Oceana Gold's mainstay Macraes gold mine in East Otago has had its mine life extended by a further two years, after the country's largest gold producer almost doubled its overall estimated gold resource yesterday, beyond 11 million ounces.
Two years' additional mine life have been added to the Macraes mine, with the pit operations pushed out to "2019 +'' and its Frasers underground to "2018 +''.
In Oceana's 26 years in New Zealand it has produced nearly 4.5 million ounces of gold.
In what will prompt an increase in Philippine exploration spending this year, Oceana was granted a five-year exploration permit renewal, including 158sq km of land in the provinces of Nueva Vizcaya and Quirino.
Oceana recently mothballed its Reefton pit operations, in the face of a weak gold price at the end of last year, so confirmation of the Macraes extension will be welcomed by its about 550 staff.
Oceana's estimated gold resources, from its mines in Macraes, Waihi in the North Island and Didipio in the northern Philippines, and also US development mines, prompted it to upgrade its "indicated resources'', to 11.6 million ounces yesterday, up 49%.
Its annual production guidance remains unchanged at between 385,000oz to 425,000oz and up to 21,000 tonnes of copper, for calendar 2016.
Oceana chief executive Mick Wilkes attributed the resource upgrade to "mainly'' its acquisitions last year of the producing Waihi gold mine in the North Island and the development Haile gold mine in South Carolina, in the US.
Oceana shares, which have gained almost 60% during the past 12 months, were down 1c at $4.05 yesterday, following the announcement.
Craigs Investment partners broker Peter McIntyre said the upgrade was a "strong and positive statement'' by Oceana, albeit he believed it was on the conservative side.
"The shares have performed well recently, although with some profit-taking. The market will be looking for Oceana to outperform on its [production] guidance,'' he said.
Mr Wilkes said following granting of the Philippine exploration permit renewal, Oceana would now expand its 2016 exploration programme to include the "significant opportunities that exist for us there''.
"With continued strong cash flows expected from our operations in 2016 and higher production at even lower costs expected in 2017, the company is well positioned to further increase its resource base organically and through selective external opportunities,'' he said.
Mr McIntyre said Oceana had "a strong development pipeline in place, which bodes well for future upgrades by Oceana''.
Mr Wilkes said the permit renewal would let Oceana expand its Philippine exploration programme over the broader region around its existing Didipio gold-copper mine, where earlier geochemical sampling had identified several gold and copper soil anomalies, close to Didipio.
"We are now reviewing and prioritising targets and expect to provide clarity around the planned exploration programmes in the coming weeks,'' Mr Wilkes said.
