OceanaGold Q1 profit drops 50% on weak prices

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Australian mining company, OceanaGold Corp, said on Thursday its net income dropped by more than half in the first three months of the year as record output from its mining operations failed to offset weak metal prices and lower exchange rate.

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It said in a report its net profit reached $24.5 million in January-March, down 58 percent from $58.9 million a year ago and revenue slipped to $129.3 million from $170.3 million.

Consolidated production of its three operating mines for the quarter was pegged at 91,146 ounces of gold and 6,102 tons of copper.

Its gold-copper operations at Didipio, Nueva Vizcaya achieved a second consecutive quarter record gold production of 35,122 ounces with 6,102 tons of copper. Its New Zealand operations – with combined output from Macraes and Reefton mines – contributed 56,024 ounces of gold.

During the quarter, the company started development of an underground decline at Didipio and continued to advance the power grid connection.

At the Paco tenements on the island of Mindanao, the company has also commenced with the geophysical survey on the area.

In New Zealand, OceanaGold initiated a brownfields exploration program at Macraes with an objective to increase its resource base and increase the mine life at current production rates with good margins. It also announced extension of mine life of its Frasers underground mine.

OceanaGold managing director and chief executive officer Mick Wilkes announced that he has signed a non-binding letter of intent with Newmont Mining Corp. for the acquisition of the latter’s Waihi gold mine in New Zealand.

OCG will pay Newmont $101 million plus customary adjustments. It will also retain a one percent net smelter royalty for gold ounces mined from one specific exploration tenement capped at 300,000 ounces of production.

“We have long believed that Waihi represents a strong strategic fit within OceanaGold. IT represents a unique opportunity for us to acquire a high-quality asset that has demonstrated the propensity to extend mine life for more than two decades in what is still a very prospective, high-quality goldfield,” Wilkes said.

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