Oceana Gold expands mining operations in Otago

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Gold

Melbourne-based Oceana Gold Corporation has a strong presence in New Zealand. It is listed in this country as well as Australia and Canada.

Its profile as a good investment has leapt since a recent announcement it expects to be mining profitably underground at Macraes Mine near Palmerston in East Otago until 2017. This is three years beyond the forecast date of 2014.

Oceana Gold has received resource consents to enlarge its underground operations at Macraes Mine which includes both an underground mine and an open cast mine. Resource consents last year were extended to 2019.

This decision was released by the Otago Regional Council and the Waitaki District Council, both of which had jurisdiction in the matter.

A hearing panel appointed by the councils heard the application for the consents in September 2011 and recommended that the application to permit the Macraes Phase III by Oceana Gold be granted subject to certain conditions.

The mine contributes significantly to the "socioeconomic wellbeing of the district, region, and to a lesser extent, the nation," the panel's report said.

The physical effects of the project could be "tolerated, avoided, mitigated or remedied".

The open cast and underground mines at Macraes Flat are the largest gold mine in New Zealand.

Commissioned by Oceana Gold in 1990, the mines lie in open countryside at Macraes Flat which is about 30km from the nearest town of Palmerston in East Otago.

When the mine was commissioned it had the capacity to process 1.5 million tonnes of ore annually.

However with improved techniques and technology Macraes Mine now has the company processing almost six million tonnes of ore per year.

Since it was commissioned, the mine has produced about 5.2 million ounces of gold for Oceana Gold and a survey of the unmined areas concludes there could well be a significant amount of gold still in the mine.

The company proposed an extension of its current operations and also to re-work areas it has previously mined for gold.

The latter consent was sought because the price of gold on world markets now makes it economic to mine at deeper levels than when the mine was originally operating.

Under the new consents Oceana Gold must establish a new tailings storage facility as well as other facilities. The company had been asked to review the timing and implementation of its closure strategy which was revised after consultation with affected parties.

Oceana Gold will direct funds to a $2 million community trust to enhance the future wellbeing of the local community.

Still Oceana Gold has lodged an appeal against parts of this consent condition on the grounds that they were “unnecessary and onerous.”

With the recent drop in the price of gold and a dip in its share price, Oceana Gold maintains a conservative outlook for 2012, setting it at 230,000 to 250,000 ounces of gold at a cash cost of about NZ$1,196 an ounce.

This forecast includes forecast production from the company’s Didipio and Reefton operations as well as Macraes.

OceanaGold, says gold production grew in the fourth quarter, with improvements from both of its New Zealand goldfields, although the total still fell short of projected levels.

It said gold production in the three months to December 31 came in at 65,750 ounces, an 11 percent improvement on the third quarter. That brought total production for the 2011 calendar year to 252,499 ounces. This equated to revenues of US$106.6 million in the three months, calculated at an average gold price of US$1705 per ounce.

"This was slightly below expectations for the quarter and subsequently the year," the company said in a statement. It expects to release its full year results on February 16.

The bulk of fourth quarter production came from OceanaGold's Macraes goldfield, situated in Otago, with 44,451 ounces produced, up 5 percent on the previous three months.

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