Mining an ideal vehicle to the great outdoors

A rising wage bill has added to mine operating costs - an experienced tunnel machine operator can earn $230,000 a year at Macraes and be at home at the end of their 12-hour shift. Photo / Grant Bradley

In the early 1980s Mick Wilkes looked at the job ads and decided mining was for him.

The Queenslander had a maths and physics bent, didn't want to get stuck in an office and as is the case today, liked the look of the money.

"I looked in the paper and nearly all the jobs in 1981 were in mining - I liked the outdoors, the pay was good and I thought that will do me," Wilkes said.

He started at one of the world's great copper, zinc and lead mines, Mt Isa, working underground as a hard rock miner using hand held machines.

"It was a good grounding, it's where I cut my teeth and learned my profession."

The 48-year-old now heads NZX-listed miner OceanaGold which has open cast and underground mines in Otago and the West Coast. The company is also listed on Australia's ASX and the Toronto stock exchange.

Wilkes grew up in Toowoomba and graduated with an engineering degree from the University of Queensland in 1984.

He worked for six years as an engineer and superintendent, before spending 16 years living and working overseas, starting in the UK shaft sinking in a British coal mine, before moving to Papua New Guinea doing evaluation and development work on new mines.

In 2000, he married Deb, a lawyer from Papua New Guinea, and then together they moved to Laos where he managed the development of the country's first significant mine, the Sepon Copper Gold Mine.

They remained in Laos for about five years until the mine was fully operational, then returned to Australia to develop the Prominent Hill Copper Gold Mine in South Australia.

The couple moved to Melbourne in late 2010 when Wilkes was appointed chief executive of OceanaGold. Since moving into the role, the biggest challenge has been managing uncertainty and dealing with financing projects.

"I've got a much greater understanding since I took this job. There's two worlds on this planet - there's the people that make things and the people who finance things," he said during a visit to Auckland this month.

"It's inherently a risky business - you spend millions of dollars before you can have a crack at it," he said.

"You need different investors for different circumstances.

"You build different relationships for different circumstances but not everybody is going to like you."

The company falls in and out of favour with shareholders too, its shares at times battered by sudden falls in gold prices.

"You wake up in the morning and think what did I do wrong."

Although OceanaGold has its reasonably stable operating base at its South Island mines at Macraes Flat and Reefton, it hopes to commission its big gold and copper project at Didipio in the Philippines later this year where it will have spent close to $380 million on the stop-start project.

The open cut and underground mine was embroiled in controversy over land rights abuse claims when it first started and was put into care and maintenance when the global financial crisis was felt in 2008.

"Didipio was much maligned because of previous issues with the Government, some of them were true and some of them were not.

"As a result the investment market gave [it] no value because they never thought it would happen."

Wilkes said the company had learned its lessons.

There were about 1500 people working on site, including 500 Didipio locals and only about 30 expats.

"[It's] through rebuilding the relationships with the local community that we've been able to regain our social licence to operate. Once you get the support of the local community the NGOs don't have any foothold or credibility."

New Zealand operations have also faced challenges this year.

The first part of this year has been tough and the company posted a first-quarter loss due to lower gold production and a tough foreign exchange environment.

The company made a net loss of US$3.9 million ($4.9 million) in the three months ended March 31, compared to a profit of US$14.8 million a year earlier.

Earnings before interest, tax, depreciation and amortisation plunged 47 per cent to US$23.3 million as its cost of sales rose 38 per cent from a year earlier.

Production in New Zealand was lower due to planned maintenance shutdowns at the Macraes and Reefton operations.

The average gold price OceanaGold received in the quarter was US$1708 an ounce, in line with the three months ended December 31, but the operating cost per ounce climbed to US$1126 from US$890 in the previous quarter.

Wilkes said the rapidly rising wage bill had contributed to higher operating costs.

Last year the wage bill went up 16 per cent as the company fought to hang on to workers that were in the sights of Australian companies.

While pay is still less than that across the Tasman, an experienced jumbo tunnelling machine driver can make up to $230,000 a year in Otago, and unlike Australia, be at home at the end of their 12-hour shift.

Wilkes said an experience while exploring in Papua New Guinea - a country he said was not nearly as dangerous as perceived - reminded him of why he was a miner.

"One Sunday morning I got dropped off on a sandbank and was walking up a stream with crystal clear water up to my ankles. I thought some people would kill to do this."

Mick Wilkes
* Age: 48.
* Chief executive of OceanaGold since early last year.
* Married with a daughter.
* Bachelor of Engineering (Honours) from the University of Queensland.
* Master of Business Administration from Deakin University.
* Member of the Australian Institute of Mining and Metallurgy, and the Australian Institute of Company Directors.