The record 574,606oz of gold, almost 25,000oz above the lower end of guidance and 38% up on the previous year, was its sixth consecutive year of meeting guidance, its Haile mine in South Carolina and Didipio operation in the northern Philippines underpinning the record.
For the first time, gold production from its 27-year-old mainstay Macraes mine in East Otago was overtaken by another operation, Didipio producing 176,790oz against Macraes’ 160,226oz.
While Macraes production was hampered by delays in accessing higher grade gold-bearing ore from its relatively new Coronation North development last year, Macraes’ 2018 production outlook is expected to be boosted after hitting higher grade ore.
Oceana chief executive Mick Wilkes said the result was a "strong finish" for 2017, having hit record fourth quarter production, with production in Haile in South Carolina and Macraes boosted, plus record annual production from Didipio.
Craigs Investment Partners broker Peter McIntyre said the fourth quarter production, from Haile and Didipio, produced a "strong finish" for Oceana’s year, with low-cost Haile fully contributing.
"Oceana has moved to protect costs and margins over the next two years with opportunistic hedging on the New Zealand dollar gold price and 90% of group diesel consumption," Mr McIntyre said.
Mr Wilkes said while production at Haile and Macraes were expected to improve this year, at Didipio 2018 pit production was expected to be down as lower grade ores were processed, but underground operations there would begin to increase.
In a corporate presentation yesterday, Oceana said its mid-term strategy was to maintain annual gold production at 500,000oz to 600,000oz across its four mines.
It also noted Macraes production was expected to be about 180,000oz to 190,000oz and there was potential for a future mine life extension with work under way on its Round Hill project.
Didipio also produced 18,351 tonnes of copper, a gold-mining by-product which offsets the gold production costs, making it the least costly producer in Oceana’s portfolio.
"We look ahead to 2018 where we have many catalysts across our business and we will continue to advance our exploration programme to create organic value for our shareholders," Mr Wilkes said.
Oceana will supply its full financial report next month. Mr McIntyre expects a revenue boosted to $US724 million and, with lower costs, after-tax profit to come in about 29% up, at $US165 million.
Oceana booked its crucial "all-in sustaining cash costs" to produce an ounce of gold at $US617, at the bottom end of earlier guidance of $US600-$US650, across all its four mines. Didipio all-in costs were in a range of $US70, Haile’s $US509, Waihi in the central North Island at $US759 and Macraes’ at $US1115.
Mr McIntyre said the overall $US617 cost was down 13% on the previous year.
Gold sales during 2017 were 555,632oz. Oceana increased its cash in hand balance from $US61million to $US73million, and reduced debt by $US73million to $US167million.
