Miner OceanaGold has posted a 22% decline on quarterly production and a fall in profit, but is forecasting a "significant" increase in cash flow for the remaining three quarters of the year.
For the quarter to March, Oceana's gold production was down 22.3% to 65,291 ounces from 84,037oz during the same quarter last year and its profit slumped from $US9.05 million ($NZ12.48 million) to $US1.8 million ($NZ2.48 million) for the period.
Lower ore grades, lower mill throughputs and unscheduled maintenance on production plant also had a negative effect on forecast work, with cash costs rising from $US279 per oz to $US551.
Oceana shares, while trading at low volumes immediately after the announcement, rose 8c to $3.48.
Craigs Investment partners broker Peter McIntyre said increasing cash costs of production, such as fuel and electricity, were part of a total $US13 million increase, and higher interest costs also contributed to the profit fall to $US1.8 million.
During the quarter Oceana was still locked into supplying some of its gold at forward contract hedge prices - a position which it has since exited - which cost it $US15.1 million during the quarter to settle.
While the spot gold price for the quarter had risen, Oceana's average price per ounce sold was $US743, which was "significantly down" on the average $US927 achieved in the previous quarter.
"This [low $US743] was on account of the much higher percentage of gold production being sold into the hedge book at prices well below spot," the company said.
From April 1, all of Oceana's gold has been sold on the global spot market, which has been hovering around $US1100 for several weeks.
Cash flows were, therefore, expected to increase significantly in future quarters, the company said in a market statement yesterday.
Oceana is maintaining earlier production guidance that it will deliver 270,000oz to 290,000oz this year, at a production cash cost of $US455 to $US495 an ounce.
