Oceana Gold has tentatively forecast record gold production for the calendar year 2013, underpinned by its gold and copper development mine in the Philippines which is less than a year away from beginning production.
Oceana, along with most other major gold producers, saw its share price undermined during the past fortnight by the decline in global spot gold prices which went below $US1600 ($NZ2133) to $US1573 yesterday.
Oceana's share price during the past seven trading days is down more than 18%, having fallen from $3.38 to about $2.76 yesterday, with market capitalisation declining from $NZ887 million to $NZ724 million.
While Oceana has ramped up overall exploration funding, increased its resource estimates and is portraying confidence in the Didipio development, management is putting itself under increasing pressure to deliver results to the market soon.
Oceana chief executive Mick Wilkes, in separate market updates released this week, reiterated expectations of Oceana delivering 230,000-250,000 ounces of gold from New Zealand operations this year, but raised the production bar to 300,000-350,000 ounces for 2013, which would include about 70,000 ounces from the Philippines.
Crucial to operations and profitability, cash costs of production per ounce this calendar year are expected to be $US900-$US980 per ounce.
For 2013, with the Didipio operation in the northern Philippines under way, Mr Wilkes said operating costs should move below $US500 per ounce.
He remained confident Oceana could achieve a target of producing 600,000 ounces a year by 2016 from all operations.
On the question of declining market capitalisation, Mr Wilkes said investors would soon realise Didipio would bring a "significant transformation" to Oceana.
"The current market capitalisation reflects little to no value for Didipio as we execute on our strategy to build it and establish a platform for growth in the region," Mr Wilkes said in a statement.
In his Didipio update, Mr Wilkes said 480 construction staff were on site, plus management. About $10 million per month was being spent and exploration of adjacent prospects would accelerate next year. Production was scheduled to begin in the fourth quarter.
Craigs Investment Partners broker Peter McIntyre said while Oceana's New Zealand operations stood out for the year, Didipio as a new operation still carried risks.
He said Mr Wilkes had clearly outlined operational expectations and where he saw value in company operations, but he had "drawn a line in the sand", for the market and investor expectations.
While gold was usually a safe haven in turbulent economic times, investors had been taking profit from recent highs and it was possible some of the euro-zone countries, many of which were historic holders of large amounts of gold, were selling stocks to assist in shoring up their faltering economies.
