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OceanaGold posts 1Q loss as production declines

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(Kitco News) - OceanaGold Corp. (TSX: OGC, ASX: OGC) Thursday reported a loss in the first quarter, during which production also declined. However, the company expects production to pick up during the course of the year.

The net loss for the January-March period was  $26 million, or 4 cents per share, compared to a profit of $12.4 million, or 2 cents, in the same quarter of 2019. The January-March results included a $21.2 million loss on the fair value of undesignated hedges relating to New Zealand dollar gold price hedges covering the remainder of 2020, the company said in its financial statement.

The first-quarter adjusted net loss was $10.7 million, or 2 cents a share.

First quarter revenue fell to $138.2 million from $179.5 million in the same quarter of 2019. The decline came on expected lower gold sales from New Zealand assets and limited sales from Didipio in the Philippines, where mining is temporarily suspended as the company tries to resolve certain issues with the government, partly offset by higher sales from Haile, OceanaGold said.

The company pre-released its production, announcing last week that consolidated first-quarter output fell to 80,707 gold ounces from 108,200 in the fourth quarter. The company said at the time that this was largely the result of lower average grades at both Haile and Macraes and the conclusion of mining at the Correnso deposit at Waihi. Also, output was affected during the latter part of the quarter by restrictions imposed by the New Zealand government due to the COVID-19 pandemic.

All-in sustaining costs were $1,218 per ounce on sales of 91,388 ounces of gold.

“With the first quarter of 2020 complete, we look ahead to the remainder of the year where, in the second half in particular, we expect increased production at lower all-in sustaining costs,” said Michael Holmes, president and chief executive officer. “At Haile, mined and processed grades are expected to increase progressively with two-thirds of Haile’s annual gold output expected in the second half with the fourth quarter being the strongest quarter.

“At Macraes, second quarter production is expected to be lower than in the first quarter due to the impact of the five-week New Zealand Government enforced COVID-19 lockdown. However, with production now effectively back to capacity, we are targeting a rebound in the second half of the year.”

The company reaffirmed its full-year 2020 production guidance although it acknowledged ongoing risks associated with COVID-19. The company expects to produce 360,000 to 380,000 ounces of gold in 2020, excluding Didipio.

“Our organic growth projects continue to advance, with first production from the Martha Underground expected in the second quarter of 2021,” Holmes said. “We are progressing the Waihi district study, which will highlight the initial value of the Waihi district while we continue to target further expansion through exploration. The market release of the Waihi district study is expected in the second or third quarter. At Macraes, the Golden Point Underground study continues to progress, and we expect the results to be released in the second half of the year.”

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