TORONTO (miningweekly.com) – Triple-listed OceanaGold says it could boost its overall output by up to 22% a year to between 380 000 oz and 410 000 oz of gold, should it succeed in its $106-million bid to buy the Waihi gold mine, in New Zealand, from US gold miner Newmont Mining.
The Waihi gold mine was about 150 km south-east of Auckland on the Oceania-nation’s North Island and would expand OceanaGold's output by about 100 000 oz/y, while all-in sustaining costs (AISC) were expected to drop.
OceanaGold advised that the Waihi transaction remained subject to New Zealand regulatory approval and legal completion would only occur after receiving approval from the Overseas Investment Office. At closing, the company would assume the economic benefits and costs associated with Waihi from July 1.
For the second half, Waihi output was expected to be between 65 000 oz and 70 000 oz of gold, at a cash cost guidance range of $490/oz to $520/oz sold and an AISC guidance range of $650/oz to $680/oz sold.
OceanaGold’s consolidated annual cash cost guidance range decreased from $450/oz to $530/oz sold to between $420/oz and $470/oz sold, while the consolidated AISC guidance range for the year decreased from $770/oz to $840/oz sold to between $690/oz and $740/oz sold.
"The inclusion of the economic benefit from Waihi not only increases our production but also further reduces our unit cost base. Waihi is a solid asset in a highly prospective gold region that will generate significant free cash flows and further insulate our business in a lower gold price environment,” MD and CEO Mick Wilkes explained.
He added that upon closing of the transaction, OceanaGold would start an optimisation study aimed at further reducing costs, increasing productivity, increasing reserves and extending the mine's life.
Meanwhile, OceanaGold had in July agreed to buy Canadian project developer Romarco Gold in an all-scrip deal valued at about C$856-million, which, upon closing, would create the lowest-cost global gold producer.
Romarco's main asset was the Haile gold mine, in South Carolina, which was a high-grade openpit project that was currently in construction and represented one of the best gold development assets worldwide.
The business combination was expected to create the lowest-cost gold producer in the market, boosted by a long reserve life, a portfolio of high-quality assets that generated significant free cash flow and a solid pipeline of organic growth opportunities.
Haile was expected to produce about 540 000 oz/y from 2017 at AISC of less than $600/oz. During the mine’s first year of operations, the AISC was expected to be as low as $414/oz of gold.