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OceanaGold Reports 2Q Profit On Higher Production

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(Kitco News) - OceanaGold Corp. (TSX, ASX: OGC) late Thursday reported a profit in the second quarter as consolidated production was boosted by the Haile mine in South Carolina, but the company remains embroiled in a legal battle over the Didipio mine in the Philippines.

OceanaGold listed a profit, before unrealized losses on undesignated hedges, of $22.1 million, or adjusted earnings of 3 cents a share. The company’s earnings release noted that the result was just above the consensus analyst estimate of 2 cents. The result also was up from $16 million in the first quarter.

The net profit was $15.3 million, up from $12.4 million in the prior quarter.

Second-quarter production of 129,290 ounces of gold was up from around 125,700 in the first quarter. Quarter-on-quarter gold production increased slightly with stronger output at Haile and Waihi partially offsetting expected lower production from Macraes, OceanaGold said. With the higher output, revenue rose to $186 million from $179.5 million in the first quarter.

All-in sustaining costs were $1,118 per gold ounce. The company also produced 3,961 tonnes of copper.

“We are very pleased with the performance of our operations in the second quarter, particularly at Haile, where we had a significant improvement from the previous quarter with production higher 45% [to 37,182 gold ounces], total material mined increasing 45% and unit cash costs decreasing 39%,” said Mick Wilkes, president and chief executive officer.

“To capitalize on improved weather conditions, we have accelerated pre-stripping activities at the Red Hill pit, which is now into ore mining, approximately one quarter ahead of schedule. We have also brought forward pre-stripping of other areas.”

Meanwhile, in the Philippines, the company is fighting an order from a provincial governor to restrain operations at the Didipio mine amid a fight over environmental issues. OceanaGold said a court hearing took place on July 12, and the company is awaiting a decision. In the meantime, underground mining at Didipio has been suspended due to the depletion of consumable mining supplies, while other underground activities including pumping continue for safety and environmental reasons, OceanaGold said. Processing of ore from stockpiles and metal production is also continuing.

“In the Philippines, we continue to work constructively with regulatory stakeholders on the FTAA renewal process, which is ongoing,” Wilkes said. “We will continue to follow due legal process, and put employee safety and community welfare first, in seeking to secure an injunction against local orders issued by the provincial governor seeking to restrain operations at Didipio. We remain confident in the legal basis of our position.”

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