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OceanaGold needs US$140m to complete mine

Tuesday 21st September 2010

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OceanaGold, operator the Macraes goldfield, said it needs to raise US$140 million to get its Didipio Gold-Copper Project in the Philippines operational, on top of the US$80 million already invested in the venture.

The capital requirements emerged after an internal economic and technical ‘re-optimisation' review was commissioned to restart the project, which was placed on hold in 2008 after the global financial crisis caused capital costs to rise significantly, the company said in a statement.

"The updated technical and economic study for the Didipio Gold-Copper project demonstrates, in our view, a robust project with a long mine life, decreased capital costs and strong economics," said OceanaGold chairman Jim Askew.

The study found that the project has proven reserves of 1.41 million ounces of gold and 374 million pounds of copper, and will have an estimated lifespan of 20 years once operational.

OceanaGold revised the mineral reserve estimates down by 5.1 million tonnes after the report recommended a shift to entirely underground operations after six years of operation.

"The potential to move to sub-level open-stoping for the underground mining method also further de-risks the project once the operation transitions to an underground operation, though it reduces feed to 1.2 metric tons per annum," Askew said.

OceanaGold said the Didipio Project is unencumbered, with no hedging, project debt or off-take agreements, giving the company a high degree of flexibility when raising capital.

The mine is expected to become operational between 15 and 21 months from re-commencement of construction.

OceanaGold shares were last at $5.34, the highest level since the company listed in July 2007, largely on the back of the price of gold which has climbed to an all-time high of US$1,283.80 an ounce.

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