/NOT FOR DISSEMINATION OR DISTRIBUTION IN THE UNITED STATES AND NOT FOR DISTRIBUTION TO
US NEWSWIRE SERVICES./
(All financial figures in US Dollars unless
otherwise stated)
BRISBANE, Australia,
Sept. 23, 2020 /CNW/ - OceanaGold
Corporation (TSX: OGC) (ASX: OGC) (the "Company") is pleased
to announce the completion of the Haile Gold Mine ("Haile")
National Instrument 43-101 Technical Report ("Technical Report").
The Haile Technical Report will be filed on SEDAR and with the
Australian Securities Exchange within 45 days.
Note that all Haile Technical Report forecasts are based on
Mineral Reserves only. The results of the Technical Report are not
to be used as formal guidance. The Company expects to provide
formal annual guidance for production, costs and capital based on
Board approved budgets in the first quarter of 2021.
Key Highlights
- Life of mine extended to 2033 based on Mineral Reserves
only
- Reserve Gold Price Case ("Reserve Case") pre-tax net present
value ("NPV") (5% discount rate) of approximately US$930 million, after-tax of US$892 million at a flat gold price of
$1,500/oz
- Market Consensus Gold Pricing Case ("Market Pricing Case")
pre-tax NPV5% of approximately US$1.1 billion, after-tax of US$1.05 billion
- Reserve Case life of mine pre-tax undiscounted free cash flows
of approximately $1.3 billion,
after-tax of $1.2 billion
- Market Pricing Case life of mine pre-tax undiscounted free cash
flows of approximately $1.5 billion,
after-tax of $1.4 billion
- Increased Proven & Probable Gold Reserves by 60,000 ounces,
Measured & Indicated Resources by 120,000 ounces and Inferred
Resources by 40,000 ounces, all net of mine depletion as at
June 30, 2020
- Approximate life of mine cash costs of $590 per ounce and All-In Sustaining Costs
("AISC") of $800 per ounce
- Horseshoe Underground optimal mine sequence confirmed as
bottom-up with development expected to commence in 2021 and first
production targeted for late 2022
- Average annual life of mine gold production of 180,000 -
200,000 ounces, increasing to approximately 250,000 ounces when on
combined open pit and underground mill feed between 2023 and
2027
- Underground exploration targets advancing including Horseshoe,
Snakeshoe and Palomino with new drill targets at Aquarius and
Pisces (both not included in the Technical Report)
Michael Holmes, President and CEO
of OceanaGold said, "We are pleased with the results of the updated
Haile Technical Report which demonstrate long-term value and
significant organic growth opportunity for the operation. The
Reserve Case estimates the pre-tax NPV at $930 million while the pre-tax NPV using market
consensus gold prices is estimated at $1.1
billion. These results, coupled with the significant
underground exploration upside, makes the Haile Gold Mine a
top-tier asset in a great jurisdiction."
"Haile has been a commercial operation for approximately three
years. Despite numerous challenges during this time, we have
successfully increased the process plant capacity by approximately
75% from nameplate, have significantly increased mining rates while
reducing unit costs, upskilled the local workforce and attracted
experienced operations managers who have improved the safety
culture and operational productivity. We continue to adapt to the
extreme weather patterns of the last few years in the Carolinas
that have at times hampered mining productivity. Through our
experience of operating Haile over the past few years, we have
updated its mine plan to deliver over the long-term."
"We evaluated the Horseshoe Underground mine sequence and
confirmed a bottom-up approach as the optimal mine sequence. We
plan to commence development of the Horseshoe Underground in late
2021 with first production targeted for late in 2022. Gold
mineralisation below the current reserve open pit design represents
significant underground growth opportunity for the Company with
further drilling being planned to convert Inferred Resources
(Horseshoe, Palomino), define new resources where we have
intersected significant zones of mineralisation (Snakeshoe) and
test new underground targets Pisces and Aquarius. Underground ore
feed is an important part of Haile's future operation. Its
importance is illustrated in the updated Technical Report with
average annual gold production of 250,000 ounces a year at first
quartile costs when both open pit and underground ore is fed
through the mill."
Updated Mineral Reserves and Resources
As at June 30, 2020, the Company
increased Haile Proven and Probable Mineral Reserves from
December 31, 2019 by 60,000 ounces of
gold, net of mine depletion.
Table 1 – Proven
& Probable Mineral Gold Reserves (June 30, 2020)
|
|
|
|
|
Resource
Area
|
Proven
|
Probable
|
Proven &
Probable
|
Mt
|
Au
g/t
|
Ag
g/t
|
Mt
|
Au
g/t
|
Ag
g/t
|
Mt
|
Au
g/t
|
Ag
g/t
|
Au
Moz
|
Ag
Moz
|
Open Pit
|
3.0
|
1.37
|
2.54
|
46.4
|
1.58
|
2.35
|
49.4
|
1.57
|
2.36
|
2.49
|
3.75
|
Underground
|
-
|
-
|
-
|
3.4
|
3.78
|
-
|
3.4
|
3.78
|
-
|
0.42
|
-
|
Haile
Total
|
3.0
|
1.37
|
2.54
|
49.8
|
1.73
|
2.19
|
52.8
|
1.71
|
2.21
|
2.91
|
3.75
|
|
- Reserves are based on a US$1,500/oz Au
gold price and are inclusive of Mineral Resources.
- All figures are rounded to reflect the
relative accuracy of the estimates. Totals may not sum due to
rounding.
- Includes 722kt of stockpile material
grading 1.23 g/t Au and 1.78 g/t Ag
|
Open Pit
Notes:
|
- Open pit reserves are stated using a 0.45
g/t cut-off and assume full mine recovery.
- Metallurgical recoveries are based on a
recovery curve (1-(0.2152*au grade^-0.3696)) +0.025 that equate to
an overall recovery of 82%.
- Reserves are converted from resources
through the process of pit optimization, pit design, production
schedule and supported by a positive cash flow model.
- 5% dilution at zero grade and 98% mining
recovery was applied for 2020 and 2021 mine schedule. Remaining
years open pit reserves are not diluted further to dilution
inherent to the resource model and assume selective mining unit of
10 m x 10 m x 5 m.
- The open pit Mineral Reserves were
estimated by Fernando Rodrigues, BS Mining, MBA, MMSAQP #01405,
MAusIMM #304726 of SRK, a Qualified Person.
|
Underground
Notes:
|
- Metallurgical recoveries are based on a
recovery (1-(0.2152*au grade^-0.3696)) that equates to an overall
recovery of 88%.
- Underground reserves are stated using a
1.44 g/t cut-off. The reserve estimate is based on a mine design
using an elevated cut-off grade of 1.67g/t, with adjacent lower
grade stopes included in the design. Incremental material is
included in the reserves based on an incremental stope cut-off
grade of 1.29g/t Au and an incremental development cut-off grade of
0.38g/t Au.
- Mining recovery ranges from 94% to 100%
depending on activity type. Sill levels use a 75% recovery. Mining
dilution is applied using zero grade. The dilution ranges from 2%
to 10% depending on activity type.
- Mineral Reserves have been stated based on
a mine design, mine plan, and cash-flow model.
- The Mineral Reserves were estimated by
Joanna Poeck, BEng Mining, SME-RM, MMSAQP #01387QP, a Qualified
Person.
|
As at June 30, 2020, the Company
increased Haile Measured and Indicated Mineral Resources from
December 31, 2019 by 120,000 ounces
of gold and Inferred Resources from December
31, 2019, by 40,000 ounces, both net of mine depletion.
Table 2 – Measured
& Indicated Resources (June 30, 2020)
|
|
|
|
|
Resource
Area
|
Measured
|
Indicated
|
Measured &
Indicated
|
Mt
|
Au
g/t
|
Ag
g/t
|
Mt
|
Au
g/t
|
Ag
g/t
|
Mt
|
Au
g/t
|
Ag
g/t
|
Au
Moz
|
Ag
Moz
|
Open Pit
|
3.2
|
1.35
|
2.61
|
52.3
|
1.53
|
2.40
|
55.5
|
1.52
|
2.41
|
2.71
|
4.30
|
Underground
|
-
|
-
|
-
|
3.3
|
4.95
|
-
|
3.3
|
4.95
|
-
|
0.53
|
-
|
Haile
Total
|
3.2
|
1.35
|
2.61
|
55.6
|
1.73
|
2.40
|
58.8
|
1.71
|
2.27
|
3.24
|
4.30
|
Table 3 – Inferred
Mineral Resources (June 30, 2020)
|
|
|
Resource
Area
|
Inferred
Resources
|
Mt
|
Au
g/t
|
Ag
g/t
|
Au
Moz
|
Ag
Moz
|
Open Pit
|
7.6
|
1.0
|
1.3
|
0.24
|
0.32
|
Underground
|
9.0
|
3.1
|
-
|
0.90
|
-
|
Haile
Total
|
17
|
2.1
|
0.6
|
1.1
|
0.32
|
Notes:
|
- Cut-off grades for the open pit, Horseshoe
underground and Palomino underground are 0.45 g/t, 1.26 g/t and
1.37 g/t Au respectively, based on a gold price of US$1,700/oz.
Silver grade was not included in the cut-off calculation.
- The open pit resources are reported within
an optimised shell based on a gold price of US$1,700/oz.
- Mineral Resources include Mineral Reserves
and are reported on an in-situ basis
- There is no certainty that Mineral
Resources that are not Mineral Reserves will be converted to
Mineral Reserves.
- All figures are rounded to reflect the
relative accuracy and confidence of the estimates and totals may
not add correctly.
- The Mineral Resources were estimated under
the supervision of Jonathan Moore, MAusIMM CP(Geo), a Qualified
Person
|
The Company continues to focus on resource growth and conversion
at Haile with an emphasis on underground targets with significant
results (i.e. addition of Palomino Inferred Resource of 600koz in
2019). The Company will incorporate 2020 drill results into the
year-end Resource and Reserve update.
Operating Physicals
Over the life of mine, the Company expects to produce
approximately 2.5 million ounces of gold with an average annual
life of mine gold production of approximately 180,000 -
200,000 ounces, increasing to approximately 250,000 ounces with
combined both open pit and underground mill feed (2023 to
2027).
The life of mine AISC is estimated to be approximately
$800 per ounce while life of mine
cash costs are estimated to be $590
per ounce, both after silver by-product credits of 3.0 million
ounces at an average price of $17 per
ounce.
Figure 1 – Technical Report Haile Production
& Cost Profile
- Annual Production and cost profile should
not be used as formal Company guidance. The Company will provide
formal annual guidance based on a Board approved budget for
production, costs and capital.
|
Table 4 – Site
All-in Sustaining Cost Breakdown (Reserve Case)
|
|
|
|
All-in Sustaining
Cost Inputs
|
Units
|
Average LOM
(per oz Au sold)
|
Direct cash
costs
|
per oz Au
sold
|
$586
|
Sustaining capital
expenditures
|
per oz Au
sold
|
$213
|
Total Site All-in
Sustaining Costs
|
per oz Au
sold
|
$799
|
Table 5 –
Operating Unit Costs Overview
|
|
|
|
Operating
Costs
|
Units
|
Average
LOM
|
Open Pit
|
per tonne
mined
|
$2.00
|
Underground
|
per tonne
mined
|
$47.15
|
Processing
|
per tonne
milled
|
$10.00
|
Site General &
Administrative
|
per tonne
milled
|
$3.30
|
- Figures have been rounded to nearest
$0.05
|
The Company expects to mine approximately 388 million tonnes of
waste and 46 million tonnes of ore from the open pits for a life of
mine strip ratio of 8.4 to 1 from 2021 onward. Open pit mining is
expected to average 40 million tonnes of waste and 4 million tonnes
of ore per year based on historical mining and weather data up
until 2029, reducing thereafter. Mining rates are based on the
operation's expanded mine footprint and has factored additional
Potential Acid Generating ("PAG") material which requires
engineered and environmentally approved containment locations. Open
pit mining unit costs are estimated to average approximately
$2.00 per tonne mined over the life
of mine, inclusive of capitalised mining costs.
The Haile Underground is initially expected to mine
approximately 3.4 million tonnes of ore over an average five-year
mine life or approximately 680,000 tonnes a year based on Reserves.
The Company will target the conversion of Horseshoe Inferred
Resources and other underground targets along the one-kilometre
corridor between Horseshoe and Palomino (Figure 8). Horseshoe
underground mining unit costs are estimated to be approximately
$47 per tonne mined including
capitalised underground mining costs.
Figure 2 – Haile Mining Physicals
Since 2017, the Company has increased the Haile process plant
capacity by approximately 75% above nameplate (2.3 million tonnes
per annum) and expects a steady-state annual throughput rate of
approximately four million tonnes per annum. Processing unit costs
are estimated to further decrease and average approximately
$10 per tonne processed over life of
mine.
Over the life of mine, the head grade is estimated to average
1.7 grams per tonne and approximately 2.3 grams per tonne between
2023 and 2027 from combined open pit and underground ore feed. Gold
recoveries are typically correlated with head grade and are
expected to average approximately 85% over life of mine and 87%
from 2023 and 2027 with the higher average head grade from combined
open pit and underground ore feed.
Figure 3 – Haile Processing Physicals
Capital Investment
The Company has refined its capital cost estimate to incorporate
additional infrastructure required over the life of mine from 2021
onward, which is based on operating data from over the last few
years. Total non-sustaining (growth) capital for the expanded Haile
operation, excluding site closure costs is estimated at
approximately $190 million over the
life of mine, and includes the continued expansion of the Tailings
Storage Facility ("TSF") and additional PAG waste containment
facilities (combined $90 million),
and development of the Horseshoe Underground ($80 million).
The Horseshoe Underground mine plan has been enhanced and
development capital investment is estimated to be approximately
$80 million, an expenditure that will
take place primarily in 2021 and 2022. Underground sustaining
capital is estimated to be approximately $17
million over its five-year mine life.
Site closure capital is estimated at $70
million, an expenditure that progressively increases toward
the end of the mine life with approximately $35 million of the estimated total expended after
the end of mine life.
Total sustaining capital for Haile is estimated to be
approximately $450 million over 13
years from 2021 to 2033 inclusive. The two main components of
sustaining capital are open pit capitalised pre-stripping
($255 million) and progressive TSF
lifts over the life of mine ($140
million) from 2021 to 2033 inclusive. The investments
required for TSF lifts also recognise the requirement to contain
and manage the large amount of supernatant water accumulated as a
result of the materially higher than average rainfall since
2018.
Figure 4 – Haile Capital Investments
- Annual capital profile should not be used
as formal Company guidance. The Company will provide formal annual
guidance based on a Board approved budget for production, costs and
capital.
- Capital depicted in Figure 4, excludes
principle and interest payments related to equipment leases. These
payments are captured in the operating cash flow estimates.
Sustaining costs related to equipment leases are included in the
site AISC calculation
|
Economics
The Haile Technical Report highlights an estimated Reserve Case
pre-tax NPV5% of approximately $930 million and after-tax NPV5% of
$892 million utilising a $1,500 flat reserve gold price. Alternatively,
the estimated pre-tax NPV5% and after-tax
NPV5% utilising market consensus gold price assumptions
is calculated at approximately $1.1
billion and $1.05 billion,
respectively. Refer to Table 7 for gold price assumptions used in
both calculations. NPV calculations are effective July 1, 2020.
Table 6 – Economic
Analysis Overview
|
|
|
|
|
|
Unit
|
Reserve
Case
|
Market Consensus
Case
|
Average LOM Gold
Price
|
$/oz
|
1,500
|
1,574
|
Average LOM Silver
Price
|
$/oz
|
17.00
|
19.44
|
Life of Mine (based
on Reserves)
|
|
2033
|
2033
|
LOM Payable
Gold
|
koz
|
2,470
|
2,470
|
Pre-tax
NPV5%
|
USDm
|
930
|
1,110
|
After-tax
NPV5%
|
USDm
|
892
|
1,050
|
LOM Pre-Tax Free Cash
Flow
|
USDm
|
1,290
|
1,480
|
LOM After-tax Free
Cash Flow
|
USDm
|
1,240
|
1,410
|
- Figures have been
rounded
|
Table 7 – Gold
Price Assumptions
|
|
|
|
USD/oz
|
Reserve
Case
|
Market Consensus
Case
|
H2 2020
|
1,500
|
1,850
|
2021
|
1,500
|
1,850
|
2022
|
1,500
|
1,750
|
2023
|
1,500
|
1,650
|
2024 &
Long-term
|
1,500
|
1,500
|
- Reserve Case average silver price was
$17/oz
- Market Consensus Case average price silver
was $19.44
|
Figure 5 – Reserve Case NPV Sensitivity
Chart
Over the life of mine, the Company expects the Haile operation
to generate $1.3 billion in pre-tax,
undiscounted free cash flow under the Reserve Case and $1.5 billion pre-tax utilising Market Consensus
Case gold prices.
Figure 6 – Haile Net Cash Flow Profile –
Reserve Case
Figure 7 – Haile Net Cash Flow Profile –
Market Consensus Case
Exploration
The Company continues to define the potential of underground
mining opportunities at Haile. The Company expects it will focus
exploration efforts on further defining underground opportunities
in an effort to extend the life of these operations beyond the
initial five-years. Previous drilling of underground targets from
surface has identified high-grade zones across the Horseshoe -
Palomino trend that require further drill definition and
understanding. The Company has also identified new underground
targets, Pisces and Aquarius and plans to drill these targets in
the near-future. Neither of these targets are included as the
Technical Report is based on Reserves only.
Figure 8 – Haile Underground Targets
In line with ASX listing requirements, OceanaGold has appended
information required by JORC Table 1 for the Haile Resources and
Reserves estimates to its ASX announcement. JORC Table 1 is not
required under National Instrument 43-101. Readers are referred to
the ASX website at www.asx.com.au or the OceanaGold website at
www.oceanagold.com to view JORC Table 1.
Authorised for release to market by Acting Company Secretary,
Chris Hansen, on behalf of
Liang Tang (currently on Maternity
Leave)
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. 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 operates the Haile Gold Mine, a
top-tier, long-life, high-margin asset located in South Carolina. The Company's assets also
encompass the Didipio Gold-Copper Mine located on the island of
Luzon in the Philippines.
OceanaGold also has a significant pipeline of organic growth and
exploration opportunities in the Americas and Asia-Pacific regions.
OceanaGold has operated sustainably since 1990 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.
Qualified Persons and Scientific and Technical
Information
The Mineral Resource estimates included in this public release
have been prepared under the supervision of J. Moore. Any information regarding metallurgy or
mineral processing has been prepared, verified and approved by D.
Carr. The open pit Mineral
Reserves have been prepared under the supervision of F. Rodrigues
and the underground Mineral Reserves have been verified and
approved by J. Poeck. The open pit and underground mining costs and
economic evaluation have been prepared under the supervision of T.
Cooney.
Each of D. Carr, T. Cooney, J.
Moore, J. Poeck, and F. Rodrigues
are Qualified Persons under NI 43-101.
Messrs Carr, Cooney and Moore
are full-time employees of the Company's subsidiary, OceanaGold
Management Pty Limited. Accordingly, each is not independent for
purposes of NI 43-101.
J. Poeck is a registered member of the SME and a QP member of
the MMSA. F. Rodrigues is a member of AusIMM and a QP member
of the MMSA. Both are full time employees of SRK.
D. Carr, T. Cooney, J.
Moore, J Poeck and F. Rodrigues
have reviewed and approved the scientific and technical information
in this public release in respect of which each is responsible and
each consent to inclusion in this public release of the matters
based on their information in the form and context in which it
appears.
Cautionary Statement for Public Release
Certain information or statements contained in this public
release may be deemed "forward-looking" within the meaning of
applicable securities laws. Forward-looking statements and
information relate to, among other things, future performance and
study results and reflect the Company's expectations regarding the
generation of free cash flow, achievement of guidance, 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 forward-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,
among others, the outbreak of an infectious disease, 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.
This public release also contains references to estimates of
Mineral Resources and Mineral Reserves. The estimation of Mineral
Resources and Mineral Reserves is inherently uncertain and involves
subjective judgments about many relevant factors. Mineral Resources
that are not Mineral Reserves do not have demonstrated economic
viability. The accuracy of any such estimates is a function of the
quantity and quality of available data, and of the assumptions made
and judgments used in engineering and geological interpretation
which may prove to be unreliable and depend, to a certain extent,
upon the analysis of drilling results and statistical inferences
that may ultimately prove to be inaccurate. Mineral Resource or
Mineral Reserve estimates may have to be re-estimated based on: (i)
fluctuations in gold price; (ii) results of drilling, (iii) the
results of metallurgical testing and other studies, including their
subsequent refinement and updating; (iv) proposed mining
operations, including dilution; (v) the evaluation of mine plans
subsequent to the date of any estimates; (vi) changes in mining or
other costs, and (vii) the possible failure to receive required
permits, approvals and licenses or changes to existing mining
licences.
As well, all of the economic results of studies included in this
public release constitute forward-looking information or statements
including pre-tax NPV (5% discount rate) of approximately
US$930 million and after-tax of
US$892 million at a flat gold price
of $1,500/oz and Market Consensus
Gold Pricing Case pre-tax NPV5% of approximately US$1.1 billion, after-tax of US$1.05 billion; life of mine pre-tax
undiscounted free cash flows of approximately $1.3 billion, after-tax of $1.2 billion and Market Consensus Gold Pricing
Case life of mine pre-tax undiscounted free cash flows of
approximately $1.5 billion, after-tax
of $1.4 billion, and approximate life
of mine cash costs of $590 per ounce
and AISC of $800 per ounce.
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 Company's
control. Although the Company believes that any forward-looking
statements and information contained in this public 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 information, events or otherwise, except
as required by applicable securities laws. The information
contained in this release is not investment or financial product
advice.
www.oceanagold.com | Twitter: @OceanaGold
SOURCE OceanaGold Corporation