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MELBOURNE, April 30, 2015
/CNW/ - OceanaGold Corporation (TSX/ASX/NZX: OGC)
("OceanaGold") is pleased to announce that it has signed a
non-binding Letter of Intent ("LOI") with Newmont Mining
Corporation ("Newmont") to acquire Newmont's Waihi Gold Mine
("Waihi") in New Zealand for
US$101 million in cash plus customary
adjustments. Newmont will also retain a 1% Net Smelter Royalty for
gold ounces mined from one specific exploration tenement capped at
300,000 ounces of production. The proposed transaction is subject
to completion of comprehensive due diligence, execution of a
definitive acquisition agreement, Board and regulatory approvals
and other customary closing conditions.
Mick Wilkes, Managing Director
and CEO commented, "We have long believed that Waihi represents a
strong strategic fit within OceanaGold. We are excited about the
prospect of acquiring it and welcoming its experienced workforce to
our team. Waihi represents a unique opportunity for us to acquire a
high-quality asset that has demonstrated the propensity to extend
mine life for more than two decades in what is still a very
prospective, high-quality goldfield." He added, "This proposed
acquisition is accretive to shareholders, grows our production
profile and importantly will further reduce our industry leading
All-In Sustaining Cost (AISC) profile."
Proposed Transaction Highlights
- High-grade and low-cost operation expected to contribute
meaningful gold production
- Substantial free cash flow generation anticipated to result in
a rapid payback on investment
- Significant opportunities to extend mine life through
exploration and development, as demonstrated by the performance
over 27 years operating in this highly prospective goldfield
- Synergies with OceanaGold's existing operations and extensive
experience in New Zealand
- Highly prospective regional exploration potential
- Accretive to near-term earnings per share and cash flow per
share
Mr. Wilkes went on to say, "We recently announced a mine life
extension to the Frasers Underground Mine which combined with a
weaker New Zealand dollar and
lower fuel prices has enhanced the value of our Macraes operations.
We are investing in exploration along strike and underground at
Macraes and believe there is good potential to underpin 3 to 5
years of steady operations producing around 150,000 ounces of gold
per annum while generating material free cash flow. This combined
with the proposed Waihi transaction creates an attractive and
profitable gold business in New
Zealand that we believe will generate strong returns for
years to come."
Waihi Mine Operations Overview
- Location: Waihi, New Zealand
(approximately 150 kilometers southeast of Auckland)
- History: Open pit mine since 1988, and underground operations
since 2005
- Current operations: Correnso Underground Mine
- Processing: Conventional SAG mill, ball mill and CIP circuit,
with plant capacity of up to 1.3 million tonnes per annum
- Reserves: 2 Mt grading 5.52 g/t containing approximately 360
koz gold
- Production: Expected to produce on average 100,000 ounces per
annum through to 2018 from Correnso Underground Mine
- All-in-sustaining costs: Expected to be US$760-820 per ounce
- Geology: low-sulphidation epithermal gold and silver deposits
hosted in quartz veins
- Employees: 340 person workforce
- Community: Long history of community engagement and support for
community development
Information in relation to Waihi Mine Operations Overview is
from Newmont's 2014 Reserves and Resources Statement (dated
February 19, 2015), Newmont's 2014
Financial Results (dated February 19,
2015) and from Newmont.
Potential Transaction Overview
Pursuant to the LOI, Newmont has granted OceanaGold an
exclusivity period until June 1, 2015
for OceanaGold to complete its due diligence review and for Newmont
and OceanaGold to execute a definitive acquisition agreement.
The purchase price of US$101
million in cash plus customary adjustments will be paid on
legal closing, which is subject to customary closing conditions,
including Board and regulatory approvals. Under the proposed
transaction, and subject to legal closing occurring, OceanaGold
will have the economic benefit of the asset with effect from
1 July 2015 with expected formal
closing early in the third quarter of 2015.
Financing
OceanaGold will fund the purchase price from cash and undrawn
facilities. As at 31 March 2015,
OceanaGold had cash of US$59.6
million and has drawn US$77.8
million from its revolving credit facility leaving
US$97.2 million undrawn. In order to
ensure a sufficient liquidity buffer going forward, OceanaGold has
received highly confident letters from its relationship banks to
increase its revolving credit facility to a total of US$225 million. Prior to the transaction closing,
OceanaGold will finalise the negotiation of this amendment to its
revolving credit facility.
Advisors
With respect to the proposed transaction, Citigroup Global
Markets Australia Pty Limited is serving as financial advisor and
Anderson Lloyd is serving as legal
advisor to OceanaGold.
About OceanaGold
OceanaGold Corporation is a significant multinational gold
producer with mines located on the South Island of New Zealand and in the Philippines. The Company's assets
encompass New Zealand's largest
gold mining operation at the Macraes goldfield in Otago which is
made up of the Macraes Open Pit and the Frasers Underground mines.
Additionally, on the west coast of the South Island, the Company
operates the Reefton Open Pit mine. OceanaGold's Didipio Mine in
northern Luzon, Philippines
commenced commercial production on 1 April
2013 and is expected to produce 100,000 ounces of gold and
14,000 tonnes of copper per year on average over the next 15 years.
In 2015, the Company expects to produce 295,000 to 335,000 ounces
of gold from the combined New
Zealand (ex-Waihi) and Philippine operations and 21,000 to
23,000 tonnes of copper from the Philippine operations.
OceanaGold is listed on the Toronto, Australian and New Zealand stock exchanges under the symbol
OGC.
Cautionary Statement for Public Release
Certain information contained in this public release, including
any information relating to the Company's future financial or
operating performance 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 future growth, 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
forward-looking statements. Forward-looking statements such as
production forecasts are subject to a variety of risks and
uncertainties which could cause actual events, performance,
achievements or results to differ materially from those expressed
in the forward-looking statements. They include, among 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. Such
forward-looking statements 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 Company's control. Some of these risks and
uncertainties include: general economic and market factors
(including changes in global, national or regional financial
credit, currency or securities markets); changes or developments in
global, national or regional political conditions (including any
act of terrorism or war); changes in laws (including tax laws) and
changes in GAAP or regulatory accounting requirements; fluctuations
in the price of gold; inability to obtain required consents,
permits or approvals; and other risk factors as outlines in the
Company's annual and interim filings. Readers are cautioned that
the foregoing list of factors is not exhaustive. Although the
Company believes that any forward-looking information 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 information, whether as a
result of new information, events or otherwise, except as required
by applicable securities laws. All forward looking information
contained in this public release is qualified by this Cautionary
Statement. The information contained in this release is not
investment or financial product advice.
SOURCE OceanaGold Corporation