(All financial figures in US Dollars unless
otherwise stated)
/NOT FOR DISSEMINATION OR DISTRIBUTION IN THE UNITED STATES AND NOT FOR DISTRIBUTION TO
US NEWSWIRE SERVICES./
BRISBANE, Australia,
Aug. 28, 2020 /CNW/ - OceanaGold
Corporation (TSX: OGC) (ASX: OGC) (the "Company") wishes to
provide a corporate update regarding the continued efforts to
manage near-term risks associated with the COVID-19 global
pandemic, associated impacts on production guidance and a general
operational update.
Michael Holmes, President and CEO
of OceanaGold said, "We continue to manage the near-term risks
presented by the COVID-19 global pandemic to our business while we
work diligently to deliver on our commitments and advance our
exciting organic growth opportunities. The health and wellbeing of
our workforce is always our top priority which is why we
implemented stringent protocols at each of our operations. These
protocols include a rigorous health screening process upon entry to
the mine site, physical distancing, staggered shifts, continuous
disinfecting of common use areas and mandatory self-isolation of
suspected or confirmed cases."
"These measures have been in place since the beginning of March
and up until June, the Company had no positive cases of COVID-19.
Since June, Haile has had 18 positive cases and approximately 220
workers have been required to self-isolate for a two-week period at
some point since the beginning of March. These protocols while
essential, have adversely impacted staffing levels at Haile. Given
the continued fluid situation in the
United States regarding COVID-19, combined with productivity
losses due to weather, the outlook at Haile for the remainder of
the year is now uncertain. We are behind schedule on our targeted
mining advance rates, which is delaying access to the higher-grade
zones of the open pits necessary to achieve the significantly
higher production levels expected in the latter months of the
year."
"To that end, we have revisited our near-term mine plan for
Haile to better understand what is achievable in the current work
environment. As such, we are now expecting Haile's 2020 production
to range between 135,000 and 175,000 ounces of gold. The wide range
represents the high degree of uncertainty we currently face and the
short-term sensitivity the 2020 production plan has to advance
rates given the increasing grade profile."
"In response to this uncertain outlook and to enhance our
balance sheet, we have entered into a new forward gold sale
arrangement with members of our existing bank group. Under the new
arrangement, the Company will receive a pre-payment of
approximately US$77 million, in
exchange for delivering of 40,000 ounces of gold in the second
quarter of 2021, representing approximately 10% of next year's
expected gold output excluding any contribution from Didipio. This
recognises the change in the timing of operating cash flow and
provides additional liquidity to continue to manage the near-term
risks of COVID-19 while continuing development of Martha
Underground ahead of first production in the second quarter of
2021."
"OceanaGold is a solid mid-tier gold producer with one of the
premier growth pipelines in the gold mining industry. We continue
to advance the Waihi District opportunities which are planned to
deliver the largest organic growth in OceanaGold's 30-year history.
In addition to Waihi, we continue to advance the Golden Point
underground study which we anticipate completing this quarter and
demonstrate a meaningful mine life extension at Macraes. We also
expect to commence development of the Horseshoe underground in 2021
providing access to a high-grade underground feed source at Haile.
These opportunities are expected to create significant value for
shareholders."
Operations
In New Zealand, the operations
were impacted by a five-week government shutdown in April with
Macraes limited to processing stockpiles to maintain the autoclave
in a safe and operable state. At the end of July, the Company
announced that despite a strong rebound in mining activity at
Macraes in May and June, the operation would not be able to make up
for the shortfall in mining this year and some production
originally expected in the fourth quarter would shift into 2021. As
a result, the Company announced at the end of July that is has
reduced Macraes 2020 production guidance range to between 140,000
and 150,000 ounces of gold.
In the United States, the Haile
operation's strict protocols also include the mandatory
self-isolation of workers who exhibit COVID-19 symptoms, have
tested positive for the virus, and/or have come in contact with
someone who has exhibited symptoms or has tested positive for the
virus. Since the beginning of March, approximately 220 workers have
had to self-isolate at some point, including 50 since the end of
June. The operation had no positive cases of COVID-19 until June
and since June, 18 workers have tested positive for the virus and
three additional workers are currently in isolation as presumptive
positive cases. Despite these cases, the Company continues to be
COVID-19 free at site through its rigorous safety protocols and
contact tracing process.
As noted several times throughout the year, Haile's full year
production is significantly weighted to the second half of the year
due to mine sequencing whereby grades increase materially as the
year progresses. This mine plan is predicated on moving a
significant amount of material to access the higher-grade ore zones
which are expected to be mined in the latter months of the year.
These months are expected to deliver significant production
levels.
With the ongoing challenges presented by COVID-19, which has and
continues to adversely impact staffing levels combined with delays
in accessing some areas of the open pit in the first half of the
year due to loss production from weather, the outlook for the
operation is now uncertain. As a result, the Company is revising
Haile's production guidance to account for these ongoing challenges
impacting the operation's ability to achieve the mining rates
required to access the high-grade zones in the timeframe previously
anticipated.
The Company now expects Haile to produce between 135,000 ounces
and 175,000 ounces of gold at a site All-In Sustaining Cost
("AISC") ranging between $1,100 and
$1,400 per ounce sold. The Company
wishes to note that the resource model remains strongly intact with
reconciliation at or above expectations. As such, any high-grade
zones previously expected to be accessed in 2020 would be delayed
to subsequent quarters.
With this revision, along with the previously announced revision
to the Macraes outlook, the Company now expects full year
consolidated production of between 295,000 and 345,000 ounces of
gold at an AISC range between $1,150
and $1,250 per ounce sold.
This revised outlook is based on the Company's best efforts to
estimate the ongoing impacts of the COVID-19 global pandemic.
Liquidity
In response to the revised 2020 outlook, the Company has entered
into a new forward gold sale arrangement with Citibank, BNP Paribas
and the Commonwealth Bank of Australia. Under the new
arrangement, the Company will receive a pre-payment of
approximately US$77 million on
August 28, 2020, in exchange for
delivering 40,000 ounces of gold between April and June 2021. The amount of gold presold is expected
to represent approximately 10% of the expected full year production
for 2021, excluding any potential ounces produced from Didipio.
The cash consideration for the advanced gold sale will be
treated as deferred revenue to be amortised and the revenue
recognised when the physical delivers occur. The cash consideration
will be included in operating cash flow for the third quarter of
2020. Prior to inclusion of the $77
million gold pre-sale proceeds, the Company's current cash
position is approximately $105
million.
The existing 48,000 ounce forward gold sale executed in February
and due for delivery will be completed as scheduled between
September and December 2020.
The Company will continue to manage its balance sheet in a
prudent manner to ensure sufficient liquidity to address near-term
risks associated with the COVID-19 global pandemic and ensure
continued investment in organic growth projects, particularly
Martha Underground and WKP on the optimal timelines.
Growth
Despite the five-week temporary cessation of development at
Martha Underground, the Company continues to expect first
production in the second quarter of 2021. The Company continues to
advance the other opportunities within the Waihi District through
the permitting phase and recently announced receipt of the mining
permit for the WKP Hauraki tenement. Exploration drilling continues
at both Martha Underground and WKP with a focus on resource
conversion and extension.
The Company continues to advance the Golden Point Underground
study to completion this quarter. The Golden Point Underground is
expected to replace the Frasers Underground and along with
additional open pit opportunities, extend the mine life of Macraes.
The release of this study in the form of an updated Macraes
National Instrument 43-101 Technical Report ("NI 43-101") will
exclude Inferred resources however, it will include an initial
resource for Golden Point Underground.
At Haile, the Company expects to complete the Horseshoe
underground optimisation before the end of the year and deliver an
updated NI 43-101. The updated Technical Report will include any
new details on Horseshoe but will also include an updated mine plan
for the overall Haile operation.
Didipio
The Company continues to engage with the Philippine National
Government on advancing the renewal of the FTAA which is currently
with the Office of the President pending a decision. The Company
has not been provided any timeline on when a decision will be made
on the renewal.
Since mid-April, the Company has temporarily laid-off
approximately 500 workers and is required to either re-instate or
terminate the workers effective mid-October. The Company will be
required to provide notices to the workforce of its intent in
mid-September.
The Company was encouraged by positive tangible actions taken by
the Government earlier this year along with re-endorsement of the
FTAA renewal by government agencies to the Office of the President
for a decision. The Company also recognises the ongoing challenges
the Government has faced in managing the COVID-19 pandemic. The
Company continues to recognise and appreciate the significant
support demonstrated by thousands of local residents in the
provinces of Nueva Vizcaya and
Quirino and the vocal support from local unions, cooperatives and
organisations for the FTAA renewal and the Company as their
responsible mining company of choice.
Authorised for release to market by OceanaGold Corporate Company
Secretary, Liang Tang.
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 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 operates the Haile Gold Mine, a
top-tier, long-life, high-margin 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 since 1990 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.
For 2020, and subject to the cautionary statement below, the
Company expects to produce between 295,000 and 345,000 ounces of
gold from Haile, Waihi and Macraes combined at a consolidated
All-In Sustaining Costs ranging from $1,150 to $1,250
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, achievement of
guidance, 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
outbreak of an infectious disease, 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