Oceana Gold's copper and gold mine development in the northern Philippines has been mothballed for more than two years - with seemingly few prospects on the horizon to reignite the Didipio project.
However, underpinned by rising global metals prices, the deferred development is at least increasing in value and making it a more attractive investment, Craigs Investment Partners broker Peter McIntyre said.
"Twenty-eleven copper [price] prospects are strong but Oceana won't be able to participate in it.
The upside is they are sitting on a good asset," Mr McIntyre said.
In its most recent full-year report, for calendar 2009, released in March, Oceana said the proposed Didipio site was expected to yield four years of open-pit mining and nine years of underground mining; processing 2.5 million tonnes of ore per year to average 120,000oz of gold and 15,000 tonnes of copper during each year of its first decade of operation.
In a surprise cash-less merger with Sydney-based Climax in July 2006, Oceana took over the Didipio project and went on to put about $US80 million into development; with assessments at the time Didipio would be in production by mid-2008 and ready to deliver 260,000 gold-equivalent oz from copper and gold.
About 60% of the bulk earthworks were completed.
However, by May 2008 Oceana had suspended development of Didipio in the face of doubling development costs, from $US160 million to $US320 million, just as the global credit crunch took hold and spooked investors from high-risk projects.
Oceana has since been seeking investment partners and funding of about $US185 million.
"Circumstances [declining global investment] were conspiring against them.
But I would have thought after a couple of years they would have had a joint venture partner lined up," Mr McIntyre said.
He noted global copper prices, which pre-recession had reached record highs, were last month up 11.5%.
Oceana's investment in Didipio took most analysts by surprise and prompted many to query whether it should have gone down that track.
Oceana management was contacted for comment at its head office in Melbourne yesterday, but said only there were no further updates on Didipio at present.
Oceana's second-quarter and half-year results, released late last week, only reiterated what has been noted in earlier reports, that the project remained under care and maintenance with a reduced workforce and was still "currently evaluating various strategic and funding options".
"This is currently a key priority for the management team with good progress being made during the quarter," the report said.
