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OceanaGold reports strong FY profit on high gold prices

Friday 17th February 2012 1 Comment

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OceanaGold Corp., operator of the Macraes gold field who joined the NZX 50 in September, reported record annual sales as the company benefitted from peaking world gold prices during the year.

Earnings before interest, tax, depreciation and amortisation increased 17 percent to $163.9 million for the year ended Dec. 31. Net profit after tax fell to US$44.2 million in the year ended Dec. 31 from US$44.4 million as an accounting gain on a year earlier wasn’t repeated in the latest period.

Gold sales increased 29 percent to US$395.6 million and averaged US$1,587 per ounce, up from $305.6 million the previous year. The result was in line with brokerage Forsyth Barr’s forecast of $395.8 million.

As well as expanding its Frasers Underground mine life till 2017, the company’s Philippines-based Didipio Project met construction milestones, nearing completion of its accommodation camp and mobilising its mining construction site.

“Our New Zealand operations posted relatively stable earnings in 2011 and continue to generate positive free cash flows,” said Mick Wilkes, chief executive. “With the construction of the Didipio Project progressing according to plan and scheduled to commission in the fourth quarter 2012, combined with exploration opportunities in New Zealand and the Philippines, the company is on the right track to achieve its strategic targets.”

While gold prices were high, the company’s total annual output continued to decline.

Fourth quarter gold sales totaled 62,515 ounces, compared with 68,027 ounces in the same period the year before. Total sales for the year were 249,261 ounces compared with 268,087 ounces in the year to Dec, 31 2010. The average gold price in the quarter was US$1,705 an ounce and for the year the average gold price was US$1,587 an ounce, compared with US$1,140 and ounce in 2010 and US$790 in 2009. Cash operating margin rose by 20 percent from the previous year to US$712 an ounce.

“Production was slightly below our expectations for the quarter and consequently impacted the total productions for the full year,” the company said in its full year results released to the NZX. “Production guidance for the full year 2012 has been set at 230,000 to 250,000ounces of gold at cash coast of $980 per ounce (assuming NZD/USD exchange rate of $0.80).”

The result equated to earnings of 17 cents per share. Directors declared no final dividend.

Oceanagold’s shares are currently up 1 percent trading at $2.90 a share, down 22.7 percent over the last 12 months.

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Comments from our readers

On 17 February 2012 at 12:40 pm Tired of waiting said:
Wake up and smell the rose's (directors)It's about time investors were rewarded for their patience and support of the company. You are not the only one in this sector, and you are not the most attractive share price value.
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