Record gold prices and Oceana Gold's ability to sell directly on to the spot market saw its profit margin per ounce increase 100% to $US423 ($NZ544) for the quarter to March, compared to the corresponding period last year.
The East Otago-based miner, the largest in in the country, booked an increase on earnings before interest, tax , depreciation and amortisation of $US21.69 million, more than 300% above the $5.4 million recorded last year.
However, due to hedge book losses, Oceana recorded an increased after-tax loss of $US11.2 million, compared to a $US10.7 million loss in the corresponding period a year ago.
Global spot gold prices climbed to hit a record of more than $US1000 per ounce by early March, but had drifted back to about $US870 yesterday.
ABN Amro Craigs broker Peter McIntyre said the after-tax loss from hedge losses came about from the price of spot gold being higher than the price set in the hedging (forward contracts).
The difference had to booked as a loss under the new IFRIS international financial reporting
standards.
"Oceana have been able to take advantage of the spot prices by having released their [contracted] hedge book obligations,'' he said.
Oceana also had a series of options, insurance policies, to protect against the rise and fall of spot gold prices, Mr McIntyre said.
In January, Oceana announced restructuring of its hedge book - gold previously contracted to be sold at a given price - and it rolled forward 113,712 hedged ounces from 2008 to 2011, Oceana chief executive Steve Orr said in a statement yesterday.
"In anticipation of completing the restructure, the company temporarily rolled the hedge contracts maturing in the first quarter into the second quarter. As a result, all gold was sold into the spot market and an average price of $US919 per ounce was realised,'' Mr Orr said, noting a 46% increase on the gold price for the period.
Mr Orr said despite the strength of the New Zealand dollar and escalating fuel and electricity prices, Oceana's costs to produce an ounce of gold fell 9% to $US496, compared to the previous quarter's cost of $US544.
During the quarter, the Macraes open pit and Frasers underground site produced 44,631 ounces, a 23% increase, at a grade of 1.4 grams of gold per tonne (g/t) of ore removed, and Reefton's open pit contributed 18,204 ounces at 2.4 g/t - 62,835 oz in total. Oceana sold a total 67,724 ounces during the quarter, a 75% increase on last year.
"Development of the higher grade [Frasers underground] panel 1B has been accelerated and is expected to be brought into production ahead of schedule,'' Mr Orr said.
Development of Oceana's $US155 Didipio gold/copper open-pit mine near at Luzon, in the northern Philippines, is progressing, with its Australian contractor having begun a $A54 million pre-stripping contract at the site, and it is scheduled to boost gold production from 280,000-300,000 ounces this year - solely from New Zealand - to 500,000 ounces by 2010, which includes copper equivalents.
Dual-listed Oceana's shares fell 2.6% to $A2.24 yesterday on the Australian exchange, and similarly fell in New Zealand, but on extremely light trade.
