Fatality shadow on Oceana report

Mick Wilkes.
Mick Wilkes.
A strong first half result for Oceana Gold has been soured by the death on Thursday night of a worker at its Waihi mine, the company's first fatality in 25 years.

The results release coincided with the death of a 29-year-old man about 2km into Oceana's Correnso underground mine in Coromandel, after his front-end loader overturned while backfilling voids with waste rock, on Thursday night.

He was Tipiwai Stainton, from Western Bay of Plenty, who was understood to have worked at the mine for more than seven years.

Oceana purchased the open pit and underground operations at Waihi from Newmont last year, for $135million.

Oceana's chief executive Mick Wilkes offered condolences to the man's family and other mine employees yesterday.

"It is a sobering reminder that the health and safety of our workforce is paramount each and every day,'' Mr Wilkes said.

Operations at Waihi have been suspended while police and WorkSafe New Zealand investigate the cause of the fatality.

For first-half production in 2015, Oceana delivered 176,999oz but for first half 2016 that rose by more than 27% to 225,339oz, from its New Zealand operations and Didipio, in the northern Philippines.

Oceana almost tripled its profit for the half-year trading, making gains from the appreciating global spot gold price.

Mr Wilkes, in a statement made before the Thursday fatality, said that after a strong first half of the year, Oceana was "well positioned to achieve its production and cost guidance for the year''.

For calendar 2016, Oceana expects to produce 385,000oz to 425,000oz of gold from the combined New Zealand and Didipio operations and 19,000 to 21,000 tonnes of copper from the Didipio operation, at all-in sustaining costs of $US700 to $US750 per ounce of gold.

For the first half 2016, Oceana had reported revenue of $US330.8 million, against $US254 million last year, earnings before interest, tax, depreciation and amortisation was $155.2million, against $US100.9million last year, and net profit of $US63.2million was well up on last year's $US23.5million.

Mr Wilkes said the increase in earnings was a result of higher average gold price received, but was partly offset by slightly higher mining costs and corporate costs associated with redundancies when restructuring at Waihi.

Operating cash flow for the quarter was $US91.5million, significantly up on the previous quarter because of higher gold prices and reduction in working capital.

Oceana received $US34million from mining fleet sale at Haile under a leaseback arrangement with Caterpillar, Mr Wilkes said.

At the end of the second quarter, Oceana had immediate available liquidity of $US221million including nearly $US104million in cash and $US117million undrawn from its revolving credit facility.

Total debt stood at about $US228million.

The Haile development in South Carolina was on schedule and budget and the Didipio underground development was advancing well.

Operations were on track to achieve production and cost guidance, Mr Wilkes said.

"I'm very pleased with the significant progress made at the Haile gold mine as we continue to advance the project towards commissioning, which we confidently expect to commence at the end of this year,'' he said.

As at the end of the second quarter at haile, Oceana had spent about $246million of the $380million estimated capital cost, while the capital spent and committed as at the end of the quarter was about $330million.

Mr Wilkes said at Didipio, the operation produced 90,887 ounces of gold and 12,244 tonnes of copper in the first half of the year from the open pit, while production from the underground development was expected at the end of 2017.

The Waihi operation continued to track to guidance, producing 63,523oz of gold during the first half.

Mr Wilkes said quarter-on-quarter gold production decreased as a result of less ore mined from Correnso, as Oceana continued to develop underground access drives to Correnso Deeps and the Daybreak and Empire veins.

The combined Macraes operation in East Otago and Reefton, on the West Coast, produced 70,929oz of gold in the first half, before Reefton was mothballed and Macraes delivered 31,941oz during the second quarter.

simon.hartley@odt.co.nz

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