Oceanagold Delivers Positive Preliminary Economic Assessment Results FOR Waihi District
1
MEDIA RELEASE
16 July 2020
OCEANAGOLD DELIVERS POSITIVE PRELIMINARY ECONOMIC ASSESSMENT
RESULTS FOR WAIHI DISTRICT
(All financial figures in US Dollars unless otherwise stated)
(MELBOURNE) OceanaGold Corporation (TSX: OGC) (ASX: OGC) (the “Company”) is pleased to announce
the results the Waihi District Study Preliminary Economic Assessment (“PEA”) for the Waihi District located in
New Zealand.
The PEA is being disclosed in accordance with National Instrument 43-101 Standards of Disclosure for Mineral
Projects (“NI 43-101”). An NI 43-101 Technical Report of the PEA will be finalised and filed on SEDAR within
the next 45 days. Readers are cautioned that the PEA is preliminary in nature. It includes Inferred Mineral
Resources that are considered too speculative geologically to have the economic considerations applied to
them that would enable them to be categorized as Mineral Re serves, and there is no certainty that the PEA
will be realised. Mineral Resources that are not Mineral Reserves do not have demonstrated economic viability.
PEA Results Summary
BASE CASE (@$1,500/oz gold price)
• Initial after-tax IRR of 51%
• Initial after-tax net present value (“NPV”) at 5% discount rate of US$665 million
• Life of Mine (“LOM”) after-tax free cash flow of US$1.1 billion
• LOM All-in sustaining costs (“AISC”) of US$627 per ounce
• LOM cash costs of US$557 per ounce
• Initial mine life to 2036 from multiple sources of mill feed
• Total growth capital investment of approximately US$447 million over eight years for four
distinct deposits
• Increased resource for Martha Open Pit – now 260,000 gold ounces in the Indicated
category and 290,000 ounces in the Inferred category
Michael Holmes, President and CEO of OceanaGold said, “ We are very pleased to share the positive results
of the Waihi District Study that represents the initial value creating p otential of the district opportunities . The
PEA indicates the potential for a robust project with an extended mine life for Waihi to 2036 from Martha
2
Underground, Wharekirauponga Underground ( “WKP”), Gladstone open pit and a cutback of the existing
Martha open pit.”
“Using our base case assumptions, the significant exploration potential recognised at Martha Underground and
WKP, combined with the existing infrastructure and skilled workforce, the results of the study give us
confidence to move forward in the Waihi District opportunities and as a result, we will continue advancing each
forward. Additionally, we see potential for further significant growth through resource additions particularly at
Martha Underground and WKP deposits . Resource expansion has the potential for sustained high levels of
annual gold production and mine life extension.”
“Leveraging exploration potential through aggressive drill campaigns has been the key to our success since
acquiring the Waihi asset in late 2015. This year, we have over 25,000 metres of exploration drilling planned
and underway at Martha Underground where our focus is on resource conversion. At WKP, we have an
additional 5,000 metres of drilling underway as we continue to drill the high-grade East Graben vein and related
foot-wall and hanging wall structures. We expect to update the WKP resource mid-2021.”
“The critical path for success is expected to be resource consenting of WKP and surface projects including the
Martha Open Pit Phase 5 and additional tailings storage capacity. The Company has successfully permitted
projects in New Zealand over the past 30 years. Through our understanding of the regulatory regime, strong
reputation as a responsible miner, demonstration of 30 years of responsible mining and rehabilitation and
support from local communities, we are confident to advance these projects through the permitting phase.”
“The results of the Waihi District Study also show significant socio-economic benefits for the rural communities
in the Coromandel region and for New Zealand that can play a critical role in the post -COVID-19 economic
recovery. With the potential to extend the mine life out to 2036, we can invest an estimated $1. 4 billion in-
country while adding 300 new jobs to our existing 700 -person countrywide workforce. OceanaGold has
operated responsibly for over 30 years and has already delivered significant benefits to New Zealand over that
time.”
Overview
The Waihi District on the North Island, New Zealand includes the town of Waihi and surrounding areas and lies
approximately 140 kilometres southeast of Auckland. The mining projects included in the PEA for the Waihi
district include Martha Underground (“MUG”), Wharekirauponga Underground (“WKP”), Martha Open Pit
Phase 5 Cutback (“MOP5”) and Gladstone Open Pit (“Gladstone”) (Figure 1). WKP is located 10 kilometres
north of Waihi. The forecast financial and operating metrics reflect the inclusion of the four projects as they
progressively contribute to production, commencing with MUG in the second quarter of 2021.
3
Figure 1 – Waihi District Overview
Mineral Resource
Since 2017, the Company has completed nearly 100,000 metres of drilling from surface and underground a t
Martha and approximately 35,000 metres of drilling at WKP that underpins the existing Indicated and Inferred
Resources (no Measured Resource currently exists at MUG or WKP) (Table 1).
The PEA is based upon the resource estimates reported in the Company’s 2019 annual reserve and resource
statement (see release March 31, 2020) with optimisation of the mine design resulting in the following
modifications to reported resources:
• the Martha Phase 4 open pit has been superseded by MOP5, resulting in the merging of the Martha
Phase 4 resource into the larger MOP5 open pit resource
• the Martha Phase 4 open pit mineral reserve of 77,000 ounces has been declassified for inclusion in
the larger open pit mineral resource
• the MOP5 design utilises approximately 140,000 ounces from the upper portion of the Martha
underground mineral resource resulting in a mineral resource reduction to the latter
• a review of cut-off grade applicable to the Gladstone project resulting in an increase in both Indicated
and Inferred Resource
In combination with the release of the PEA, the Company is pleased to announce an increase in the resource
for the Martha Open Pit which now totals 260,000 ounces of gold in the Indicated category and 290,000 ounces
of gold in the Inferred category . Meanwhile, the Indicated Resource at Gladstone has increased to 140,000
ounces of gold (from 100,000 ounces) while the Inferred Resource has increased to 20,000 ounces of gold
4
(from 10,000 ounces). The net result of these changes is an increase of 140,000 and 240,000 ounces of gold
in the Indicated and Inferred categories, respectively from the updated December 2019 Resource and Reserve
statement.
The Company also notes that the Martha Underground resource used for the purposes of the PEA totals
706,000 gold ounces, approximately half of the reported total Indicated and Inferred ounces pending future
studies around the extraction of the remnant Martha and Royal veins in historical mine working areas.
Table 1 – Updated Waihi Resources
Resource Area
Resource
Cut Off
Grade
Indicated Resource Inferred Resource
Mt Au
g/t
Au
Moz
Ag
g/t Ag oz Mt Au
g/t
Au
Moz
Ag
g/t Ag Moz
Martha OP 0.5 g/t Au 4.0 2.0 0.26 19.9 2.6 4.9 1.9 0.29 19 2.9
Gladstone OP 0.5 g/t Au 2.8 1.6 0.14 3.8 0.3 0.6 1.1 0.02 2.5 0.0
Open Pit Total 6.8 1.8 0.40 13.3 2.9 5.4 1.8 0.31 17 3.0
MUG 2.15 g/t Au 4.4 5.2 0.74 17.8 2.5 3.7 4.6 0.55 16 2.0
WKP 2.5 g/t Au 1.0 13.4 0.42 25.5 0.8 1.9 12 0.72 20 1.2
Underground Total 5.4 6.7 1.16 19.2 3.3 5.7 7.0 1.3 18 3.2
Waihi District Total 12.2 4.0 1.56 15.9 6.2 11 4.4 1.6 17 6.2
- MUG resources are reported below the Martha stage 5 open pit design and are constrained to within a conceptual underground designed based upon the incremental cut-
off grade of 2.15 g/t which is defined at a gold price of NZD2,083/oz (US$1,500/oz @ USD:NZD 0.72).
- WKP Resources are constrained to within a conceptual underground design based upon the cut -off grade of 2.5 g/t gold which is defined at a gold price of NZD2,083/oz
(US$1,500/oz @ USD:NZD 0.72).
- No dilution is included in the reported figures and no adjustments have been allowed for mining recoveries or processing losses
- There is no certainty that Mineral Resources that are not Mineral Reserves will be converted to Mineral Reserves. Mineral Resources that are not Mineral Reserves do
not have demonstrated economic viability.
- The tabulated resources are estimates of metal contained as troy ounces of gold and silver.
Assumptions such as mine dilution and mining rates have been applied to the reported resources for t he
purposes of the study.
Project Economics
The base case after -tax financial model yielded an IRR of 51% and an NPV 5% of $665 million (Table 2). The
spot case scenario assumes gold prices and exchange rates that closer reflects the current operating
environment, including a gold price of $1,750 per ounce. At these assumptions, the after -tax financial model
resulted in an IRR of 75% and an NPV5% of $917 million. Cash flows have been discounted to January 1, 2020
assuming production commences with Martha Underground in the second quarter of 2021.
5
Table 2 – Forecast Financial Analysis Overview (pre-tax and after-tax)
Financial Metric Unit Base Case Spot Scenario
Gold Price $/oz $1,500 $1,750
After-Tax
NPV5% USDm 665 917
Internal Rate of Return % 51 75
LOM Cumulative Free Cash Flow USDm 1,091 1,466
Pre-Tax
NPV5% USDm 931 1,273
Internal Rate of Return % 61 92
LOM Cumulative Free Cash Flow USDm 1,520 2,040
- The PEA is a preliminary technical and economic study of the potential viability for the Waihi project. The production target and financial forecast referred to in the PEA
are comprised of 51% Indicated Mineral Resources and 49% Inferred Mineral Resources. Inferred Mineral Resources are considered too geologically speculative to have
economic considerations applied to them in order to be categorized as Mineral Reserves. There is no certainty that further drilling will convert Inferred Resources to
Indicated Mineral Resources. Further drilling, evaluation and studies are required to provide any assurance of an economic development case
Mining and Milling
The PEA assumes an initial 2.2 million ounces of go ld produced, after application of metallurgical recoveries
averaging 90% over the LOM from the four deposits: MUG, WKP, Gladstone and MOP5.
Table 3 – Waihi District Forecast Production Summary
Operation First Production Average Annual
Gold Production
Steady State
Production Rate Initial Mine Life
Unit koz koz
MUG 2021 75 90 – 100 2028+
WKP 2026 156 190 – 230 2031+
MOP5 2027 50 80 – 100 2036
Gladstone 2024 13 15 – 30 2027
Average annual gold production is based on the total production expected over the initial mine life and includes
the ramp -up period; thus, total gold production from the start of production until depletion of the mineral
resources is assumed. Steady-state production assumes average production rates following ramp-up of mining
operations. The Company will continue to drill both the Martha and WKP underground deposits with the aim of
increasing the size of both resources.
Figure 2 – Forecast Production Summary by Deposit
6
Initial estimated mill feed used in the PEA, including initial grades and mining rates , are listed in Table 4. Mill
feed grade reflects dilution factors applied to the resource. The Company expects varying timelines to ramp -
up to peak mining rates for the different deposits. Total contained gold in mill feed at MUG reflects only half of
the reported resources due to mine planning restrictions that reflect the exclusion of areas that prevents optimal
design and requires additional resource and geotechnical drilling.
Table 4 – Waihi District Forecast Mill Feed
Deposit Mill Feed Gold Grade Contained Gold Peak Mining
Rates Assumed
Unit kt g/t koz ktpa
MUG 5,000 4.4 700 750
WKP 3,500 9.2 1,000 800
MOP5 8,800 1.9 550 1,600
Gladstone 3,400 1.5 160 1,200
Total / Average 20,700 3.7 2,500
The PEA assumes underground mining at MUG and WKP and conventional open pit mining at MOP5 and
Gladstone. MUG is expected to produce 35,000 to 45,000 gold ounces in 2021 with production beginning in
the second quarter utilising modified Avoca and remnant mining methods.
WKP is located 10-kilometres north of the existing Waihi process plant within New Zealand Department of
Conservation (“DOC”) land. The PEA assumes underground mining of the WKP deposit utilising a decline from
private land with several access locations currently under consideration. The material mined would be
transported underground via a decline to a portal then via surface to the existing Waihi process plant. The PEA
assumes first production from WKP in 2026 using a modified Avoca mining method.
Open pit mining at Gladstone, beginning in 2024, would provide early mill feed as well as rock for underground
mine backfill over the LOM and construction of TSFs. Mining of MOP5, beginning in 2027, assumes an
additional cutback to the previously permitted Phase 4 cutback and would require some relocation/replacement
of surface infrastructure, acquisition of a mining fleet and pre-stripping of overburden.
The PEA includes the use of the existing Waihi process plant that currently has a throughput capacity of 1.0 to
1.3 million tonnes per annum (“Mt pa”) and assumes modest growth capital investment to increase plant
capacity to 1.6 Mtpa. The throughput rate of the plant will be achieved through upgrades to the crushing, milling,
and carbon -in-pulp circuit s (Figure 3). Options are available with increased capital to further increase the
capacity of the plant to accommodate potential expansion of existing resources and production levels over the
life of mine.
7
Figure 3 – Forecast Mining Mill Feed and Processing
Preliminary metallurgical test work demonstrates average recoveries of 90% over the LOM from the existing
processing circuit. Annual gold production ranges from 35,000 to 45,000 ounces in 2021 to approximately
300,000 gold ounces in 2028 with a significant contribution from WKP along with MUG and MOP5.
Options for future tailings storage facilities (“TSFs”) include two upper lifts on the existing TSFs, the
construction of a new (third) TSF, and the potential conversion of Gladstone open pit to a TSF when mining is
completed there.
Capital Investment
The total growth capital investment for the Waihi District is estimated to be $447 million spread principally over
eight years (Table 5). Growth capital expenditures include MUG development and construction, portal facilities
and decline access to WKP, WKP underground development, surface infrastructure related to Gladstone and
MOP5, expansion of the process plant, lifts to the existing TSFs and construction of an additional (third) TSF.
Total sustaining capital cost is estimated to be approximately $155 million over the LOM and is inclusive of $49
million estimated for site reclamation and closure costs.
Table 5 – Forecast Capital Investment Summary
Capital Expenditures Growth Sustaining
(USDm) (USDm)
Martha Underground $48 $61
WKP $139 $25
Gladstone $20 –
Martha Open Pit $116 $2
General (including reclamation & closure) $16 $55
Processing Plant $33 $4
Other $75 $8
Total / Average $447 $155
8
Operating Costs
The life of mine All-in Sustaining Cost is expected to be $627 per ounce while life of mine cash costs is expected
to be $557 per ounce including estimated royalties.
Table 6 – Forecast Operating Cost Summary
Operating Costs Units Average LOM
Martha Underground per tonne mined $31
WKP per tonne mined $30
Martha Open Pit per tonne mined $4.4
Gladstone Open Pit per tonne mined $3.2
Processing per tonne milled $19
Site General & Administrative per tonne milled $8.1
Table 7 – Forecast Site All-in Sustaining Cost Breakdown
All-in Sustaining Cost Inputs Units Average LOM (per oz Au sold)
Direct cash costs per oz Au sold $545
By-product credits per oz Au sold ($45)
Royalties per oz Au sold $57
Sustaining capital expenditures per oz Au sold $70
Total All-in Sustaining Costs per oz Au sold $627
Next Steps
The Company is committed to advancing the permitting (consenting) process under New Zealand’s Resource
Management Act and progressing technical studies for the Waihi District as outlined in the PEA. The Company
expects to complete a feasibility study for MUG in the first quarter of 2021 and complete a prefeasibility study
for WKP in the second half of 2021 with the intent to convert existing resources to reserves. The Company
also expects to complete a feasibility study for Gladstone, MOP5 and the additional TSF in 2022.
The Company intends to complete the consenting process for all the projects as soon as possible to facilitate
the development of the Waihi District, prioritising the development of WKP . The consenting process includes
extensive technical, environmental and cultural assessments as well as significant social engagement beyond
the initial geological work that established the Mineral Resource. The consenting process is expected to
commence in the second half of 2020.
For the remainder of 2020, the Company expects to drill an additional 5,000 metres at WKP on the high-grade
East Graben structures. At MUG, the Company has completed approximately 10,000 metres of drilling in the
first half of 202 0 and expects to complete an additional 15,000 metres of drilling during the remainder of the
year with a focus on resource conversion to Indicated category. In addition to the current reported resource at
MUG, the Company has an identified exploration target with the potential of 6 to 8 million tonnes grading 4 to
6 g/t Au that represents future opportunity for resource addition.
It is important to note that the exploration target at MUG is exclusive of the reported resource and relates to
the portion of the deposit that has not yet been adequately drill tested. This exploration target is based on the