Oceana's future looks more golden with merger

Macraes goldmine in north Otago is one of a number of mines Oceana has in New Zealand. Picture / Peter McIntosh

Oceana Gold - the listed owner of New Zealand's biggest gold mine - plans to merge with Australian mining company Climax to create a new entity with market capitalisation of $600 million.

Oceana Gold is Melbourne-based but listed on the NZX and ASX. It owns the Macraes goldmine in north Otago and three others on the West Coast.

Oceana is effectively paying $282 million in shares for control of Climax, whose shareholders will end up owning about 44 per cent of the merged entity. The new company will retain the Oceana name and its dual listing but will also look for other international listing opportunities.

Oceana's New Zealand-based chairman, Kerry McDonald, said the merger would provide greater development opportunities and the ability to leverage off the combined skills of the two companies.

Climax Mining's primary asset is a gold and copper mine in the northern Luzon region of the Philippines where the company believes there are significant opportunities for expansion.

The merger has the support of both boards of directors.

The new company would have gold reserves of 4.8 million ounces and forecast annual gold production of 550,000 ounces by 2008.

Oceana shares closed down 4c at $1.03 on the NZX yesterday.