underground
ore body and drill tested several targets within the FTAA.
For 2017, the Company has increased its exploration budget to
between $30 million and $41 million
on the back of increased extensive drilling and target generative
activities within the Company's targeted regions.
At Waihi, the focus for the Company is on reserve replacement
and increasing resources with a medium-term exploration target of
one million ounces. At Macraes, extensional drilling of Coronation
North will continue, along with the drilling of at least five
additional targets. At Didipio, the infill drilling of the
underground will continue and priority regional targets within the
FTAA will be advanced. At Haile, exploration will focus on infill
and extensional drilling as well as initial drilling of several new
"Haile-like" targets near the existing operation.
2017 Outlook
In December 2016, OceanaGold
announced its 2017 production and cost guidance that reflected
significantly higher gold production at lower costs compared to
2016. The production increase year-on-year is primarily driven by
the inclusion of the high margin ounces from the Haile Gold Mine as
it moves into commercial production in early 2017 and increased
production from Macraes where the Coronation North deposit
represents higher grades than traditionally mined in the Macraes
Goldfield.
Table 3 – 2017
Production and Cost Guidance
|
|
|
|
|
|
|
|
|
|
Didipio
|
Waihi
|
Macraes
|
Haile
(1)
|
Consolidated
|
Gold
Production
|
ounces
|
110,000 –
130,000
|
110,000 –
120,000
|
180,000 –
190,000
|
150,000 –
170,000
|
550,000 –
610,000
|
Copper
Production
|
tonnes
|
15,000 –
17,000
|
–
|
–
|
–
|
15,000 –
17,000
|
Cash
Costs
|
$ per
ounce
|
($20) –
$40
|
$460 –
$510
|
$600 –
$650
|
$400 –
$450
|
$370 –
$420
|
All-In Sustaining
Costs(2)
|
$ per
ounce
|
$130 –
$180
|
$740 –
$790
|
$950 –
$1,000
|
$500 –
$550
|
$600 –
$650
|
|
|
|
|
|
|
|
|
Notes:
|
- Haile guidance reflects full year expected
production and cost guidance. Production and costs prior to
declaration of commercial production will be capitalised and
reflected on the balance sheet.
- AISC calculation conforms to the methodology
outlined by the World Gold Council. It includes all cash costs,
corporate G&A, maintenance capital expenditures, capitalised
mining expenditures and exploration. It excludes growth capital
such as additional development such as the plant expansion at the
Haile Gold Mine and Didipio Underground.
|
Economic
Assumptions
|
- NZD:USD exchange rate of 0.70, Copper price: $2.50 /
lb on average for full year.
|
|
2017 Capital Program
The Company is also pleased to announce a consolidated 2017
capital expenditure program of $211 million
to $252 million of which $101 million
to $113 million is allocated to growth projects at Didipio,
Haile and Waihi.
Non-Sustaining capital, which is not included in the Company's
AISC calculation includes a $60 million to
$65 million spend at Didipio, mainly related to the
underground development and completion of the first mine phase. The
total pre-production capital cost for the Didipio Underground has
slightly increased from the original estimate of $116 million to $133
million. The additional costs, which are recoverable under
the FTAA, are related to the procurement of an enhanced paste fill
plant, earlier start to the development of the second mining
domain, and additional scope which has been brought forward in the
mine plan. The slight increase in costs is more than offset by a
reduction in sustaining capital costs over the life of mine related
to a decrease in the number of stopes.
At Haile, the Company expects to spend $35 million to $40 million to expand the process
plant from 2.2 Mtpa to 3.0 Mtpa, complete the Haile expansion
feasibility study and construct ancillary buildings and workshops
including a permanent large vehicle maintenance facility and
administrative building.
In New Zealand, non-sustaining
capital expenditures relate to the completion of the Martha study
at Waihi, which has a medium-term objective of a million ounces in
resource that could be mined from combined surface and underground
operations. At Reefton, the Company expects to spend between
$4 million and $5 million on
rehabilitation and mine closure activities.
Sustaining, pre-stripping and capitalised mining capital
expenditures range from $80 million to $98
million and are included in the Company's AISC. At Macraes,
pre-stripping costs are mainly associated with the Coronation North
mine where mining is expected to commence with removal of
overburden in February and ore mining in May.
The Company has allocated a total exploration budget between
$30 million and $41 million of which
$20 million to $30 million relate to
brownfields exploration activities and included in the AISC. A
budget of $10 million to $11 million
has been allocated to greenfields exploration and excluded from the
AISC. Greenfields exploration activities are planned in
the Philippines, WKP prospect
located north of Waihi and on multiple targets in the
Carolinas.
Table 4 – 2017
Capital Expenditure Program
|
|
|
|
|
|
|
|
|
USDm
|
Didipio
|
Waihi
|
Macraes
|
Reefton
|
Haile
|
TOTAL
|
Included in
AISC
|
Non-Sustaining
|
60 – 65
|
2 – 3
|
–
|
4 – 5
|
35 – 40
|
101 –
113
|
0
|
Sustaining
|
8 – 10
|
5 – 7
|
10 – 12
|
–
|
–
|
23 –
29
|
23 –
29
|
Pre-stripping /
capitalised mining
|
–
|
5 – 7
|
35 – 40
|
–
|
17 – 22
|
57 –
69
|
57 –
69
|
Exploration
|
5 – 8
|
12 – 15
|
5 – 8
|
–
|
8 – 10
|
30 –
41
|
20 –
30
|
TOTAL
|
73 –
83
|
24 –
32
|
50 –
60
|
4 –
5
|
60 –
72
|
211 –
252
|
100 –
128
|
|
Notes:
|
- Sustaining, Pre-stripping/capitalised mining and
brownfields exploration is included in the Company's All-In
Sustaining Cost guidance
- Capital expenditure for brownfields exploration is
approximately $20 - $30 million and included in the AISC.
|
|
Hedging
As announced in 2016, the Company entered into a series of
zero-cost collar hedging programs for gold production from the
Macraes Goldfield. At the beginning of 2017, the remaining hedges
at Macraes totalled 155,400 ounces of gold at a put option strike
price of NZ$1,650 per ounce and a call option strike price of
NZ$1,810 per ounce. As at 29 January
2017, the current New
Zealand denominated gold price was NZ$1,642 per ounce.
Full Year Results and Webcast
The Company will release its financial and operational results
for the fourth quarter and full year ending 31 December 2016 before the TSX market open on
23 February 2017 (Toronto, Canada time). The results will be
posted on OceanaGold's website at www.oceanagold.com
The Company will host a conference call / webcast to discuss the
results at 8:30 am on 24 February 2017 (Melbourne, Australia time) / 4:30 pm on 23 February
2017 (Toronto, Canada
time).
Webcast Participants
To register, please copy and paste the link below into your
browser:
http://event.on24.com/r.htm?e=1349552&s=1&k=3A9B5447E56F208E102F5CD308EF4EBC
Teleconference Participants (required for those
who wish to ask questions)
Local (toll free) dial in numbers are:
Australia: 1 800 076 068
New Zealand: 0 800 453 421
Canada & North America: 1 888 390 0546
All other countries (toll): + 1 416 764 8688
Playback of Webcast
If you are unable to attend the call, a recording will be
available for viewing on the Company's website.
About OceanaGold
OceanaGold Corporation is a mid-tier, high-margin, multinational
gold producer with assets located in the
Philippines, New Zealand
and the United States. The
Company's assets encompass its flagship operation, the Didipio
Gold-Copper Mine located on the island of Luzon in the Philippines. On the North Island of
New Zealand, the Company operates
the high-grade Waihi Gold Mine while on the South Island of
New Zealand, the Company operates
the largest gold mine in the country at the Macraes Goldfield which
is made up of a series of open pit mines and the Frasers
underground mine. In the United
States, the Company is currently commissioning the Haile
Gold Mine, a top-tier asset located in South Carolina along the Carolina Terrane. The
Company expects the Haile Gold Mine to commence commercial
production in early 2017. OceanaGold also has a significant
pipeline of organic growth and exploration opportunities in the
Australasia and Americas regions.
OceanaGold has operated sustainably over the past 26 years with
a proven track record for environmental management and community
and social engagement. The Company has a strong social license to
operate and works collaboratively with its valued stakeholders to
identify and invest in social programs that are designed to build
capacity and not dependency.
In 2017, the Company expects to produce 550,000 to 610,000
ounces of gold and 15,000 to 17,000 tonnes of copper with sector
leading All-In Sustaining Costs that range from $600 to $650 per ounce sold.
Cautionary Statement for Public Release
Certain information contained in this public release may be
deemed "forward-looking" within the meaning of applicable
securities laws. Forward-looking statements and information relate
to future performance and reflect the Company's expectations
regarding the generation of free cash flow, execution of business
strategy, future growth, future production, estimated costs,
results of operations, business prospects and opportunities of
OceanaGold Corporation and its related subsidiaries. Any statements
that express or involve discussions with respect to predictions,
expectations, beliefs, plans, projections, objectives, assumptions
or future events or performance (often, but not always, using words
or phrases such as "expects" or "does not expect", "is expected",
"anticipates" or "does not anticipate", "plans", "estimates" or
"intends", or stating that certain actions, events or results
"may", "could", "would", "might" or "will" be taken, occur or be
achieved) are not statements of historical fact and may be
forward-looking statements. Forward-looking statements are subject
to a variety of risks and uncertainties which could cause actual
events or results to differ materially from those expressed in the
forward-looking statements and information. They include, among
others, the accuracy of mineral reserve and resource estimates and
related assumptions, inherent operating risks and those risk
factors identified in the Company's most recent Annual Information
Form prepared and filed with securities regulators which is
available on SEDAR at www.sedar.com under the Company's name. There
are no assurances the Company can fulfil forward-looking statements
and information. Such forward-looking statements and information
are only predictions based on current information available to
management as of the date that such predictions are made; actual
events or results may differ materially as a result of risks facing
the Company, some of which are beyond the Company's control.
Although the Company believes that any forward-looking statements
and information contained in this press release is based on
reasonable assumptions, readers cannot be assured that actual
outcomes or results will be consistent with such statements.
Accordingly, readers should not place undue reliance on
forward-looking statements and information. The Company expressly
disclaims any intention or obligation to update or revise any
forward-looking statements and information, whether as a result of
new information, events or otherwise, except as required by
applicable securities laws. The information contained in this
release is not investment or financial product advice.
SOURCE OceanaGold Corporation