/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, June 26, 2017 /CNW/ - OceanaGold Corporation
(TSX/ASX: OGC) (the "Company") wishes to provide an update on the
status of commissioning activities at the Haile Gold Mine
("Haile").
Mick Wilkes, OceanaGold President
and CEO said, "Although the Haile operation is cash flow positive
and many aspects of the operation continue to meet or exceed our
expectations, we have encountered some commissioning issues that
have had an impact on overall process stability and recoveries. It
is not uncommon to encounter technical issues that need to be
addressed during the commissioning phase of a new process plant.
Our highly skilled team on the ground, many of which have
contributed to the timely and successful commissioning of the
Didipio and Reefton process plants, are working towards achieving
commercial production."
He added, "Although disappointed with the delay, I am highly
confident in the team and with their ability to deliver this plant
to meet our expectations for production and cost. The Haile Gold
Mine is world-class asset with very robust economics that will
deliver significant cash flows for many years to come, as
demonstrated by the results of the optimisation study."
Haile Commissioning
In the first quarter and early in the second quarter, plant
throughput ramped-up well and we achieved nameplate throughput
several times. However, in the middle of the second quarter, some
commissioning issues surfaced leading to a shortfall in tonnes
milled and recovery as compared to the ramp-up plan.
- The primary poly-urethane liner on each of the eight
Carbon-in-Leach ("CIL") tanks
partially de-laminated due to poor application. As a result, the
Company was required to take two CIL tanks at a time off line to
strip the liner completely from the tanks, which reduced the
residency time in the leaching circuit leading to lower recoveries.
Re-application of the new liners, is being carried out under
warranty and by the installation contractor one tank at a time to
eliminate disruption to the plant with an expected completion in
December.
- The CIL tank inter-stage piping system was short circuiting and
thereby sending some gold bearing slurry into tailings. The Company
identified that the CIL piping system was under designed and has
implemented a temporary fix while advancing the permanent solution.
The Company will install a new CIL piping system and expects this
work to be completed by August. The temporary solution has resolved
the issue and has subsequently led to higher recoveries and
increased plant stability in recent weeks.
- The front-end of the process plant has performed to expectation
with only a minor issue related to grate sizing of the SAG mill.
The current steel discharge grate opening in the SAG mill are
inadequately sized to allow worn steel grinding media to pass
through. This has resulted in excessive amount of small grinding
media inside the mill reducing its effectiveness. This in turn, has
created fluctuations in throughput and contributed to instability
of the process. As part of a planned mill re-lining scheduled for
July, the Company will replace some of the current steel grates
with larger aperture grates which will alleviate the problem.
- The fine grinding circuit has been impacted by fluctuations in
density effecting its performance. The circuit will be converted to
closed circuit grinding which will stabilise the feed to the mills
and better regulate the product size.
- Some parts of the control systems have not performed to
expectations due to lower data processing speeds which has resulted
in sub-optimal responses through some areas of the process plant.
In parallel with the process plant expansion, enhancements to the
process control system will be identified and undertaken.
A summary of the commissioning issues, rectification plans and
timing is summarised in Table 1.
Table 1 – List of Commissioning Focus
Areas
Specific
Area
|
Issue
|
Solution
|
Estimated
Cost
|
Completion
Date
|
SAG Mill
grate
|
Current steel grates
in the
SAG mill holding back finer
steel grinding media causing
excessive quantity of small
grinding material resulting in
lower throughput
|
Replace some of the
grates with
larger aperture grates allowing
the smaller steel media to pass
through the mill
|
$50k
|
July 2017
|
Regrind
inflow
|
Variable slurry
density into
fine grinding circuit resulting in
inconsistent grinding size
|
Closing the feed
circuit to better
control slurry density and
product size
|
$200k
|
July 2017
|
Carbon-in-Leach
Piping System
|
Inadequately sized
piping
system between CIL tanks
and the leach circuit
|
Redesign and
installation of a
new CIL piping system
|
$700k
|
August
2017
|
Carbon-in-Leach
Tank Liners
|
Tank liners partially
failing at
various times due to faulty
application on inner tank walls
|
Removing the current
liners and
then reapplying new liners one
at a time to eliminate disruption
|
Nil (under
warranty)
|
December
2017
|
Control
system
|
Control system
programming
and data processing has been
sub-optimal in some areas
resulting in inefficient process control
|
In parallel with
future upgrades
to process plant, review and
undertake potential upgrades to
control system
|
$2M - $3M
|
Staged upgrades
over time
|
Mining operations continue to progress well as the Company has
commenced mining ore at the Snake pit, four months earlier than
planned. Mining reconciliation has been in-line with
expectations.
The operation is cash flow positive and operating costs are
in-line with expectations. The results of the Haile Optimisation
Study have demonstrated the significant value inherent to this
asset and the Company continues to be encouraged by the exploration
potential at depth and along strike at Haile and regionally.
Updated Company Guidance
With the updated forecast at Haile and strong operations at
Didipio, the Company wishes to provide a revised production and
cost guidance. The overall gold production guidance range for the
Company remains broadly unchanged while the copper production
guidance range has increased.
Table 2 – REVISED 2017 Production and Cost
Guidance
|
|
Didipio
|
Waihi
|
Macraes
|
Haile
(1)
|
Consolidated
|
Gold
Production
|
'000
oz
|
150 – 160
(was 110 –
130)
|
110 – 120
(unchanged)
|
180 – 190
(unchanged)
|
110 – 130
(was 150 –
170)
|
550 – 600
(was 550 -
610)
|
Copper
Production
|
'000
t
|
18 – 19
(was 15 –
17)
|
–
|
–
|
–
|
18 – 19
(was 15 –
17)
|
All-In
Sustaining
Costs(2)
|
$ /
oz
|
$70 – $120
(was $130 –
$180)
|
$740 –
$790
(unchanged)
|
$950 –
$1,000
(unchanged)
|
$600 –
$650
(was $500 –
$550)
|
$600 –
$650
(unchanged)
|
Notes:
|
1.
|
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.
|
2.
|
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.
|
On the revised guidance for the Haile and Didipio operations
this year, Mick Wilkes stated
"Operating a diversified multi-mine business provides us the
flexibility to offset production from one asset against another to
achieve our overall business results, as increased production now
expected at Didipio will partially offset the decrease in
production from Haile this year."
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. OceanaGold also has a
significant pipeline of organic growth and exploration
opportunities in the Americas and Asia-Pacific regions.
OceanaGold has operated sustainably over the past 27 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 600,000
ounces of gold and 18,000 to 19,000 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, sovereign risks,
risk of suspension 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