ASX- and TSX-listed OceanaGold has secured a $220-million credit facility to develop its Didipio gold project, in the Philippines.
The miner said on Monday that the project was now fully financed, despite an increase in the initial capital cost from $185-million in June last year, to $220-million.
The $220-million credit facility would be provided by a group of large, multinational banks, with the three-year facility providing OceanaGold with additional liquidity should it be required.
“I am very pleased with the strong support we’ve received from this group of large, multinational banks to restructure and strengthen the balance sheet,” said MD Mick Wilkes.
“It’s a vote of confidence in OceanaGold and allows us to focus on successfully commissioning Didipio and generating strong cash flows from our operation in 2013. We remain committed to creating a midtier, low-cost, international gold mining company and we look forward to working with our new financial partners to further grow the company.”
Wilkes said in a statement that construction activities at the Didipio project had progressed well during the past two months, and construction was now 70% completed, with more than 1 600 workers on site.
Mining of the Didipio orebody started on schedule this month in readiness for commissioning in the fourth quarter, and to build ore stockpiles for production in 2013.
“The Didipio project is going extremely well. We remain on track to achieve our goal set out in June last year to start commissioning in the fourth quarter of this year. Excellent progress has been made over the past few months with construction of the processing plant and the tailings storage facility.”
Wilkes noted that the increase in capital costs for the project was consistent with industry cost pressures, particularly for engineering design services. He noted that the company had also made the deliberate decision to engage with high-quality contractors in the Philippines, which cost more money, to ensure that the project was built to a high standard and on time.
“With the current cash position, cash flows from New Zealand operations in 2012 and the credit facility, the company is well positioned to meet its medium-term growth objectives,” Wilkes said.
The Didipio project was expected to produce some 100 000 oz of gold and 12 000 t of copper a year, over an estimated 16-year life-of-mine. OceanaGold recently signed a heads of agreement with commodity trader Trafigura to sell 100% of the project’s concentrate over at least five years, from the start of production.
Edited by: Mariaan Webb