OceanaGold to raise about US$75 million from investors to close out hedge contracts

Thursday 18th February 2010

OceanaGold, the operator of New Zealand’s biggest gold field at Macraes, plans to raise US$75 million selling securities to close out-of-the-money hedge contracts.

The mining company will raise the funds through a private placement of ASX-listed Chess Depositary Interests and the issue of subscription receipts to institutions in Canada, it said in a statement. The capital raising, which will be managed by a syndicate of underwriters led by Macquarie Capital Markets Canada, requires approval of shareholders at a meeting on March 25.

“By closing out the hedges now it gives us full leverage to the gold price,” Darren Klinck, vice president for corporate and investor relations, told BusinessWire. “It allows us to generate more cash flow (and) strengthens our balance sheet.”

Currently some 200,000 ounces of gold is hedged and out of the money in 2010. For 2011, 100% of the production is unhedged, he said. The placement also opens the company up to investors who want to hold the shares unhedged as leverage to the gold price.

OceanaGold’s shares last traded unchanged at $3.09 on the NZX. In the past year they have soared more than 300%, as the price of gold rallied. The company, whose shares also trade on the Toronto and Australian stock exchanges, also operates the Reefton open-pit mine and owns the Didipio Gold-Copper Project in northern Luzon in the Philippines.

Separately today, OceanaGold released its results for full-year 2009. Net income was US$54.5 million compared to a year-earlier loss of US$54.7 million, which mainly reflected a loss on the value of hedges. Revenue climbed to US$237 million from US$217 million, it said.

OceanaGold produced 300,391 ounces of gold last year, up from 259,182 ounces in 2008. The cash operating costs fell to US$411 an ounce from US$532, reflecting improved mine efficiencies and the exchange rate effect, Klinck said.

The company garnered US$790 an ounce in 2009, down from US$822 in the previous year.

At Macraes, the company ground through 5.6 million metric tons of rock to extract 213,049 ounces of gold at 1.47 grams/ton. At Reefton, it milled 1.28 million tons to yield 87,342 ounces at 2.6 grams/ton.

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Businesswire.co.nz

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