OceanaGold has signed a forward sale arrangement with its partner banks to receive a pre-payment of $78.5 million in exchange for delivering 48,000 gold ounces between September and December this year.
The advanced ounces sold represents just over 30 per cent of OceanaGold’s expected output across that period and 13 per cent of its total production this year.
The Melbourne-based producer, which has assets in the Phillipines, New Zealand and the United States, faced challenges with the local governments in the Philippines when its Didipio operations were suspended following a breach of agreement.
Oceana Gold is now confident that the output from the Haile gold mine in the United States will drive sales in 2020.
OceanaGold president and chief executive Mick Wilkes said he expected stronger annual production in the second half of the year, mainly driven by the Haile operation.
“We expect our annual gold production to be stronger in the second half of the year, particularly at Haile where we expect two-thirds of the gold output from the operation in the second half of the year,” he said.
While Wilkes said prepayment arrangements would not become a regular practice by the company, he believed it was an attractive option for lenders – in this case Scotia Bank, Commonwealth Bank, Citibank and BNP Paribas.
“While we do not anticipate utilising gold prepayment arrangements as a standard practice going forward, it is an attractive option at today’s high gold prices that mitigates the need for any material refinance of debt or equity issuance,” Wilkes said.
“We will continue to take prudent steps that ensure our operating cash flow matches and supports the critical timelines associated with our growth projects.”
OceanaGold expects to produce between 360,000 and 380,000 ounces of gold from its assets in Haile (United States) and Waihi and Macaraes (New Zealand) this year.