OceanaGold sees mounting losses amid delay in FTAA renewal

Published February 25, 2020, 12:00 AM

by manilabulletin_admin


The local unit of Australian-Canadian miner OceanaGold has already incurred billions of losses for failing to get President Rodrigo Duterte’s approval for its extended Financial or Technical Assistance Agreement (FTAA) with the Philippine government.

OceanaGold has disclosed that it is currently spending $8 million to $10 million a quarter (or P400 million to P500 million every three months) on holding costs in its Didipio underground gold and copper mine project in in Nueva Vizcaya.

The cost is associated with maintaining the workforce and its process plant, which is currently in care and maintenance status.

To recall, the company’s sole operation in the Philippines – the Didipio underground gold and copper mine project – has not been operational since July last year as it still awaits the Office of the President’s (OP) final approval for its extended FTAA.

This means that if the company will still not be allowed to operate by the end of this quarter, its losses could amount to $24 million to $30 million (around P1.2 billion to P1.5 billion) and even bigger beyond March.

OceanaGold also said that should the renewal process be “protracted beyond current expectations”, and then it decides to transition into full care and maintenance, “holding costs are expected to be in the order of $3 million [or P151.6 million] per quarter.”

Then it will take the company 12 months to ramp-up back to its full production once it gets its renewed contract with the Philippine government.

Right now, the Didipio mine remains in a state of operational readiness while the FTAA renewal process continues to progress.

“When operations resume at Didipio, the Company expects trucking to resume within a week, the process plant within two weeks and the underground mine within three weeks before ramping up over a four to six week period. These estimates are based on the workforce remaining in a state of operational readiness,” OceanaGold said.

Once fully ramped up, the Company expects Didipio to produce approximately 10,000 ounces of gold and 1,000 tonnes of copper per month at a site All-in sustaining costs (AISC) of between $700 and $750 per ounce sold.

As of July last year, or at the time when the company formally stopped its operations, the Didipio mine was only able to produce 83,913 ounces of gold and 10,255 metric tons (MT) of copper. This was way lower than the company’s 2019 production targets of 125,00 ounces of gold and 15,000 MT of copper.
Compared to last year, last year’s production at Didipio mine site was also lower. In 2018, the company was able to produce as much as 115,000 ounces of gold and 15,000 MT of copper from the project.