PERTH (miningweekly.com) – Dual-listed gold miner OceanaGold on Thursday estimated cost savings of about A$215-million between 2018 and 2020 from its Didipio project, in the Philippines, by bringing forward underground production.

In September, ASX- and TSX-listed OceanaGold announced that the underground development of the Didipio project would be brought forward by one year, with the development of the underground portal and surface facilities now scheduled to start in the first quarter of 2015.

First underground ore was expected in late 2017, two years earlier than originally planned.

A technical report on the Didipio operation has now revealed that the earlier access to high-grade ore from the underground mine, and the completion of openpit mining by 2017, would result in improved production and cash flow over the life of the mine.

The smaller openpit design has resulted in about 67-million tonnes of waste being eliminated from the previous mine plan, translating to a cost saving of some A$215-million, the gold miner said.

The higher underground production rate had also reduced the unit underground mining costs from the previously estimated A$33.50/t mined to A$26.45/t mined.

With these changes, Didipio’s economics have been significantly improved, and using a gold price assumption of A$1 300/oz and a copper price assumption of A$3.20/lb, OceanaGold was forecasting an after-tax and capital expenditure (capex) cash flow of A$944-million over the life of the mine.

Meanwhile, preproduction capex of some A$116-million would be required to establish the underground development, with the investment taking place over a three-year period. The total life-of-mine sustaining capital costs for the underground operation was estimated to be some A$75-million.

“The company is preparing for construction of the underground portal, scheduled to start in the first quarter of 2015,” said OceanaGold MD and CEO Mick Wilkes.

“In addition to developing access to the underground mine, this will also allow us to explore for new resources at depth beneath the existing orebody. The cost associated with the development is fully financed through the strong free cash flow generation of the business,” he added.

Meanwhile, OceanaGold on Thursday also updated the mineral reserve and resource estimates at Didipio, with the project estimated to host a proven reserve of 19.89-million tonnes, for 700 000 oz of gold and 93 600 t of copper, and a probable reserve of 29.11-million tonnes, hosting 1.7-million ounces of gold and 216 500 t of copper.

The openpit project was also estimated to host a measured and indicated resource of 27.96-million tonnes, for 770 000 oz of gold and 112 200 t of copper, while the underground project was estimated to host a measured and indicated resource of 19.67-million tonnes, for 1.17-million ounces of gold and 90 800 t of copper.