PERTH (miningweekly.com) – Dual-listed gold miner OceanaGold has warned of ‘uncertainty’ at its Haile mine, in South Carolina, after 18 staff members tested positive for Covid-19 since June this year.
The miner on Friday said that some 220 workers at Haile had been required to self-isolate for a period of two week at some point since the beginning of March, and while essential, the protocols had impacted staffing levels at the gold mine.
“Given the continued fluid situation in the US regarding Covid-19, combined with the productivity losses due to weather, the outlook for Haile for the remainder of the year is now uncertain,” OceanaGold president and CEO Michael Holmes said.
“We are behind schedule on our targeted mining advance rates, which is delaying access to the higher-grade zones of the openpits necessary to achieve the significantly higher production levels expected in the latter months of the year.
“To that end, we have revisited our near-term mine plan for Haile to better understand what is achievable in the current work environment. As such, we are now expecting Haile’s 2020 production to range between 135 000 oz and 175 000 oz of gold. The wide range represents the high degree of uncertainty we currently face and the short-term sensitivity the 2020 production plan has to advance rates given the increasing grade profile,” Holmes said on Friday.
Full year production at Haile for the 2020 financial year had previously been estimated at between 180 000 oz and 190 000 oz.
OceanaGold has previously reduced the full year production guidance for its Macreas operation, in New Zealand, to between 140 000 oz and 150 000 oz of gold, after operations were impacted by a five-week government shutdown in April this year.
At the end of July, the company announced that despite a strong rebound in mining activities at Macreas, the operation would be unable to make up for the shortfall in mining this year, with some production originally targeted for the fourth quarter, being pushed back until 2021.
Taking the Haile revision into account, OceanaGold now expects group production for the full year to reach between 295 000 oz and 345 000 oz, down from the previous estimate of 340 000 oz to 360 00 oz, while all-in sustaining costs are expected to range between $1 150/oz and $1 250/oz, up from the previous range of between $1 050/oz and $1 100/oz.
Meanwhile, Holmes told shareholders that in response to the uncertain outlook and to enhance the company’s balance sheet, OceanaGold has entered into a new forward gold sales arrangement with members of its existing bank group.
“Under the new arrangement, the company will receive a prepayment of approximately $77-million, in exchange for delivering 40 000 oz of gold in the second quarter of 2021, representing approximately 10% of next year’s expected gold output, excluding any contribution from Didipio.
“This recognises the change in the timing of operating cash flow and provides additional liquidity to continue to manage the near-term risks of Covid-19 while continuing development of Martha Underground ahead of first production in the second quarter of 2021,” Holmes said.
The cash consideration for the advanced gold sale will be treated as deferred revenue and will be included in operating cash flow for the third quarter of 2020.
The existing 48 000 oz forward gold sale executed in February and due for delivery, will be completed as scheduled between September and December this year.