Vancouver – A human rights ruling in the Philippines seems to have raised doubts as to the future of OceanaGold‘s (OGC-T) Didipio project, while the Australian miner is assuring investors the project is a go.
The company issued a press release on January 20 to address reports that the Commission on Human Rights of the Philippines had recommended the cancellation of its mining permit on the grounds the company had violated rights of indigenous people. OceanaGold reports that it has not been formally notified by the Commission about any such ruling.
In its release, OceanaGold states that it “is fully committed to the development of the Didipio Project” and is compliant with all relevant laws and regulations.
Mick Wilkes, chief executive of OceanaGold, stated “”The Company is firmly committed to building strong and enduring relationships with our community in the development and ongoing operations of the Didipio Project for the benefit of all stakeholders.”
The Commission became involved after allegations were made against OceanaGold in 2008 and 2009. According to various Philippines media sources, the complaints stem from the demolishing of about 200 houses in the community of Didipio, which was followed by protests.
The ruling comes only a few months after OceanaGold reopened the possibility of developing the Didipio project, having put the project on hold in 2008 as costs ballooned.
In September 2010 the company released a re-optimisation study that improved the financials by altering the mining method and processing plant layout.
The study established reserves of 29.7 million tonnes grading 1.48 grams gold per tonne and 0.58% copper for 1.4 million oz. gold and 374 million lbs. copper. The mine would be a combined open-pit and underground operation running for 20 years. Production costs were estimated at US$331 per oz. gold, net of copper credits.
With roughly $80 million already spent on the project, remaining capital expenditures are estimated at $140 million.
Since releasing the report, OceanaGold has started pre-construction activities, including detailed engineering design. OceanaGold also expects an updated resource/reserve estimate shortly.
The Didipio project is fully financed, while the company expects to produce 260,000 to 280,000 oz. gold from its operating New Zealand mines in 2011.
OceanaGold’s share price was down 16¢ over two days to close at $2.77. The company has a 52-week share price range between $1.68 and $4.05 and 262 million shares outstanding.
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