Didipio Mine

 

Following successful construction and commissioning, OceanaGold declared commercial production at Didipio effective April 1, 2013. 

 In June 2011 OceanaGold recommenced construction of the high grade gold copper Didipio Mine located in Luzon, approximately 270 kilometres north of Manila in the Philippines. Construction was completed and commissioning of the mine commenced on schedule in the fourth quarter of 2012 with first ore through the mill in December 2012. 

Didipio cash costs over the life of mine after copper by-product credits are expected to be significantly lower than OceanaGold’s New Zealand operations. In the first nine months of commercial production in 2013, the Didipio Mine achieved cash costs net of by-product credits of negative ($1,078) and All-In Sustaining Costs of negative ($688) per ounce of gold sold. The Didipio Mine 2013 co-product cash costs were $532 per ounce of gold sold. In 2014 cash costs and All-In Sustaining Costs net of by-product credits are expected to be negative.

OceanaGold acquired the Didipio Mine through the merger with Climax Mining in November 2006 and a local partner is entitled to a free carried interest of 8% in the operating vehicle of the mine.

Didipio is held under a Financial & Technical Assistance Agreement (FTAA). Based on the most recent NI 43-101 technical report in July 2011, the mine design forecasts an average annual production of approximately 100,000 ounces of gold and 14,000 tonnes of copper in concentrate for an anticipated 16 year mine life. Using a US$3.00/lb copper price, Didipio will produce gold at: negative US$79/oz over the first 6 years of the mine life demonstrating very robust economics. (Based on NI 43-101 report dated July 2011).

The Didipio Mine workforce consists of 1,800 employees and contractors of which over 98% are Filipino nationals including more than 50% from the local communities.

Geology

Chalcopyrite (sulphide mineral of copper and iron) and gold are the main economic minerals in the deposit. Chalcopyrite occurs as fine-grained disseminations, aggregates, fracture fillings and stock work veins, particularly within the vein zone of alteration. Some bornite (also a sulphide mineral of copper and iron) is also present.

The ore body contains a higher concentration of copper near surface and hence copper production in the early years is expected to be higher than the average life of mine production and lower in the later years.

Mining

The Didipio gold-copper deposit will be mined by both open pit and underground methods. Open pit mining is expected to operate on its own for the first 4 years with the underground development currently planned to commence with minimal ore in years 5 to 7. Open pit and underground activities will run concurrently until the pit is completed in year 12 with final low grade ore stock piles from open pit mining to be milled at the end of both open pit and underground operations.

Open pit pre-strip mining commenced in January 2012. Current mining operations are focused on delivering ore from stages 2 and 3 of the open pit. Stage 4 stripping commenced in the first quarter of 2014. Mining is contracted out to a Filipino mining contractor with certain contractual obligations to ensure targets for Filipino training and employment are met. Mining operations continue to provide competent waste rock to build out the tailings storage facility (TSF) lifts. The Company expects to continue building the TSF lifts over the next four years to reach the ultimate life of mine capacity.

 Open pit mining (based on current mine plan)

  • Strip ratio 3.45:1
  • Five pit stages
  • 300m deep open cut down to an elevation of 2,380mRL
  • Conventional drill and blast
  • Loading of haul trucks by hydraulic excavators
  • Open pit mining costs including pre-stripping are forecast at US$2.70 per tonne mined (average next five years)

 Underground mining (based on current mine plan)

  • Sub-level open stoping with cemented paste backfill
  • Mines in parallel with the open pit
  • Decline commences in 2016 from side of open pit
  • Production to commence in 2019
  • Near full production 2021, due to bottom up sequence
  • Base level 2,180mRL
  • Maximum mining rate 1.2Mtpa
  • Six year production life after development
  • Underground mining costs are forecast at US$34 per tonne of ore mined
Processing

Construction of a mineral processing facility to the north of the open pit mine was completed on schedule in the fourth quarter of 2012. Ore is processed with a conventional SAG/Ball mill grinding circuit followed by froth flotation for recovery of copper-gold concentrate. A gravity circuit is incorporated within the grinding circuit to produce gold bullion on site. Concentrate is transported by road to existing port facilities for export.

Initial nameplate capacity throughput rate of 2.5 Mtpa was achieved in 2013, with 2014 throughput planned at 3 Mtpa building up to the final expanded capacity of 3.5 Mtpa by the end of 2014. The Ball Mill Work Index is 14.6 kilowatt hours per tonne.

In 2012, the Company announced the signing of an Offtake Agreement with Trafigura in relation to the sale and purchase of copper concentrate from the Didipio Mine with a minimum period of five years from the start of production. OceanaGold sells 100% of the Didipio copper-gold concentrate production to Trafigura at competitive terms and conditions, including treatment and refining charges. Trafigura takes delivery of copper-gold concentrate at the port and manages sea transportation from port to port.

Financial or Technical Assistance Agreement ("FTAA")

The Didipio Mine is held under the FTAA between OceanaGold and the Philippines Government which allows for 100% foreign ownership of the mining operations contractor. The FTAA covers an area of approximately 129 square kilometres in the provinces of Nueva Vizcaya and Quirino. There are currently six signed FTAAs and OceanaGold is the first company to operate under such a contract.

In accordance with OceanaGold’s FTAA agreement, the Company has a period of up to five years from the start of commercial production to recover its pre-operating expenses, property expenses and taxes paid during the recovery period. Following the earlier of five years or full recovery of pre-operating expenses and other recoverable items, the Government is entitled to 60% of “Net Revenue” and 40% will be that of OceanaGold.

Should OceanaGold not fully recover its pre-operating expenses in the five year period, the Company is entitled to a depreciation allowance for the outstanding balance for the following three years.

“Net Revenue” is calculated on gross revenue less operating costs and other allowable deductions. The Government’s Share includes all taxes paid such as corporate and excise tax, royalties, free carried interest paid and as such OceanaGold will be required to pay the difference between the 60% Net Revenue amount less all Government Share items paid during the period.

Quick Facts:

  • Nominal Production: 100,000 oz gold + 14,000 t copper
  • Mine Type: Open pit (2013-2026) + Underground (2019-2028)
  • Measured & Indicated Resources: 2.06 Moz gold + 0.26 Mt copper
  • Inferred Resources: 0.3 Moz Au + 0.03 Mt copper
  • Reserves: 1.59 Moz gold + 0.21 Mt copper 
  • Estimated Mine Life: 2028
  • Cash Costs*: Years 1-6 negative US$(79)/oz gold
  • Cash costs*: LOM US$372/oz gold

*Net of bi-product copper credits using US$3.00/lb copper 

Exploration

Model of Didipio Deposit

 

 

 

 

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