Strong interest in joint venture for Didipio, says Oceana

Oceana Gold hopes to have a strategy in place for its stalled Philippines gold and copper mine by the second half of this year.

The Didipio project has been put on hold while the company re-examines the scope of the capital required to move it out of "care and maintenance".

Vice-president of corporate and investor relations Darren Klinck said several potential joint-venture partners had expressed "very strong" interest in becoming involved.

The company, which has three mines operating successfully in the South Island, said when it parked operations at Didipio it was doing so to protect and preserve assets. It had by late last year spent about US$70 million ($109 million) developing the mine but was caught by skyrocketing costs and then by paralysed credit markets.

"We expect the capital [cost] will be significantly less than it was a year ago but those are internal studies that are going on right now. There's always bumps in the road when it comes to mining companies."

Investors have been concerned about the company which is listed on the New Zealand, Australian and Toronto stock exchanges and has seen its share price take a rollercoaster ride during the past year.

Klinck said it had convertible bonds worth A$155 million that matured in 2012 and 2013 and around $16 million in project debt. "It's definitely an issue that's come up in the last nine months but it's not debt that needs to be refinanced right away."

Production from its Macraes open-cast mine and nearby Frasers underground mine, along with its underground project in Reefton put it in the top five gold producers in Australasia.

The company expected to produce between 280,000 and 300,000 ounces of gold this year, up from 183,000 ounces in 2007. It would also put more resources into the Macraes site, about 100km north of Dunedin and Reefton.

ABN Amro Craigs investor adviser Peter McIntyre said Oceana's New Zealand operations were performing strongly but it faced a challenge in bringing down debt and finding a joint venture partner at Didipio.

"The concerns we have are all around Didipio - it's been money down a big hole to this stage. There's never any real doubt about the New Zealand operation - they're extremely profitable for them."