Oceanagold Provides an Update to Haile Commissioning and Revised Company Guidance
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MEDIA RELEASE
26 June 2017
OCEANAGOLD PROVIDES AN UPDATE TO HAILE COMMISSIONING AND REVISED
COMPANY GUIDANCE
(All financial figures in US Dollars unless otherwise stated)
(MELBOURNE) OceanaGold Corporation (TSX/ASX: OGC) (the “Company”) wishes to provide an update
on the status of commissioning activities at the Haile Gold Mine (“Haile”).
Mick Wilkes, OceanaGold President and CEO said, “ Although the Haile operation is cash flow positive and
many aspects of the operation continue to meet or exceed our expectations, we have encountered some
commissioning issues that have had an impact on overall process stability and recoveries. It is not uncommon
to encounter technical issues that need to be addressed during the commissioning phase of a new process
plant. Our highly skilled team on the ground, many of which have contributed to the timely and successful
commissioning of the Didipio and Reefton process plants, are working towar ds achieving commercial
production.”
He added, “Although disappointed with the delay, I am highly confident in the team and with their ability to
deliver this plant to meet our expectations for production and cost. The Haile Gold Mine is world-class asset
with very robust economics that will deliver significant cash flows for many years to come, as demonstrated
by the results of the optimisation study.”
Haile Commissioning
In the first quarter and early in the second quarter, plant throughput ramped -up well and we achieved
nameplate throughput several times . However, in the middle of the second quarter, some commissioning
issues surfaced leading to a shortfall in tonnes milled and recovery as compared to the ramp-up plan.
1. The primary poly -urethane liner on each of the eight Carbon-in-Leach (“CIL”) tanks partially de-
laminated due to poor application. As a result, the Company was required to take two CIL tanks at a
time off line to strip the liner completely from the tanks, which reduced the residency time in the
leaching circuit leading to lower recoveries. Re-application of the new liners , is being carried out
under warranty and by the installation contractor one tank at a time to eliminate disruption to the
plant with an expected completion in December.
2. The CIL tank inter-stage piping system was short circuiting and thereby sending some gold bearing
slurry into tailings. The Company identified that the CIL piping system was under designed and has
implemented a temporary fix while advancing the permanent solution. The Company will install a
new CIL piping system and expects this work to be completed by August. The temporary solution
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has resolved the issue and has subsequently led to higher recoveries and increased plant stability in
recent weeks.
3. The front-end of the process plant has performed to expectation with only a minor issue related to
grate sizing of the SAG mill. The current steel discharge grate opening in the SAG mill are
inadequately sized to allow worn steel grinding media to pass through. This has resulted in excessive
amount of small grinding media in side the mill reducing its effectiveness. This in turn , has created
fluctuations in throughput and contributed to instability of the process. As part of a planned mill re -
lining scheduled for July, the Company will replace some of the current steel grate s with larger
aperture grates which will alleviate the problem.
4. The fine grinding circuit has been impacted by fluctuations in density effecting its performance. The
circuit will be converted to closed circuit grinding which will stabilise the feed to the mills and better
regulate the product size.
5. Some parts of the control systems have not performed to expectations due to lower data processing
speeds which has resulted in sub -optimal responses through some areas of the process plant. In
parallel with the process plant expansion, enhancements to the process cont rol system will be
identified and undertaken.
A summary of the commissioning issues, rectification plans and timing is summarised in Table 1.
Table 1 – List of Commissioning Focus Areas
Specific Area Issue Solution Estimated
Cost
Completion
Date
SAG Mill grate
Current steel grates in the
SAG mill holding back finer
steel grinding media causing
excessive quantity of small
grinding material resulting in
lower throughput
Replace some of the grates with
larger aperture grates allowing
the smaller steel media to pass
through the mill
$50k July 2017
Regrind inflow
Variable slurry density into
fine grinding circuit resulting in
inconsistent grinding size
Closing the feed circuit to better
control slurry density and
product size
$200k July 2017
Carbon-in-Leach
Piping System
Inadequately sized piping
system between CIL tanks
and the leach circuit
Redesign and installation of a
new CIL piping system $700k August 2017
Carbon-in-Leach
Tank Liners
Tank liners partially failing at
various times due to faulty
application on inner tank walls
Removing the current liners and
then reapplying new liners one
at a time to eliminate disruption
Nil (under
warranty) December 2017
Control system
Control system programming
and data processing has been
sub-optimal in some areas
resulting in inefficient process
control
In parallel with future upgrades
to process plant, review and
undertake potential upgrades to
control system
$2M - $3M Staged upgrades
over time
Mining operations continue to progress well as the Company has commenced mining ore at the Snake pit,
four months earlier than planned. Mining reconciliation has been in-line with expectations.
The operation is cash flow positive and operating costs are in-line with expectations. The results of the Haile
Optimisation Study have demonstrated the significant value inherent to this asset and the Company
continues to be encouraged by the exploration potential at depth and along strike at Haile and regionally.
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Updated Company Guidance
With the updated forecast at Haile and strong operations at Didipio, the Company wishes to provide a revised
production and cost guidance. The overall gold production guidance range for the Company remains broadly
unchanged while the copper production guidance range has increased.
Table 2 – REVISED 2017 Production and Cost Guidance
Didipio Waihi Macraes Haile (1) Consolidated
Gold
Production ‘000 oz
150 – 160
(was 110 – 130)
110 – 120
(unchanged)
180 – 190
(unchanged)
110 – 130
(was 150 – 170)
550 – 600
(was 550 - 610)
Copper
Production ‘000 t
18 – 19
(was 15 – 17)
– – –
18 – 19
(was 15 – 17)
All-In
Sustaining
Costs(2)
$ / oz
$70 – $120
(was $130 – $180)
$740 – $790
(unchanged)
$950 – $1,000
(unchanged)
$600 – $650
(was $500 – $550)
$600 – $650
(unchanged)
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.
On the revised guidance for the Haile and Didipio operations this year, Mick Wilkes stated “ Operating a
diversified multi-mine business provides us the flexibility to offset production from one asset against another
to achieve our overall business results, as increased production now expected at Didipio will partially offset
the decrease in production from Haile this year.”
- ENDS -
For further information please contact:
Investor Relations
Sam Pazuki
Tel: +1 416 915 3123
Jeffrey Sansom
Tel: +61 3 9656 5300
[email protected] | www.oceanagold.com | Twitter: @OceanaGold
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 isl and of Luzon in the Philippines. On the North Island of New
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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 m ade 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. OceanaGold also has a
significant pipeline of organic growth and exploration opportunities in the Americas and Asia-Pacific regions.
OceanaGold has operated sustainably over the past 27 years with a proven track -record for environmental
management and community and social engagement. The Company has a strong soci al 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 600,000 ounces of gold and 18, 000 to 19,000 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 the generation of free cash flow, execution of business
strategy, future growth, future producti on, 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, projectio ns, objectives, assumptions or
future events or performance (often, but not always, using words or phrases such as "expects" or "does not
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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 uncerta inties which could cause actual events or results to differ materially
from those expressed in the forward -looking statements and information. They include, among others, the
accuracy of mineral reserve and resource estimates and related assumptions, inher ent operating risks ,
sovereign risks, risk of suspension 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 only 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
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contained in this press release is based on reasonable assumptions, readers cannot be assured that actual
outcomes or results will be consistent with such statements. Accordingly, 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
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in this release is not investment or financial product advice.
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