/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") is pleased to announce the
completion of the Haile Optimisation Study ("Optimisation Study" or
"Study") where results demonstrate enhanced value through upgraded
mineral reserves, increased annual gold production, longer mine
life and robust economics.
Key Highlights
- Increased Proven and Probable gold reserves by over 70% from
2.02 Moz to 3.46 Moz
- Announced a maiden reserve on the Horseshoe deposit of 0.44
Moz.
- Revised mine plan that includes larger open pit operations for
a 16-year mine life and an underground operation at Horseshoe for a
6-year mine life.
- Planned expansion of the process plant from 3 Mtpa to 4 Mtpa to
support higher mining rates and increased annual production.
- Robust economics with undiscounted pre-tax cash flows of
$1.4 billion based on current
reserves plus an additional $400
million of undiscounted cash flows inclusive of total
current resources.
- Further extensional and standalone exploration potential to
increase value and mine life.
Mick Wilkes, OceanaGold President
and CEO said, "The solid economics of the Haile Optimisation Study
clearly demonstrate what we have long believed to be the inherent
value of this top-tier asset in South
Carolina. Mineral reserves have now increased over 70% from
original estimates, supporting increased annual production while
increasing mine life to at least 16 years. The maiden reserve at
the Horseshoe deposit of 0.44 Moz and a larger open pit operation
within our existing land package is a positive outcome."
"We expect significant cash flow generation from Haile where the
Study has determined $1.4 billion in
undiscounted pre-tax cash flows on current reserves only and
$1.8 billion including total current
mining inventory."
He added, "Very shortly, we will commence the permitting process
and work closely with the regulator and all stakeholders to advance
the Haile expansion project to construction. In the meantime, we
continue to ramp up operations and drill targets at depth and along
strike to further add to the already significant resource base.
These targets include Palomino and beneath the Snake pit both of
which were not included in the study and represent potential
additional value of the asset."
Revised Mineral Resources & Reserves
Proven and Probable Reserves have increased over 70% from
previous estimates to 3.46 Moz of gold. Following a successful
resource definition drill program on the upper portion of the
Horseshoe deposit in 2016, the Company is pleased to announce a
maiden Reserve 0.44 Moz for the Horseshoe underground, which also
has a total Inferred Resource of 0.20 Moz.
The Company has revised the mine plan and design of the surface
operations. Pit optimisations were run on a $1,300/oz gold price assumption with an
$1,150/oz gold price shell selected
for pit design (previously $950/oz
gold price). This has resulted in larger pits with the total open
pit reserves now standing at 3.02 Moz of gold.
Table 1
– Updated Haile
|
|
|
|
|
|
|
|
|
PROJECT
|
Cut-off
|
|
PROVEN
|
|
PROBABLE
|
|
PROVEN &
PROBABALE
|
AREA
|
|
|
Mt
|
Au
g/t
|
Au
Moz
|
|
Mt
|
Au
g/t
|
Au
Moz
|
|
Mt
|
Au
g/t
|
Au
Moz
|
HAILE Open
Pit
|
0.45g/t
Au
|
|
7.55
|
1.97
|
0.48
|
|
47.5
|
1.66
|
2.54
|
|
55.0
|
1.71
|
3.02
|
HAILE
Underground
|
1.50g/t
Au
|
|
|
|
|
|
3.12
|
4.38
|
0.44
|
|
3.12
|
4.38
|
0.44
|
TOTAL
|
|
|
7.55
|
1.97
|
0.48
|
|
50.6
|
1.83
|
2.98
|
|
58.2
|
1.85
|
3.46
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Table 2 – Haile
Measured & Indicated Resources
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
PROJECT
|
Cut-off
|
|
MEASURED
|
|
INDICATED
|
|
MEASURED &
INDICATED
|
AREA
|
|
|
Mt
|
Au
g/t
|
Au
Moz
|
|
Mt
|
Au
g/t
|
Au
Moz
|
|
Mt
|
Au
g/t
|
Au
Moz
|
HAILE Open
Pit
|
0.45g/t
Au
|
|
7.06
|
1.97
|
0.45
|
|
52.2
|
1.63
|
2.73
|
|
59.2
|
1.67
|
3.17
|
HAILE
Underground
|
1.17g/t
Au
|
|
|
|
|
|
2.71
|
5.68
|
0.49
|
|
2.71
|
5.68
|
0.49
|
TOTAL
|
|
|
7.06
|
1.97
|
0.45
|
|
54.9
|
1.83
|
3.22
|
|
61.9
|
1.84
|
3.67
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Table 3 – Haile
Inferred Resource
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
PROJECT
|
|
|
INFERRED
RESOURCE
|
|
|
|
|
|
|
|
|
AREA
|
Cut-Off
|
|
Mt
|
Au
g/t
|
Au
Moz
|
|
|
|
|
|
|
|
|
HAILE Open
Pit
|
0.45g/t
Au
|
|
11
|
1.4
|
0.49
|
|
|
|
|
|
|
|
|
HAILE
Underground
|
1.17g/t
Au
|
|
1.2
|
5.0
|
0.20
|
|
|
|
|
|
|
|
|
TOTAL
|
|
|
12
|
1.7
|
0.69
|
|
|
|
|
|
|
|
|
|
Reserves are
reported within mine designs based on US$1,300/oz gold price
assumption
|
Estimates of
contained metal do not make allowances for processing
losses
|
Resources are
reported inclusive of reserves
|
Mineral resources
that are not ore reserves do not have demonstrated economic
viability
|
The open pit
resource is reported within a US$1,500/oz optimised
shell
|
The underground
resource cut-off grade is based on US$1,500/oz gold
price
|
All figures are
rounded to reflect the relative accuracy of the
estimates
|
Revised Haile Mine
Plan
With the larger open pits and inclusion of an underground
operation at Horseshoe, the Company has revised the overall mine
plan. Following completion of construction of an underground
operation and expansion of the process plant, ore feed will be
sourced at a rate of 3.3 million tonnes per year from surface
operations and 0.7 million tonnes per year from underground. The
open pit operations currently have a mine life of 16 years while
the Horseshoe underground has a mine life of 6 years.
The larger open pits necessitate the need for additional
tailings and waste capacity including the addition of a new PAG
cell, however the revised design is within the Company's existing
land package.
Table 4
– Mining Physicals (based on Reserves only)
|
|
|
|
Mine
Production
|
Value
|
Units
|
Open
Pit
|
Ore
|
55.0
|
Mt
|
Waste
|
481.2
|
Mt
|
Strip
Ratio
|
8.7 : 1
|
waste:ore
|
Average Gold
Grade
|
1.71
|
g/t
|
Contained
Gold
|
3,018
|
koz
|
Underground
|
Ore
|
3.1
|
Mt
|
Average Gold
Grade
|
4.38
|
g/t
|
Contained
Gold
|
439
|
koz
|
Combined
|
Total Ore
|
58.2
|
Mt
|
Total
Waste
|
481.2
|
Mt
|
The Horseshoe deposit will be accessed from a portal originating
from the north wall of the Snake open pit, where the Company
recently commenced mining ore, four months ahead of schedule. The
mining method for Horseshoe will be long-hole open stoping at a
rate of 0.7 Mtpa from a single access and backfilled with cemented
rock fill. Mining costs are estimated to range between $35 and $40 per tonne mined. The Company expects
first ore from the underground in 2021 with pre-production
development capital costs estimated to be $55 million (excluding pre-production operating
cost).
Once underground, the Company will develop exploration drives to
further drill the Horseshoe deposit at depth and carry out
additional and more comprehensive fan drilling of nearby
underground target Palomino and mineralisation beneath the Snake
pit.
Process Plant
The Study has identified an opportunity to expand the process
plant from 3 Mtpa to 4 Mtpa to support the higher overall mining
rate. With the Company ramping-up and fine tuning the process plant
over the course of 2017, the Study has used a conservative approach
to estimate the additional plant required to achieve the higher
throughput rate. The Company does expect to identify opportunities
to reduce its upgraded plant to achieve the higher throughout rates
which would then in turn reduce capital costs. The current
estimated capital cost to upgrade the process plant is $67 million.
Haile Optimisation Study Economics
The results of the Study have demonstrated robust economics with
undiscounted pre-tax cash flows of $1.4
billion based on current reserves only plus an additional
$400 million inclusive of total
current mining inventory.
The capital cost associated with the pre-production development
of the Horseshoe underground is estimated to be $55 million, while the initial capital cost
associated with a larger open pit and associated mining
infrastructure is expected to be $132
million, which includes $60
million allocated for upgrading the mining fleet. The
expansion of the process plant to 4 Mtpa is estimated to be
$67 million with potential costs
savings identified as the plant is currently ramping up. Overall
sustaining capital cost is expected to be $245 million over the 16-year mine life.
Operating costs for surface operations are expected to reduce to
between $1.45 to $1.55 per tonne
mined while underground mining costs at Horseshoe are expected to
range between $35 and $40 per tonne
milled. Processing costs are expected to remain unchanged at
$10 to $11 per tonne milled.
Table 5 –
Capital Costs
|
|
|
|
|
Description
|
Initial
Capital $M
|
LOM Sustaining
Capital $M
|
Total SM
|
Open Pit
|
67
|
75
|
142
|
Underground
|
55
|
26
|
81
|
Process
Plant
|
67
|
25
|
92
|
Site
Infrastructure
|
65
|
119
|
184
|
Total
|
254
|
245
|
499
|
Over the course of the coming months, the Company will release
an updated National Instrument ("NI") 43-101 Technical Report in
relation to the updated mine plan and design at Haile. Furthermore,
the Company will prepare the permitting application for the larger
open pit, underground mine, associated infrastructure and expanded
process plant. The Company expects the start of underground
development in 2019 with first underground ore processed in
2021.
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.
Technical Disclosure
The updates of Proven and Probable Reserves above have been
verified by, are based on and fairly represent information compiled
by or prepared by Mr. J.G. Moore and
Mr B. van Brunt. Messrs.
Moorer and van Brunt are a full-time
employees of Oceana Gold
(New Zealand) Limited and Haile
Gold Mine, Inc respectively. Mr Moore is a Member and
Chartered Professional with the Australasian Institute of Mining
and Metallurgy. Mr van Brunt is a
Fellow of the Australasian Institute of Mining and
Metallurgy. All such persons are "qualified persons" for the
purposes of NI 43-101 and have sufficient experience relevant to
the style of mineralisation and type of deposit under consideration
and to the activity which they are undertaking to qualify as a
"competent person" as defined in the JORC Code.
Messrs Moore and van Brunt
consent to inclusion in this public release of the matters based on
their information in the form and context in which it appears.
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