OceanaGold beats 2015 guidance for gold, copper
The company exceeded 2015...
2015 was a rough year for the mining industry but for New Zealand mining company, OceanaGold, last year was anything but bad.
The company exceeded 2015 consolidated gold production guidance range with 419,153 ounces produced (36 percent year-on-year increase) and achieved copper production guidance range with 23,109 tons produced.
At its Didipio operation, a high grade gold-copper mine located in the Philippines, the company delivered record annual gold production and throughput with 127,086 ounces of gold produced along with 3.58 million tons of ore processed. The company recorded unaudited consolidated All-In Sustaining Costs (“AISC”) of $709 per ounce sold and cash costs of $458 per ounce sold, both within the 2015 cost guidance range.
In addition, OceanaGold completed commissioning of the power grid connection at Didipio. The operation is now operating on grid power and the Company expects lower processing costs than in previous years. Development of the Didipio underground mine continues to progress with a plan to begin developing exploration drifts by the second half of 2016, which will allow for drilling of the Didipio deposit at depth.
In New Zealand, Macraes and Reefton exceeded their gold production guidance with 222,093 ounces produced including 51,419 ounces produced in the fourth quarter. The year-on-year increase in gold production was a result of higher production at Reefton where the operation will process stockpiles until the end of February 2016, at which point it will be placed on care and maintenance.
“Last year was a transformational year for OceanaGold and another year of strong operational and social performance where we delivered a solid return for shareholders and made significant social investment in the communities where we operate,” said Mick Wilkes, President and CEO.
“We not only exceeded our gold production guidance but did so at sector leading low costs while further improving on our environment, health and safety record.”
Last year also saw OceanaGold complete the acquisition of Romarco Minerals, securing ownership of the Haile Gold Mine in South Carolina, USA, as well as completing the acquisition of the Waihi Gold Mine in New Zealand from Newmont Mining.
Waihi produced 69,973 ounces of gold in the second half of 2015, being production attributable to OceanaGold. In the fourth quarter, Waihi produced 34,987 ounces of gold which was slightly higher than in the previous quarter on the back of a higher mill feed and better recoveries. The Company completed the Waihi transaction on October 30, 2015. Subsequent to the completion, the Company focused on integrating the Waihi operation into the OceanaGold business while seeking to improve productivity and reducing costs.
“In the fourth quarter, we completed both the Romarco and Waihi transactions and developed an extensive exploration program across our business. Through exploration, we have already demonstrated additional resources at Macraes along with solid results from Waihi,” Wilkes said.
Moving forward, OceanaGold announced its 2016 production and guidance of 385,000 to 425,000 ounces of gold at continued low AISC of $700 to $750 per ounce.
At Haile, the company commenced infill drilling of the Horseshoe resource in the fourth quarter of 2015 and conducted initial drilling of regional targets including Cypress and Loblolly with assays pending. In 2016, OceanaGold will continue to drill at Horseshoe, other targets at Haile and advance its portfolio of regional exploration targets.
In the Philippines, drilling continued on the Morning Star prospect at Didipio and scout drilling of geophysical targets at the Paco tenements in northeast Mindanao.
In 2016, the Company has allocated an exploration budget of $25 to $30 million, of which $10 to $15 million has been allocated at Haile and $5 million to $10 million at Waihi with the remaining amount to be spent at Macraes and in the Philippines.
Lithium producers bullish as EV revolution ramps demand
Rising demand for lithium is stoking prices for the electric vehicle battery metal, fueling long-delayed expansions that still may not produce adequate supplies that automakers need to meet aggressive production plans.
Growing industry optimism from higher lithium prices is a change from last year when funding for mines and processing plants dried up during the pandemic.
Albemarle Corp, Livent Corp and other producers are scrambling to make more lithium, but some analysts worry the recent price jump will not spur a big enough expansion to meet a planned wave of new EV models by mid-decade.
Since January, General Motors Co, Ford Motor Co LG Energy Solution and SK Innovation Co, along with other automakers and battery parts manufacturers, have said they will spend billions of dollars on EV plants.
U.S. President Joe Biden has proposed spending $174bn to boost EV sales and infrastructure. The European Union has similar plans, part of a rush to catch up with global EV leader China.
Those moves have helped an index of lithium prices jump 59 percent since April 2020, according to data from Benchmark Mineral Intelligence, a commodity pricing provider.
The rising demand “reflects what feels like a real and fundamental turning point in our industry,” said Paul Graves, chief executive of Livent Corp, which supplies Tesla Inc. On Monday, it said it would more than double its annual lithium production to 115,000 tonnes.
Graves warned, though, that “it will be a challenge for the lithium industry to produce sufficient qualified material in the near and medium term.”
Albemarle, the world’s largest lithium producer, aims to double its production capacity to 175,000 tonnes by the end of the year when two construction projects are complete. Albemarle's Q1 profit beat expectations thanks to rising lithium prices. Chile’s SQM, the No. 2 producer, said its goal to expand production of lithium carbonate by 71 percent to 120,000 tonnes should be complete by December.
Australia’s Orocobre is paying $1.4 billion for smaller rival Galaxy Resources, a strategy designed to boost scale and help it grow faster in regions closer to customers.
“The next few years are going to be critical in terms of whether there’s enough available lithium supply, and that’s why you’re starting to see commodity prices start to ramp,” said Chris Berry, an independent lithium industry consultant.
The price gains helped Albemarle and other major producers, including China’s Ganfeng Lithium Co and SQM, post big gains in first-quarter profit and boost forecasts for the year.
Even China’s Tianqi Lithium Corp, saddled with debt due to years of low lithium prices, signaled that recovering demand should help it swing to a profit this year.
Forecasts call for demand for the white metals to surge from about 320,000 tonnes annually last year to more than 1 million tonnes annually by 2025, when many automakers plan to launch new EV fleets, according to Benchmark.
Still, demand is expected to outstrip supply in 2025 by more than 200,000 tonnes, so lithium prices may need to rise to encourage producers to build more mines. That could boost the prices consumers pay for EVs. “Companies across the lithium-ion supply chain are in the best position they’ve been in for the last 5 years,” said Pedro Palandrani of the Global X Lithium & Battery Technology ETF , which has doubled in value in the past year.