OceanaGold faces mounting losses amid FTAA uncertainties

Australian-Canadian mining firm OceanaGold faces billions of losses amidst uncertainties in its Financial and/or Technical Assistance Agreement (FTAA) renewal with the national government.

OceanaGold disclosed in a Manila Bulletin report that it is currently spending $8 million to $10 million, or P400 million to P500 million, per quarter on holding costs in its gold and copper mine project in Didipio, Nueva Vizcaya.

The cost is allocated for its workforce and its process plant which is currently in care and maintenance status.

News outlets have previously reported that OceanaGold’s Didipio mine has not been operational since July 2019 as it still awaits the Office of the President (OP)’s final approval for its FTAA extension.

Thus, it entails that if the firm will still be unable to operate by the end of this quarter, its losses could amount to $24 million to $30 million, or P1.2 billion to P1.5 billion, in the following months.

OceanaGold also expressed in the report that, should the renewal process be “protracted beyond current expectations” and then it transitions into full care and maintenance, “holding costs are expected to be in the order of $3 million, or P151.6 million, per quarter.”

At present, the Didipio mine remains in a state of operational readiness while the FTAA renewal process continues to progress.

“When operations resume at Didipio, the company expects trucking to resume within a week, the process plant within two weeks, and the underground mine within three weeks before ramping up over a four to six-week period. These estimates are based on the workforce remaining in a state of operational readiness,” OceanaGold was quoted as saying.

Once back on track, the company expects Didipio to produce at least 10,000 ounces of gold and 1,000 ounces of copper per month at a site All-in sustaining costs (AISC) of between $700 and $750 per ounce, respectively, sold.