Sharechat Logo

Lower production, high dollar push OceanaGold to 1Q loss

Friday 27th April 2012

Text too small?

OceanaGold Corp, which operates the Macraes gold field near Dunedin, posted a first-quarter loss after it pulled less gold out of the ground and had to contend with a tough foreign exchange environment.

The company made a net loss of US$3.9 million, or 0.1 US cents per share, in the three months ended March 31, compared to a profit of US$14.8 million, or 0.6 US cents, a year earlier. Earnings before interest, tax, depreciation and amortisation plunged 47 percent to US$23.3 million as its cost of sales spiked 38 percent from a year earlier.

The company’s margins were squeezed by “lower ounces produced and adverse foreign exchange rate movements” and it is reviewing its cost management, it said in its analysis of the quarter. Production in New Zealand was lower due to planned maintenance shutdowns at the Macraes and Reefton operations.

Gold prices have more than doubled since the global financial crisis as investors sought safe places to park their money, reaching a record high US$1,920.30 an ounce in September last year. The price was recently at US$1,654.69.

The average gold price OceanaGold received in the quarter was US$1,708 an ounce, in line with the three months ended Dec. 31, but the operating cost per ounce climbed to USUS$1,126 from US$890 in the prior quarter.

The company’s revenue fell 2.3 percent to US$88.6 million from a year earlier, and OceanaGold’s operating profit plunged to US$3 million from US$24.4 million in the first three months of 2011.

The company retained its 2012 production guidance of between 230,000 ounces and 250,000 ounces of gold at cash costs of US$900 to US$980 an ounce, and assumes an exchange rate of 80 US cents per New Zealand dollar.

“The company expects gold production in the second half of the year to be greater than the first half as the production of the higher grade gold from Frasers Stage 5 at Macraes Goldfields commences, Frasers Underground returns to normal operating levels following redevelopment of access to certain stoping areas, and increased mining rates at Reefton,” it said.

“As a result of the higher production expected in the second half, cash costs are expected to be lower in this period assuming constant exchange rates,” the company said.

OceanaGold said it expects its Didipio project in the Philippines is due to start in the fourth quarter of this year.

The company produced 50,842 ounces of gold in the quarter, compared to 65,671 ounces a year earlier. It sold 51,852 ounces in the quarter, down from 64,765 ounces in 2011.

The shares, which are listed in New Zealand, Australia and Canada, were unchanged on the NZX at $2.85.

NOTE: please be advised to read full articles from Business Desk Website, you will have to pay a subscription fee on their website.

BusinessDesk.co.nz



  General Finance Advertising    

Comments from our readers

No comments yet

Add your comment:
Your name:
Your email:
Not displayed to the public
Comment:
Comments to Sharechat go through an approval process. Comments which are defamatory, abusive or in some way deemed inappropriate will not be approved. It is allowable to use some form of non-de-plume for your name, however we recommend real email addresses are used. Comments from free email addresses such as Gmail, Yahoo, Hotmail, etc may not be approved.

Related News:

OceanaGold to buy Pacific Rim Mining for C$10.2M to gain control of El Dorado Gold Project
OceanaGold takes US$85.5M impairment as gold price falls
Plunging gold price prompts OceanaGold Corp to put off production at its Reefton mine
OceanaGold full year profit falls, despite Q4 uplift; shares dip
OceanaGold to lift gold output as Didipio comes on stream
OceanaGold to raise up to C$108M
OceanaGold dips into red in 3Q as margins squeezed
OceanaGold's Blackwater drilling results consistent with past production
OceanaGold shares reach 22-month high as Didipio start looms
OceanaGold 2Q profit plunges 82% on falling gold prices