OCEANAGOLD Corp has declared a $US70.5 million ($A77.29 million) net loss in the second quarter, reflecting a $US85.5 million non-cash writedown in the carrying value of its New Zealand gold mining operations.
The result for the three months ending June 30 reflects falling gold prices, which have seen the company say it will reduce production from its NZ mines, including the mothballing of its Reefton mine from mid-2015.
That move alone will strip $NZ40 million to $NZ45 million ($A35.18 million to $A39.58 million) of future capital costs from its plans, and is part of a plan to cut costs by $US100 million or more in the next 18 months.
The company, in a statement to markets, says its share price has declined so much that its market capitalisation was below the carrying value of net assets.
Market prices of gold have also declined significantly to below levels used in the company's forecasts, resulting in a decision bring forward Reefton's mothballing.
The quarter includes the first period of full production from the Didipio gold and copper mine in the Philippines, where costs of mining were $US586 an ounce higher than returns from 11,086 ounces of gold and 5073 tonnes of copper sold, while cash costs in the New Zealand unit were $US918 per ounce on gold sales of 59,620 ounces.
Total sales from all operations in the second quarter came in at $US131.2m, up from $US95.6m the previous quarter.
Earnings before interest, tax, depreciation, and amortisation for the quarter was $US42.5m, against $US47m the previous quarter.
Cashflows from operating activities were down substantially at $US9.9m for the quarter, compared with $US21.4m the previous quarter.
Cash and cash equivalents on hand at June 30 stood at $US17.9m, compared with $US96.5m at balance date, December 31.
The company said in its statement that with cash flows increasing over the next few years and with significant cost reductions at our New Zealand operations, it was well positioned for the new economic environment in the gold industry.
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