OceanaGold (TSX, ASX: OGC) said that the outlook at its Haile gold mine in South Carolina is “uncertain” after 18 staff members tested positive for Covid-19 since June.
According to the company, approximately 220 workers have been required to self-isolate for a two-week period at some point since the beginning of March.
“This has had an impact on material movement, which is key to accessing some of the higher-grade portions of the ore body,” BMO’s Brian Quast said in a note to investors.
The company now expects Haile’s 2020 production to range between 135,000-175,000 oz. gold. Full-year production had previously been estimated at 180,000-190,000 ounces.
“Given the continued fluid situation in the U.S. regarding Covid-19, combined with productivity losses due to weather, the outlook at Haile for the remainder of the year is now uncertain,” said Michael Holmes, president and CEO of OceanaGold.
“We are behind schedule on our targeted mining advance rates, which is delaying access to the higher-grade zones of the open pits necessary to achieve the significantly higher production levels expected in the latter months of the year,” Holmes said.
“In our view, the coming months will see a number of such guidance downgrades (for both H2 2020 and 2021) as the impacts of lower pre-stripping and planned maintenance over recent months are factored into future plans,” said Quast.
OceanaGold previously reduced the annual production guidance for its Macreas operation, in New Zealand, to 140,000-150,000 oz. gold, after operations were impacted by a government shutdown in April.
The company expects total production for 2020 to reach 295,000-345,000 oz., down from the previous estimate of 340,000-360,000 ounces.
In response to the outlook, OceanaGold also entered into a new forward gold sale arrangement with Citibank, BNP Paribas and the Commonwealth Bank of Australia.
The miner will receive a prepayment of approximately US$77 million, in exchange for delivering 40,000 oz. gold in the second quarter of 2021, representing approximately 10% of next year’s expected gold output excluding any contribution from Didipio mine, which is under a dispute with the Philippine government.
“This recognizes the change in the timing of operating cash flow and provides additional liquidity to continue to manage the near-term risks of Covid-19, while continuing development of Martha Underground ahead of first production in the second quarter of 2021,” Holmes said.
At midday on Aug. 28, OceanaGold’s stock was down nearly 6% on the Toronto Stock Exchange. The company has a C$1.9-billion market capitalization.
— This article first appeared in our sister publication, MINING.com