OceanaGold sees 2015 gold output rise of 9pc

MANILA: OceanaGold Corp expects its gold output this year to rise as put this year to rise as much as 9 percent but on Friday ruled out building a smelter for its Philippine gold and copper business, despite a possible export ban on unprocessed metallic minerals.

The Philippine Congress is considering legislation to halt ore exports and require miners to build domestic processing plants, so as to add value to its metallic mineral resources, in line with a similar step by Indonesia.

"The size of our mine, the amount of concentrate we produce, is completely incompatible with the capital needed to build a smelter," OceanaGold Chairman James Askew told reporters after addressing an industry forum in Manila.

OceanaGold, which is listed on the Toronto, Australian and New Zealand stock exchanges, ranks second among the Philippines' copper producers and third among its gold producers. It operates the Didipio mine, its flagship project, in the northern Philippine province of Nueva Vizcaya.

The company ended 2014 exceeding its output guidance with 307,463 ounces of gold and 25,010 tonnes of copper produced, including 106,256 ounces of gold from Didipio, which began commercial production in April 2013.

This year OceanaGold expects to produce 295,000 to 335,000 ounces of gold from the combined New Zealand and Didipio operations and 21,000 to 23,000 tonnes of copper from Didipio, which has a mine life of up to 2030.

Askew echoed comments by Philippine miners that a proviso to build processing plants could kill their projects in the country. The ban could be imposed by 2021 at the soonest, if the law is passed by next year, one of the bill's authors has said.

Building a processing plant may cost miners at least $1 billion in capital upfront, industry estimates show.

"We produce about 20,000 tonnes of copper, that's way below the threshold to justify building a smelter," Askew said, referring to annual concentrate output. "It would make the project dead."

The Philippines is sitting on mineral reserves worth $1.4 trillion, among the world's biggest, but development has been hampered by policy bottlenecks and a strong anti-mining lobby led by the Roman Catholic Church.