Oceana Gold has delivered another broad hint that its mainstay Macraes mine in East Otago has ''many years'' of production left, as opposed to the formal mine life, which is stated to last until 2021.
Following exploration drilling costing $US5 million ($NZ7.63 million) during the past 11 months, drilling results ''exceeding our expectations'' were yesterday released to the market by Oceana Gold chief executive Mick Wilkes for the prospects Coronation North, Golden Point and Deepdell North areas.
''This [calendar] year at Macraes, production has been significantly higher than in previous years due to the discovery of higher grade ore from Coronation North,'' he said.
Since November last year, Oceana had drilled 287 test holes, totalling 33.2km, mainly at Golden Point, Coronation North, Coronation, Deepdell North and its Frasers underground.
''I remain confident that the Macraes operation will be an important part of the Oceana Gold business for many years to come,'' he said.
The 28-year-old Macraes mine was Oceana's first. It now also has operations in Waihi in the central North island, the northern Philippines and South Carolina in the United States.
Macraes, which employs about 650 people, had a seven-year mine in 1990, two years in 2007, and a reported four years in 2013.
Historically, the Macraes operation annually runs on recovering 1 gramme of gold per tonne (g/t) of ore from its pit operations, and about 2g/t from its Frasers underground tunnel.
Of 27 test-hole results released yesterday, the top three highlighted by Mr Wilkes included grades of 5.05g/t over 49m, 4.83g/t over 25m and 2.99g/t over 38m.
''The latest drill results have exceeded our expectations and we seek to leverage those results into tangible resource growth,'' Mr Wilkes said.
Macraes regularly tops Oceana's quarterly results for the amount of gold produced by its four mines, but with low gold grades per tonne and more ore to process it has the highest, by far, production costs, which detracts from its profit margin.
Mr Wilkes said the company had been working on a new mine plan, focused on extraction or ore located within existing deposits.
''This work, coupled with the exploration success, indicate the potential for a profitable mine life extension beyond 2021, at today's gold price,'' he said.
Separately, Oceana was still investigating the technical and economic viability of its Round Hill project at Macraes, which meant a ''potential redevelopment'' of Macraes which Mr Wilkes said could add an incremental 10 years of mine life to operations.
This calendar year Oceana expects to produce between 500,000 and 540,000 oz of gold from all its four mines, plus up to 16,000 tonnes of copper from its gold-copper mine in the Philippines.