OceanaGold posted a 174 per cent gain in first-half profit, reflecting a recovery in the price of gold and increased production that reflected the contribution from the Waihi mine acquired last year.

Profit rose to US$63 million, or 10 cents a share, in the six months ended June 30, from US$23.4m, or 8 cents, a year earlier, the Melbourne-based gold and copper miner said in a statement. Sales climbed about 30 per cent to US$331m while cost of sales rose a more modest 14 per cent to US$79.6m.

OceanaGold expanded its portfolio last year, acquiring the Waihi mine from Newmont Mining Corp and developing the Haile mine in the US, where commercial production is slated to start in early 2017. Total gold production rose 27 per cent to 225,339 ounces in the first half, while copper output was little changed at 12,244 tonnes. All-in sustaining costs fell to US$722 an ounce from US$734. Spot gold was recently at US$1,335.47 an ounce, up from US$1,087.49 a year ago.

The company said production at Waihi was in line with guidance, with 63,523 ounces of gold produced. Output fell between the first and second quarters as it developed access drives to Correnso Deeps and the Daybreak and Empire veins and less gold was mined from Correnso underground.


Separately today, OceanaGold said it was cooperating with the police and WorkSafe New Zealand to determine the cause of the death of an underground mining operator on Thursday evening, which has resulted in Waihi operations being suspended for the investigation. The company's recordable injury frequency rate has dropped 74 per cent since 2011, although it climbed in the first half from a year ago.

Construction of major infrastructure at Haile was tracking to schedule and budget, and by the end of the second quarter the company had spent about US$246m of the US$380m estimated capital cost.

At Didipio in the Phillippines, the operation produced 90,887 ounces of gold and 12,244 tonnes of copper in the first half. Development of the underground mine was advancing well, with production expected at the end of 2017. In the South Island of New Zealand, the Macraes and Reefton operations produced 70,929 ounces of gold .

Operating cash flow for the first half was US$123m, up from US$85m a year earlier, which the company said reflected higher gold prices and reduction in working capital following the sale of inventory build-up at Didipio in the first quarter. The increase in earnings was a result of a higher average gold price received, partly offset by slightly higher mining costs and corporate costs associated with redundancies related to restructuring of the Waihi asset, it said. It also recognised a smaller loss on the fair value of outstanding undesignated gold hedges and fuel swaps.

"After a strong first half of the year, the company is well positioned to achieve its production and cost guidance for the year," said chief executive Mick Wilkes. "We have bolstered our balance sheet from strong cash flows generated by our business, expanding our revolving credit facility and monetising the Haile mining equipment under a sale and lease arrangement."

Wilkes added that he was confident that commissioning of Haile was on track for the end of this calendar year.

In the second quarter, OceanaGold expanded its revolving credit facility to US$300m from US$250m with its existing bankers and broadly on the same terms. It also received $34m from the sale of the mining fleet at Haile under a lease-back arrangement with Caterpillar, it said.

The company doesn't currently pay dividends.


Its NZX-listed shares last traded at $5.08 and have surged 73 per cent in the past 12 months while the NZX 50 Index has gained 25 per cent.