Commodities slump hits miner

Oceana expects output from its New Zealand and Philippines gold mines of around 400,000 ounces. Photo / Grant Bradley

OceanaGold Corp, the gold and copper miner, said its annual profit halved due to low commodity prices and extra costs from its purchase of Waihi Gold Mine and the construction of the Haile Gold Mine in South Carolina.

Profit fell to US$53.1 million in the 12 months ended December 31, from US$111.5 million a year earlier, the Melbourne-based company said. Revenue declined 9.8 per cent to US$508 million.

OceanaGold expanded its portfolio during the year, acquiring the Waihi mine from Newmont Mining Corp and undertaking construction of the Haile mine, where commercial production is slated to start in early 2017.

Since its end of year balance date, the company has also invested C$13.8 million to increase its stake in Gold Standard Ventures Corp to 19.9 per cent from 13.9 per cent, to help finance the development of GSV's Railroad Pinion gold project in North Central Nevada.

The company said yesterday it has a significant pipeline of organic growth and exploration opportunities in Australasia and the Americas.

Its cash position improved, with its accounts showing it held US$185.5 million of cash and cash equivalents at the end of its financial year, up from US$51.2 million a year earlier.

The company will pay a second annual dividend of US4c a share on April 29.

"With a strong financial position and high operating margins, our business is moving from strength to strength as we invest in further growth this year," chief executive Mick Wilkes said. "We are very pleased to announce our second annual dividend. This dividend demonstrates the robustness of our business and our commitment to enhance shareholder wealth."

The company's shares rose 3.1 per cent to close at $4.28 yesterday.

For 2016, OceanaGold expects to produce between 385,000 to 425,000 ounces of gold from its mines in New Zealand and the Philippines, compared with 419,153 ounces in 2015. It expects to produce 19,000 to 21,000 tonnes of copper from its Didipio operation in the Philippines, compared with 23,109 tonnes in 2015.

The company said it had restructured a US$250 million revolving credit facility, hedged 90 per cent of its expected diesel consumption for 2016 and 2017, and hedged its gold production at its Macraes gold mine in Otago for 2016 and 2017.

OceanaGold

12 months ended December 31

• US$508 million revenue declined 9.8 per cent.

• US$53.1 million profit, down from US$111.5 million.

• US4c a share annual dividend.