Rising costs OceanaGold's take edge off earnings
7:14 PM
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Rising mining and processing costs took the edge off first-quarter earnings for OceanaGold Corp, with after tax profit of $US14.8 million recorded in the three months to March 31, down from $US20.7 million in the previous quarter.While average gold prices for the period were a record $US1,401 per ounce and recovery rates across the company's South Island gold mines rose to 83.4% from 77.9% in the previous quarter, cash operating costs per ounce came in at $US687, compared with $US596 in the three months ended December 31.
That was the major driver for a reduction in cash operating margin per ounce falling to $US714, from $US783 in the December quarter.
However, the result is strong compared with results of the first quarter of the previous year, when the Melbourne-based company was unwinding unprofitable foreign currency hedge positions, gold prices were half current levels, and cash operating margin per ounce was $192.
Earnings before interest, tax, depreciation and amortisation for the period under review were $US44.0 million, compared with $US49.3 million in the December quarter and $US8.5 million in the March quarter of 2010.
Gold production for the first quarter of 2011 was 65,671 ounces, slightly higher than the same period in 2010.
Diesel costs and a stronger New Zealand dollar were key factors in higher processing and other costs in the latest quarter.
"The continued strength of the gold price subsequent to quarter end is expected to contribute to a continuation of this trend in the second quarter," the company said in a statement to the NZX.
OceanaGold shares rose 0.5% in morning trade on the NZX to $NZ3.74, but are still 25% down over the last six months.
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