In a preview of forthcoming results, covering the quarter to December, Craigs Investment Partners broker Peter McIntyre said production costs for companies remained the key issue, amid improving sentiment towards the sector, which included positive foreign exchange factors and falling diesel prices.
''We expect [production] cost discipline to still be the major focus, particularly among base metal miners that have seen copper and nickel prices fall respectively 4% and 6%, quarter on quarter,'' he said.
Not only is Oceana in Craigs' top four resource sector stock picks, on a buy recommendation, it is also in Craigs' separate top four ''likely to deliver'', when December quarter results are released.
Alongside Oceana is PanAust, Iluka Resources and Independence Group.
Mr McIntyre said PanAust was expected to return its strongest quarter for calendar year 2014, delivering at both the upper end of production guidance and with its costs below earlier guidance.
''Oceana should also have a good quarter and report higher earnings, quarter on quarter,'' Mr McIntyre said.
Iluka Resources was expected to increase revenue 40%, quarter on quarter, to $A206 million ($NZ216 million), while Independence Group had already pre-released impressive quarterly results, which suggested actual production cash costs at its three mines would be strong for the quarter, he said.
He forecast all-in cash costs of $US965 ($NZ1234) per oz for the New Zealand operations, down 9% quarter on quarter, and for Didipio, negative $US698 per oz, down 10%. Copper sales offset gold costs at Didipio.
Mr McIntyre said the weighted average of cash costs for Oceana, across all operations, was expected to be $US363 per oz for the December quarter, down 18% on the previous quarter, and for the full calendar year, $US412 per oz; earlier guidance having been in a range of $US400-$US450 per oz.
He expects Oceana to produce a combined 73,900 oz of gold, from its New Zealand and Philippine operations for the quarter, at an all-in production cash cost of $US363 per oz.
''This is a 10% improvement on gold output, quarter on quarter, and in line with company commentary for December quarterly production to be higher than September's,'' he said.
He estimated full calender year 2014 production to be 289,000 oz, within guidance of 275,000-305,000 oz, and expected the Didipio gold and copper mine in the Philippines would ''slightly exceed'' guidance; delivering 98,000 oz compared with guidance of 85,000-95,000 oz.
