Miner digs deep in bid to extend life

OceanaGold has a major drilling programme under way at its Macrae's mine which it hopes will extend the project's life.

Yesterday it announced mineral reserves of approximately 617,000 ounces of gold at the Macraes mine in Otago and Reefton on the West Coast.

The reserves announcement follows a 40 per cent upgrade in its Macrae's resources estimate last month. The increased mineral reserves reflect increased gold price assumptions from US$500 an ounce to US$800 an ounce. This means it is viable to mine more gold after allowing for extraction costs.

The revision results in an increase of approximately 495,000 ounces of mineral reserves compared to the December 31 last year at Macraes and an increase of approximately 122,000 ounces of mineral reserves for the Reefton Project

A small contribution also came from the Panel 2 Deeps deposit at the Macraes underground mine which has been upgraded from the inferred to indicated category

The increased gold price and improved economics will result in an expansion at the Macrae's open cast operation - the country's biggest - and at the Globe pit at Reefton.

Spokesman Darren Klinck said a summer drilling programme was also under way.

"We've still got seven drills turning as part of that brownfields exploration so the intention and the hope is that we'll continue to see newsflow of this nature over the coming months."

The company's chief executive Paul Bibby said the reserve increases at both Macrae's and Reefton were important milestones in extending the mine life for New Zealand operations.

Macraes had a mine life of around four and a half years at the start of the year and OceanaGold hoped this could be extended to between seven and eight years.

In its third quarter results released in October the company announced gold sales of 71,492 ounces, an increase of 14 per cent over the same quarter last year. Gold production for the quarter was 70,020 ounces, exceeding production for the third quarter 2008 by 10 per cent. OceanaGold also own the Didipio gold and copper project in the Philippines which it has mothballed.

Its shares closed down 5c at $2 yesterday.