OceanaGold will rehabilitate is open pit in Waihi after a wall collapsed. Photo / Michael Craig
OceanaGold will rehabilitate is open pit in Waihi after a wall collapsed. Photo / Michael Craig
A technical study of plans for a giant expansion of gold mining at Waihi finds confirms earlier estimates of the potential size of the resource and reveals what it has budgeted to rehabilitate sites in the town.
The OceanaGold report also has details of real estate portfolio and planswhat it intends doing with property it owns.
OceanaGold plans to invest in a $1.4 billion expansion of operations at and near Waihi which it says will add 300 new jobs to the workforce and will extend mining by 14 years.
The company, listed in Australia and Canada says with expanded mining, the Waihi District could produce around 1.6 million ounces of gold which at current elevated prices would be valued at $4.8b.
The plans have already attracted opposition from environmentalists and political opponents and a start to some of the new work is likely to be two years away, if consent is granted.
Project Quattro involves expanding the company's big open pit at Martha Hill in the middle of the town, digging another into the smaller Gladstone Pit, expanding its processing plant and building another tailings dam to the east of Waihi.
OceanaGold also plans to mine beneath Department of Conservation land at Wharekirauponga (WKP) 10km to the north-west. In early August it was granted a mining permit allowing it to continue exploration and technical studies in the area.
The granting of the permit has been blasted by opponents worried about the impact of mining in the environmentally sensitive area that is home to the critically endangered Archey's frog.
Opponents, including Green Party candidate Pamela Grealey and Coromandel Watchdog, say the area needs sustainable jobs, not those in a ''dinosaur industry'' where most profits go overseas.
Over the currently estimated life of Wharekirauponga, OceanaGold claims could annually produce 190,000 to 230,000 ounces of gold, which today was trading at $2935 an ounce.
The company says it will use existing infrastructure such as the processing plant, water treatment plant and tailings storage facilities.
OceanaGold says that with cash generated from the new projects starting in 2021 - such as an extension of underground mining at Martha (MUG) - as well as cash generated from the company's other operating mines it expects to generate sufficient funds to finance the project from the group cashflow once MUG goes into production.
In the alternative, and dependent on corporate preference for gearing at that time, the company may finance development by increasing debt relative to current low gearing levels.
The technical report says rehabilitation and closure costs for the current site has been estimated at $59.3m and an additional allowance made of $18.1m for rehabilitation for the new Quattro projects.
The company has rehabilitation bonds with the Waikato Regional Council and Hauraki District Council.
The purpose of the bonds is to provide the councils with access to a source of funds sufficient to close and rehabilitate the current mine site in the ''very unlikely'' event that OceanaGold fails to meet the closure obligations required under other conditions of the consent.
The latest rehabilitation bond which covers the closure costs for the 2018-2019 period, is $44m. When mining ends, the 265 metre deep Martha Pit is to be transformed into a pit lake and surrounding parkland for recreation and other land used for processing would be rehabilitated. Filling the pit could have happened early this century but mining has been extended several times since.
Both bonds will need to be reviewed should consents be granted to provide for the full closure cost.
The technical report - done by the company - also revealed it currently has $35m of commercial and residential property that it plans to divest over the next 15 years in a ''careful manner'' that does not adversely disrupt the local property market.
The Quattro work requires the purchase of property with subsequent divestment at the end of the project valued at $7m.
