|
Attention Business Editors
OceanaGold Provides Corporate Update
/NOT FOR DISSEMINATION OR DISTRIBUTION IN THE UNITED STATES AND NOT FOR
DISTRIBUTION TO US NEWSWIRE SERVICES/
MELBOURNE, Australia, May 12 /CNW/ - OceanaGold Corporation today
announced a revised capital cost for the Didipio Gold Copper project under
construction on Northern Luzon Island in the Philippines. Didipio is one of
the highest grade gold-copper porphyries being developed in the world today.
With current proven and probable reserves of 1.57 million ounces of gold and
200 thousand tonnes of copper, the deposit has a 15 year mine life at
2.5 million tonnes per annum of production. The mineral resource if converted
to reserves, will add another 610 thousand ounces of gold and 100 thousand
tonnes of copper. The deposit is open at depth and a near-mine exploration
drilling program has commenced.
The latest feasibility study was completed in 2006, and the Company has
recently finalized a detailed review and third party audit of the project
scope and cost to completion.
The project is now expected to cost US$320 million of which US$40 million
has been spent. This revised capital cost includes a US$33 million contingency
and the Company has US$105 million in cash. Using a US$800 / oz gold price and
a US$3.50 / lb copper price, the project has an IRR of 22% and a payback of
three years measured from the completion of commissioning on June 30, 2009.
<<
A number of scope changes have been made to reduce project risk:
- Addition of power generation through the purchase of a Caterpillar
heavy fuel oil power plant
- Increase to the Ausenco scope for the power plant design, installation
and integration
- Removal of 6.2 km drainage tunnel
- Additional pumping capacity for the open pit, underground and tailings
impoundment
- Increased concentrate storage capacity at site.
Key increases to capital costs compared to the 2006 Feasibility study
are:
- Infrastructure - increase of $44M (includes $33M for power plant)
- Engineering, Procurement, Construction & Management Contract -
increase of $28M (EPCM contractor, freight)
- Process Plant - increase of $25M (includes increases in labour,
foreign exchange, general commodity inflation)
- Indirect Costs - increase of $23M (includes land acquisition,
engineering & project management, commissioning)
- Contingency - increase of $22M.
>>
The Company is in the process of finalizing an updated NI 43-101 report
in accordance with Canadian requirements and this is expected to be filed in
June.
Steve Orr, CEO commented, "We are seeing an unprecedented inflationary
environment across our industry that has caused numerous projects throughout
the world to be suspended or cancelled indefinitely. The robustness of the
Didipio project remains intact with a payback in three years from the time we
achieve full production rate. We have de-risked the project in a number of key
areas and are working through proposals to complete the funding for the
project. "
Revised Production Guidance
The Company has reduced 2008 gold production guidance to 265,000 -
275,000 ounces at cash costs of US$490 - US$520 per ounce. The adjustment
reflects an updated forecast for process recovery and mining challenges at
Macraes. However, there have been measurable improvements in the month of
April. Further allowance has been made for increasing fuel costs and a strong
New Zealand dollar exchange rate.
Cautionary Statement
Statements in this release may be viewed as forward-looking statements.
Any statements regarding the impact of future exploration on reserve
estimates; expectations as to the timing and extent of production, estimates
as to the future costs relating to the development of Didipio; or that express
or involve discussions with respect to predictions, expectations, beliefs,
plans, projections, objectives, assumptions or future events or performance
(often, but not always, using words or phrases such as "expects" or "does not
expect", "is expected", "anticipates" or "does not anticipate", "plans",
"estimates" or "intends", or stating that certain actions, events or results
"may", "could", "would", "might" or "will" be taken, occur or be achieved) are
not statements of historical fact and may be forward-looking statements.
Forward-looking statements are subject to a variety of risks and uncertainties
which could cause actual events or results to differ from those reflected in
the forward-looking statements. There are no assurances the Company can fulfil
such forward-looking statements and the Company undertakes no obligation to
update such statements. Such forward-looking statements are only predictions;
actual events or results may differ materially as a result of risks facing the
Company, some of which are beyond the Company's control.
About OceanaGold
OceanaGold currently operates in the South Island of New Zealand and in
the Philippines. The Company's assets encompass New Zealand's largest gold
mine at Macraes which includes the recently commissioned Frasers Underground
operation, Reefton Gold Mine also in New Zealand and the Didipio Gold-Copper
Project in northern Luzon, Philippines scheduled for commissioning in H1 2009.
OceanaGold is listed on the Toronto, Australian and New Zealand stock
exchanges under the symbol "OGC".
-30-
/For further information: Mr Darren Klinck, Vice President, Corporate &
Investor Relations, OceanaGold Corporation, Tel: 61 3 9656 5300/
|
NEWS RELEASES
WEBCAST