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Oceanagold Posts $US54.7m Loss

Contributor:
Fuseworks Media
Fuseworks Media

Wellington, Feb 20 NZPA - Australian-based mining company OceanaGold, which has three gold mines in the South Island, has reported a loss of $US54.7 million ($NZ108 million) in 2008.

That compares to the loss of $US63m in 2007 and directors were proposing not to pay a dividend, it announced today in its financial report for the year to the end of December, 2008.

The company warned it was looking to raise capital as balance sheet liabilities exceeded assets by $US43.4m. The company also has capital commitments of $US6.6m.

It has cash on hand of $US9.7m and the cash flow projections showed the company could carry on as a going concern for another 12 months.

However, if projections did not eventuate the company might not be able to meet its obligations.

It said it was considering a number of options to raise capital.

OceanaGold operates mines at Macraes in Otago and Reefton in Buller, as well as a mine in the Philippines, which it has put into mothballs.

OceanaGold is listed on the Toronto, Australian and New Zealand sharemarkets.

This year its New Zealand share price has increased steadily from a low of about NZ22 cents in December to NZ97c before losing NZ17c this morning to NZ80c.

OceanGold's revenue in 2008 more than doubled from $US1.04m in 2007 to $US2.17m.

Earnings before interest, tax, depreciation, amortisation were $US66.1m compared to $8.7m in 2007.

The company achieved record gold sales totalling 74,816 ounces for the fourth quarter and 264,124 ounces for the 2008 year, an increase of 49 percent.

The increase in production reflected the successful commissioning of the Reefton open pit and Frasers Underground mines in 2007 and 2008.

Last year OceanaGold commissioned the Frasers underground mine at Macraes. The mine is expected to produce 55,000 to 65,000 ounces of gold per year.

After ramping up in the first quarter, the mine improved its performance and by the third quarter was operating to plan.

The company now has three operations in New Zealand that combined are expected to produce between 280,000 and 300,000oz of gold in 2009. During 2008, OceanaGold said it experienced unprecedented volatility with key consumable costs such as diesel and electricity in New Zealand.

The weaker NZD, which dropped from US81c in February to US57c at the end of the year, was a strong value driver for the New Zealand business as approximately 70 to 80 percent of the company's costs were denominated in NZD but revenues are based solely on USD priced gold. Meanwhile, OceanaGold said it made considerable progress toward development of its Didipio gold-copper project in the Philippines, which it has described as "one of the highest grade gold-copper porphyries at development stage in the world".

However, by December, continued deterioration of global economic conditions resulted in the decision to place Didipio on "care and maintenance", pending an improvement in the credit markets.

NZPA WGT dw kn

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