OceanaGold's Didipio project cost rises to $220M

MANILA, Philippines - Australian miner OceanaGold Corp. (OGC) announced yesterday that its copper project in Didipio Nueva Vizcaya is fully financed and ready for commissioning in the last quarter of the year.

In a statement, OGC said the total project capital is now estimated at $220 million, up 19 percent from $185 million as announced in June last year. 

The increased capital cost are due to increases in the cost of engineering design and procurement services, tailings storage facilities (TSF) and infrastructure construction, and site support costs.

The company said the construction of the mines over 70-percent complete. Recruitment for Didipio permanent operations team and operations readiness plans are also “well advanced.”

OGC said it has received credit approvals from “a group of large, multi-national banks” for a $220-million credit facility to be used, if necessary, for repayment of convertible bonds maturing in December 2012 and December 2013 and for general working capital.

 “Construction activities at the Didipio project have progressed well over the past two months,” OGC said.

It said the project is at the peak of construction with more than 1600 workers on site, 98 percent of them Filipinos.

The company said design for the process plant and infrastructure is now complete. Delivery of all power equipment is expected at the site over the next four to six weeks.

The construction of the accommodation village and administration building has also been completed.

The tailings storage facility is now 50 percent complete.

Mining of the Didipio ore body has commenced on schedule this month in preparation for the commissioning of the mine in the fourth quarter and to build ore stockpiles for production in 2013.

“In advance of commissioning later this year, the Didipio operations team is being recruited with approximately 60% of the required positions already filled,” OGC said.

 “Didipio Project is going extremely well. We remain on track to achieve our goal set out in June last year to commence commissioning in Q4 this year, said OGC, managing director & CEO Mick Wilkes.

 “Excellent progress has been made over the past few months with construction of the processing plant and the TSF. Mining is ramping up to full capacity and ore mining has commenced on schedule. We are also making good progress with our commissioning and operations readiness plans. The increased capital cost for the project is consistent with industry cost pressures today, particularly for engineering design services. We also made the very deliberate decision to engage high quality contractors in the Philippines which cost more money to ensure the Project will be built to a high standard and on time,” he added.

OGC recently signed an agreement with commodity trader Trafigura for the sale of 100 percent of the output of the Didipio mine.

It signed a Heads of Agreement with commodity trader Trafigura for the sale of copper concentrate from the mine.

Trafigura is an international commodity trader that specializes in the supply and transport of concentrates. It owns and operates concentrate storage facilities in China and other countries.

Under the agreement between OGC and Trafigura, OGC will sell 100 percent of the copper/gold concentrate of the Didipio mine to Trafigura at “competitive terms and conditions,” including treatment and refining charges.

The offtake will be conducted for a minimum period of five years from the start of production at the Didipio mine.

Trafigura will manage all land and sea transportation from the mine site to smelters.

The two parties expect to finalize a binding contract for the offtake arrangements in the near future.

Currently, Didipio is expected to produce 100,000 ounces of gold and 14,000 tons of copper per year over an estimated 16 year mine life.

OceanaGold Corporation is an Asia Pacific gold producer with projects located on the South Island of New Zealand and in the Philippines. It is listed on the Toronto, Australian and New Zealand stock exchanges under the symbol OGC.

Trafigura specializes in the supply and transport of crude oil, petroleum products, renewable energies, coal, refined metals, ferrous and non-ferrous ores and concentrates. It has 81 offices in 54 countries in Europe, Africa, Asia, Australia, and North, Central and South America.