21 Feb 2014

Mine plan puts Oceana Gold in the red

12:19 pm on 21 February 2014

The cost of shutting down North Otago's huge opencast goldmine and a neighbouring underground mine near Macraes Flat has pushed its parent company from profit to loss.

Macraes' owner, Oceana Gold, has announced record earnings for last year. Revenue was a record $670 million and earnings before interest, taxation and other costs also broke new ground.

Despite that, the Melbourne-based company recorded a loss for the year of $58 million.

A company official says the value of the mines had to be written down because of their shortened lifespan.

The company plans to close the mines in 2017, but says that decision could be reversed if the price of gold recovers. Chief executive Michael Wilkes says the price would have to rise substantially for that to happen.

He also says he expects the New Zealand dollar to also remain high for the next 12 to 18 months, putting further pressure on Oceana's operations here.

The company will produce less gold in New Zealand this year, because of reduced actiivity at Macraes, but expects to mine more gold and copper in the Philippines.

Some workers at Macraes have already lost their jobs in anticipation of closure.