Oceanagold Achieves 2016 Production and Cost Guidance
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MEDIA RELEASE
30 January 2017
OCEANAGOLD ACHIEVES 2016 PRODUCTION AND COST GUIDANCE
(All financial figures in US Dollars unless otherwise stated)
(MELBOURNE) OceanaGold Corporation (TSX/ASX: OGC) (the “Company”) is pleased to release its full
year and fourth quarter 2016 production report for the year ended 31 December 201 6, in accordance with
the Australian Securities Exchange (“ASX”) Listing Rule 5.1. Note that the numb ers contained in this
document are unaudited and subject to finalisation. The Company will release its complete 201 6 audited
financial and operational results on 23 February 2017 (Toronto Eastern Standard Time).
Key Highlights
Achieved 2016 consolidated production guidance range with 41 6,741 ounces of gold and 21,123
tonnes of copper.
Recorded consolidated All-In Sustaining Costs1 (“AISC”) of $708 per ounce sold and cash costs1 of
$452 per ounce sold.
Recorded 2016 consolidated gold sales of 437,146 ounces and copper sales of 21,413 tonnes.
Commenced milling at Haile in December 2016 and achieved first gold pour in January 2017.
Announced i ncreased 2017 exploration budget reflecting strong organic growth potential of the
business.
Announced 2017 production and cost guidance of 550,000 to 610,000 ounces of gold at a sector
leading AISC of $600 to $650 per ounce sold.
Mick Wilkes, President and CEO said, “ We are very pleased to report another year of delivering on our
commitments with solid operational and financial performance across our business in 2016. For the f ifth
consecutive year, we achieved our production and cost guidance while delivering on Haile with the start of
milling before the end of 2016 and first gold pour 10 days ago . Despite recent inclement weather,
commissioning activities have met our expectations and continue to advance to plan.”
He went on to say, “We expect 2017 to be another solid year of performance across our business with higher
production and stronger margins. The strategy we established six years ago and the successes we have
achieved along the way have allowed us to build a profitable business that is insulated from low commodity
prices and has provided consistent positive returns to shareholders. Since the start of 2013 , we expect to
increase our gold production by approximate ly 150% while significantly reducing costs to achieve sector
1 Costs are based on unaudited results
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leading margins. We have a robust business with high quality assets and a solid pipeline of organic growth
opportunities which we are well-positioned to invest in to unlock significant value.”
Table 1 – Unaudited 2016 Production and Cost Results Summary
Didipio Waihi Macraes &
Reefton Consolidated
Fourth Quarter 2016 Results
Gold Produced ounces 30,695 29,280 42,453 102,428
Copper Produced tonnes 3,765 – – 3,765
Gold Sales ounces 35,260 27,665 42,733 105,658
Copper Sales tonnes 4,960 – – 4,960
Cash Costs $ per ounce (120) 427 743 372
2016 Results
Gold Produced ounces 147,150 116,028 153,563 416,741
Copper Produced tonnes 21,123 – – 21,123
Gold Sales ounces 149,663 116,169 171,314 437,146
Copper Sales tonnes 21,413 – – 21,413
Cash Costs $ per ounce 1 473 832 452
All-In Sustaining Costs2 $ per ounce 239 735 1,099 708
Table 2 – 2016 Production and Cost Guidance
Didipio Waihi Macraes &
Reefton Consolidated
Gold Production ounces 130,000 – 145,000 115,000 – 125,000 140,000 – 155,000 385,000 – 425,000
Copper Production tonnes 19,000 – 21,000 – – 19,000 – 21,000
Cash Costs $ per ounce $20 – $70 $480 – $530 $750 – $800 $460 – $500
All-In Sustaining Costs $ per ounce $300 – $350 $700 – $750 $1,000 – $1,050 $700 – $750
Notes:
AISC calculation conforms to the methodology outlined by the World Gold Council. It includes all cash costs, corporate G&A, mainte nance
capital expenditures, capitalised mining expenditures and exploration. It excludes development capital expenditures such as t he development of
the Haile Gold Mine and Didipio Underground.
Assumptions
NZD:USD exchange rate of 0.65, Copper price: $2.00 / lb on average for full year .
Operations
On a consolidated basis, the Company produced 416,741 ounces of gold in 2016, broadly in-line with 2015
production and within the production guidance range of 385,000 to 4 25,000 ounces. Copper production of
21,123 tonnes was slightly higher than the top end of the guidance range of 19,000 to 21,000 tonnes. Fourth
quarter 2016 gold production of 102,428 ounces was 15% higher than in the previous quarter, as expected,
and due to increased production at each asset.
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On a consolidated basis, the Company recorded an AISC of $708 per ounce on gold sales of 437,146 ounces
and copper sales of 21,413 tonnes and within the guidance range. Full year c onsolidated cash costs were
$452 per ounce sold, which was slightly below the cost guidance range.
In the Philippines, Didipio slightly exceeded its 201 6 gold production guidance range with 147,150 ounces
produced, including 30,695 ounces produced in the fourth quarter while copper production for the year was
21,123 tonnes including 3,765 tonnes produced in the fourth quarter. Quarter-on-quarter gold production was
higher, as expected, due to increased head grade, partly offset by a lower mill feed. As stated in the previous
quarter, the Company shut the process plant down at Didipio for planned maintenan ce and upgrade works,
all of which were completed before the end of the year.
In New Zealand on the South Island, Macraes and Reefton combined to produce 153,563 ounces of gold for
the year which was in-line with the 2016 production guidance range . Fourth quarter production at Macraes
was slightly higher than in the previous quarter due to higher head grades. The Reefton operation produced
4,477 ounces of gold in 2016 before being placed on care and maintenance in February 2016. In December,
the Company an nounced the Reefton operation would be closed with rehabilitation and closure activities
scheduled over the next few years.
On the North Island at Waihi, the operation achieved its 2016 production range with 116,028 ounces of gold
produced following a stronger fourth quarter of production of 29,280 ounces. The quarter-on-quarter increase
in production was previously forecast and a result of a higher head grade and mill feed.
Development
Commissioning activities at the Haile Gold Mine in South Carolina, United States continue to advance well
towards commercial production in early 2017. Near the end of December 2016, the Company announced the
start of milling and on January 20, 2017, the Company announced the first gold pour.
In the Philippines, developme nt of the Didipio Underground continues to progress to schedule, with the
decline now advanced a total of 2,100 meters from the primary portal. During the fourth quarter, the Company
also completed a second underground portal ahead of schedule and two fresh air vent raise bores to surface.
First underground ore feed to the mill remains on track for the end of 2017 as planned.
Exploration
In 2016, OceanaGold initiated an extensive exploration program and throughout the year, announced solid
drill results across its operations. In the fourth quarter following a successful resource definition drill program
of the Horseshoe underground target at Haile, drilling shifted to test the Palomino and Snake underground
targets and additional regional targets.
At Waihi, drilling continued to focus on resource extensions of known veins in the underground, the large
exploration target beneath the Martha Open Pit, as well a s near mine targets surrounding the Waihi
operations.
At Macraes, the Company continued to drill multiple targets along the Hydes-Macraes Shear Zone with strong
results at Coronation North, Coronation, Nunns and Frasers Underground. In the Philippines, th e Company
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initiated infill and at depth drilling of the Didipio underground ore body and drill tested several targets within
the FTAA.
For 2017, the Company has increased its exploration budget to between $30 million and $41 million on the
back of increased extensive drilling and target generative activities within the Company’s targeted regions.
At Waihi, the focus for the Company is on reserve replacement and increasing resources with a medium-
term exploration target of one million ounces. At Macraes, exte nsional drilling of Coronation North will
continue, along with the drilling of at least five additional targets. At Didipio, the infill drilling of the underground
will continue and priority regional targets within the FTAA will be advanced. At Haile, expl oration will focus
on infill and extensional drilling as well as initial drilling of several new “Haile -like” targets near the existing
operation.
2017 Outlook
In December 2016, OceanaGold announced its 2017 production and cost guidance that reflected significantly
higher gold production at lower costs compared to 2016. The production increase year-on-year is primarily
driven by the inclusion of the high margin ounces from the Haile Gold Mine as it moves into commercial
production in early 2017 and increased production from Macraes where the Coronation North deposit
represents higher grades than traditionally mined in the Macraes Goldfield.
Table 3 – 2017 Production and Cost Guidance
Didipio Waihi Macraes Haile (1) Consolidated
Gold
Production ounces 110,000 – 130,000 110,000 – 120,000 180,000 – 190,000 150,000 – 170,000 550,000 – 610,000
Copper
Production tonnes 15,000 – 17,000 – – – 15,000 – 17,000
Cash Costs $ per ounce ($20) – $40 $460 – $510 $600 – $650 $400 – $450 $370 – $420
All-In
Sustaining
Costs(2)
$ per ounce $130 – $180 $740 – $790 $950 – $1,000 $500 – $550 $600 – $650
Notes:
1. Haile guidance reflects full year expected production and cost guidance. Production and costs prior to declaration of commerc ial production will be
capitalised and reflected on the balance sheet.
2. AISC calculation conforms to the methodology outlined by the World Gold Council. It includes all cash costs, corporate G&A, maintenance capital
expenditures, capitalised mining expenditures and exploration. It excludes growth capital such as additional development such as the plant
expansion at the Haile Gold Mine and Didipio Underground.
Economic Assumptions
NZD:USD exchange rate of 0.70, Copper price: $2.50 / lb on average for full year.
2017 Capital Program
The Company is also pleased to announce a consolidated 2017 capital expenditure program of $211 million
to $252 million of which $101 million to $113 million is allocated to growth projects at Didipio, Haile and Waihi.
Non-Sustaining capital, which is not included in the Company’s AISC calculation includes a $60 million to
$65 million spend at Didipio, mainly related to the underground development and completion of the first mine
phase. The total pre-production capital cost for the Didipio Underground has slightly increased from the
original estimate of $116 million to $133 million. The additional costs, which are recoverable under the FTAA,
are related to the procurement of an enhanced paste fill plant, earlier start to the development of the second
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mining domain, and additional scope which has been brought forward in the mine plan . The slight increase
in costs is more than offset by a reduction in sustaining capital costs over the life of mine related to a decrease
in the number of stopes.
At Haile, the Company expects to spend $35 million to $40 million to expand the process plant from 2.2 Mtpa
to 3.0 Mtpa, complete the Haile expansion feasibility study and construct ancillary buildings and workshops
including a permanent large vehicle maintenance facility and administrative building.
In New Zealand, non -sustaining capital expenditures relate to the co mpletion of the Martha study at Waihi,
which has a medium -term objective of a million ounces in resource that could be mined from combined
surface and underground operations. At Reefton, the Company expects to spend between $4 million and $5
million on rehabilitation and mine closure activities.
Sustaining, pre-stripping and capitalised mining capital expenditures rang e from $80 million to $ 98 million
and are included in the Company’ s AISC. At Macraes, pre -stripping costs are mainly associated with the
Coronation North mine where mining is expected to commence with removal of overburden in February and
ore mining in May.
The Company has allocated a total exploration budget between $30 million and $4 1 million of which $20
million to $30 million relate to b rownfields exploration activities and included in the AISC. A budget of $10
million to $11 million has been allocated to greenfields exploration and excluded from the AISC. Greenfields
exploration activities are planned in the Philippines, WKP prospect located north of Waihi and on multiple
targets in the Carolinas.
Table 4 – 2017 Capital Expenditure Program
USDm Didipio Waihi Macraes Reefton Haile TOTAL Included in
AISC
Non-Sustaining 60 – 65 2 – 3 – 4 – 5 35 – 40 101 – 113 0
Sustaining 8 – 10 5 – 7 10 – 12 – – 23 – 29 23 – 29
Pre-stripping /
capitalised mining – 5 – 7 35 – 40 – 17 – 22 57 – 69 57 – 69
Exploration 5 – 8 12 – 15 5 – 8 – 8 – 10 30 – 41 20 – 30
TOTAL 73 – 83 24 – 32 50 – 60 4 – 5 60 – 72 211 – 252 100 – 128
Notes:
Sustaining, Pre-stripping/capitalised mining and brownfields exploration is included in the Company’s All -In Sustaining Cost guidance
Capital expenditure for brownfields exploration is approximately $20 - $30 million and included in the AISC.
Hedging
As announced in 2016, the Company entered into a series of zero -cost collar hedging programs for gold
production from the Macraes Goldfield. At the beginning of 2017, the remaining hedge s at Macraes totalled
155,400 ounces of gold at a put option strike price of NZ$1,650 per ounce and a call option strike price of
NZ$1,810 per ounce. As at 29 January 2017, the current New Zealand denominated gold price was NZ$1,642
per ounce.
Full Year Results and Webcast
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The Company will release its financial and operatio nal results for the fourth quarter and full year ending 31
December 2016 before the TSX market open on 23 February 2017 (Toronto, Canada time). The results will
be posted on OceanaGold’s website at www.oceanagold.com
The Company will host a conference call / webcast to discuss the results at 8:30 am on 24 February 2017
(Melbourne, Australia time) / 4:30 pm on 23 February 2017 (Toronto, Canada time).
Webcast Participants
To register, please copy and paste the link below into your browser:
http://event.on24.com/r.htm?e=1349552&s=1&k=3A9B5447E56F208E102F5CD308EF4EBC
Teleconference Participants (required for those who wish to ask questions)
Local (toll free) dial in numbers are:
Australia: 1 800 076 068
New Zealand: 0 800 453 421
Canada & North America: 1 888 390 0546
All other countries (toll): + 1 416 764 8688
Playback of Webcast
If you are unable to attend the call, a recording will be available for viewing on the Company’s website.
- ENDS -
For further information please contact:
Investor Relations
Sam Pazuki
Tel: +1 416 915 3123
Jeffrey Sansom
Tel: +61 3 9656 5300
Media Relations
Jill Thomas
Tel: +61 3 9656 5300
[email protected] | www.oceanagold.com | Twitter: @OceanaGold
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About OceanaGold
OceanaGold Corporation is a mid-tier, high-margin, multinational gold producer with assets located in the
Philippines, New Zealand and the United States. The Company’s assets encompass its flagship operation,
the Didipio Gold-Copper Mine located on the island of Luzon in the Philippi nes. On the North Island of New
Zealand, the Company operates the high-grade Waihi Gold Mine while on the South Island of New Zealand,
the Company operates the largest gold mine in the country at the Macraes Goldfield which is made up of a
series of open pit mines and the Frasers underground mine. In the United States, the Company is currently
commissioning the Haile Gold Mine, a top-tier asset located in South Carolina along the Carolina Terrane.
The Company expects the Haile Gold Mine to commence commercial production in early 2017. OceanaGold
also has a significant pipeline of organic growth and exploration opportunities in the Australasia and Americas
regions.
OceanaGold has operated sustainably over the past 2 6 years with a proven track record for environmental
management and community and social engagement. The Company has a strong social license to operate
and works collaboratively with its valued stakeholders to identify and invest in social programs that are
designed to build capacity and not dependency.
In 2017, the Company expects to produce 550,000 to 610,000 ounces of gold and 15,000 to 17,000 tonnes
of copper with sector leading All-In Sustaining Costs that range from $600 to $650 per ounce sold.
Cautionary Statement for Public Release
Certain information contained in this public release may be deemed “forward -looking” within the meaning of
applicable securities laws. Forward -looking statements and information relate to future performance and
reflect the Company’s expectations regarding t he generation of free cash flow, execution of business
strategy, future growth, future production, estimated costs, results of operations, business prospects and
opportunities of OceanaGold Corporation and its related subsidiaries. Any statements 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 forwa rd-looking statements. Forward -looking statements are
subject to a variety of risks and uncertainties which could cause actual events or results to differ materially
from those expressed in the forward -looking statements and information. They include, amon g others, the
accuracy of mineral reserve and resource estimates and related assumptions, inherent operating risks and
those risk factors identified in the Company’s most recent Annual Information Form prepared and filed with
securities regulators which is available on SEDAR at www.sedar.com under the Company’s name. There are
no assurances the Company can fulfil forward -looking statements and information. Such forward -looking
statements and information are o nly predictions based on current information available to management as
of the date that such predictions are made; actual events or results may differ materially as a result of risks
facing the Company, some of which are beyond the Company's control. Although the Company believes
that any forward-looking statements and information contained in this press release is based on reasonable
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assumptions, readers cannot be assured that actual outcomes or results will be consistent with such
statements. Accordingl y, readers should not place undue reliance on forward -looking statements and
information. The Company expressly disclaims any intention or obligation to update or revise any forward -
looking statements and information, whether as a result of new information , events or otherwise, except as
required by applicable securities laws. The information contained in this release is not investment or financial
product advice.
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