Price drop hits profit at OceanaGold

Photo / Ross Setford

OceanaGold, which operates the Macraes goldfield in Otago, reported a 61 per cent drop in third quarter profit as a lift in production in its Philippines operations was offset by declining gold prices.

Net profit fell to US$16.9 million, or 5c a share, in the three months ended September 30, from US$43.7 million, or 14c a share, in the same period a year earlier.

Sales dropped 22 per cent to US$123 million. The company affirmed it was on track to meet its full-year production and cost guidance.

OceanaGold has been scaling back its New Zealand gold mining production as it focuses on its copper and gold production in the Philippines.

The price of spot gold was recently US$1199.11 and has declined 10 per cent in the past 12 months.

The triple-listed shares of the company dropped 24c to close at $2.27 on the NZX.

The company's Philippines Didipio gold and copper mine had a cash operating margin of US$1901 an ounce in the third quarter, down from US$2675 for the same period a year earlier. Gold produced rose to 26,207oz, up from 18,011oz a year earlier, while copper production increased to 7078 tonnes from 6150 tonnes and silver rose to 82,787oz from 75,227oz.

At its New Zealand operations, the cash operating margin fell to US$217 an ounce, from US$449 a year earlier.

The Macraes and Reefton gold fields produced a total 41,145 ounces of gold in the three months, down from 56,686 a year earlier. Gold production at Reefton declined 45 per cent from the second quarter as the operation focused on pit redesign following a minor pit wall failure resulting in less ore available for processing early in the quarter.

Mining and processing rates at Reefton returned to planned levels in the third quarter, it said.

OceanaGold said production was expected to step up in the fourth quarter, as mining operations advance at Didipio.

The company had liabilities of US$97.3 million ($124 million) as at September 30, from US$129.5 million at December 31, 2013, after paying US$30 million of debt.