Oceanagold Expansion Plans Are In Full Swing

The Age

Tuesday August 15, 2006

By BARRY FitzGERALD

OCEANAGOLD has backed up its first-mover status in the consolidation of Australia's mid-tier gold companies by delivering a a sharply higher operating profit for the June half.

The $6.68 million profit (excluding unrealised and non-cash hedging losses) was up 39 per cent on the $4.79 million profit booked in the previous corresponding period.

The higher result reflected the mining of higher-grade ores, tight cost controls and an improved gold price. The establishment of a solid operating basis recently gave the group the confidence to push ahead with its development of new mines in New Zealand, as well as make an agreed $523 million paper-only takeover bid for Climax Mining.

The Climax deal is by way of a scheme of arrangement and is due to be completed in the first week of November. Climax is developing the Dinkidi gold and copper project in the Philippines and, once it opens in mid-2008, the enlarged OceanaGold will rank as one of the Australia's biggest listed gold producers, with annual output of 550,000 ounces of gold equivalent.

OceanaGold chief executive Stephen Orr has said that the enlarged group would become a "consolidation vehicle within Australasia, and this is our first step in that strategy". Yesterday he said that the company was actively planning its next moves.

Group gold production now comes from the Macraes mine on NZ's south island. Production there rose from 79,380 ounces to 100,160 ounces in the June half. The group is also spending $55 million developing the Globe Progress project at the historic Reefton goldfield on the South Island's west coast.

It is due to start production in December and is expected to produce up to 75,000 ounces of gold annually when in full production. The 65,000 ounce-a-year Frasers underground project at Macraes is also proceeding.

The bid for each Climax share (it traded at 49.5? a share yesterday) is 0.62 of an OceanaGold share (it was up 1.5? to 77?).

© 2006 The Age

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