Cost cuts help Oceana Gold's June-half profit rise 40pc

The Frasers Underground project at Macraes Flat, Otago, is expected to come on stream at the start of 2008, and deliver 65,000 ounces of gold a year. Picture / Otago Daily Times

Dual-listed gold mining operation Oceana Gold has booked a June half-year net profit of A$6.7 million ($8.19 million) after tax.

Excluding unrealised hedge losses, the result - a 40 per cent increase on the corresponding period last year - was aided by high gold price, record production and cost cuts.

"These are excellent results for Oceana Gold and confirm our ability to maximise the return from our gold mining operations," chief executive officer Stephen Orr said.

Gold production increased 26 per cent from the corresponding 2005 period.

Production at the company's Macraes mine rose over the first half of the year to a total of 100,160 ounces, compared with 79,380 ounces for the same period last year.

Orr said Oceana Gold was on track to meet projected production targets for the year of 180,000 ounces at a cash cost of $379 per ounce.

Cost efficiencies saved the company 23 per cent in its cash costs from the corresponding period.

Its A$55 million Globe Progress Project at Reefton is expected to begin mining by the start of next year and expected to deliver between 65,000 and 75,000 ounces of gold a year once in full production.

Meanwhile, Oceana Gold's Frasers Underground project at Macraes Flat, Otago, is expected to come on stream at the start of 2008, delivering 65,000 ounces a year.

Another project, Dinkidi in the Philippines, is expected to be commissioned in mid-2008, if its planned merger with Climax Mining goes ahead.

The merger would make Oceana Gold one of the largest Australian players, giving it an annual gold production of 550,000 ounces a year.

The merger would give the new company a value of more than A$500 million and a more diverse portfolio including silver and copper as well as gold.

- NZPA