Production down but Oceana good as gold

Oceana Gold mine in Reefton. Photo / Grant Bradley

Oceana Gold's production last year was down almost 6 per cent but was in line with guidance and also the crucial cash cost of production per ounce.

In a report outlining its fourth-quarter result, Oceana included some unaudited figures for the full year, which will be released in full detail in mid-February.

Fourth-quarter gold production from its Macraes site in east Otago was 44,451 ounces and from Reefton, on the West Coast, 21,299 ounces, in total up 11 per cent at 65,750 ounces for the quarter, compared to the third quarter.

During 2010, Oceana produced 268,602 ounces at a cash cost of US$570 per ounce, while unaudited figures for 2011 were 252,499 ounces, at a cost of US$875 an ounce, which was within the guidance range of US$850-890 per ounce.

"This [gold production] was slightly below expectations for the quarter and subsequently the year," Oceana said.

The company had signalled last year that some lower grade ores had to be worked through.

Craigs Investment Partners broker Peter McIntyre said lower grade ores and less tonnage from both mine sites had contributed to the rise in cash costs, but in the year ahead, higher grades were expected from both Macraes and Reefton.

With Oceana expecting production to begin at the end of this year from its gold and copper mine in the northern Philippines, "preliminary" guidance for 2013 has been estimated at 300,000-350,000 ounces of gold at cash costs of less than US$500 per ounce, offset by copper sales.

Revenue for the fourth quarter was US$106.6 million ($132.1 million). The average gold price received during the period was US$1705 per ounce on the 62,515 ounces sold.

Gold hit a record high of US$1921 in early September, and had since fallen to trade at about US$1600.