OceanaGold Corporation Full Year 2008 Financial Results



    
    /NOT FOR DISSEMINATION OR DISTRIBUTION IN THE UNITED STATES AND NOT FOR
    DISTRIBUTION TO US NEWSWIRE SERVICES./
    

    MELBOURNE, Australia, Feb. 19 /CNW/ -

    Cautionary Statement Regarding Forward-Looking Information

    This Management Discussion & Analysis contains "forward-looking
statements and information" within the meaning of applicable securities laws
which may include, but is not limited to, statements with respect to the
future financial and operating performance of the Company, its subsidiaries
and affiliated companies, its mining projects, the future price of gold, the
estimation of mineral reserves and mineral resources, the realisation of
mineral reserve and resource estimates, costs of production, estimates of
initial capital, sustaining capital, operating and exploration expenditures,
costs and timing of the development of new deposits, costs and timing of the
development of new mines, costs and timing of future exploration, requirements
for additional capital, governmental regulation of mining operations and
exploration operations, timing and receipt of approvals, consents and permits
under applicable mineral legislation, environmental risks, title disputes or
claims, limitations of insurance coverage and the timing and possible outcome
of pending litigation and regulatory matters. Often, but not always,
forward-looking statements and information can be identified by the use of
words such as "plans", "expects", "is expected", "budget", "scheduled",
"estimates", "forecasts", "intends", "targets", "aims", "anticipates" or
"believes" or variations (including negative variations) of such words and
phrases, or may be identified by statements to the effect that certain
actions, events or results "may", "could", "would", "should", "might" or
"will" be taken, occur or be achieved. Forward-looking statements and
information involve known and unknown risks, uncertainties and other factors
which may cause the actual results, performance or achievements of the Company
and/or its subsidiaries and/or its affiliated companies to be materially
different from any future results, performance or achievements expressed or
implied by the forward-looking statements. Such factors include, among others,
future prices of gold; general business, economic, competitive, political and
social uncertainties; the actual results of current production, development
and/or exploration activities; conclusions of economic evaluations and
studies; fluctuations in the value of the United States dollar relative to the
Canadian dollar, the Australian dollar, the Philippines Peso or the New
Zealand dollar; changes in project parameters as plans continue to be refined;
possible variations of ore grade or recovery rates; failure of plant,
equipment or processes to operate as anticipated; accidents, labour disputes
and other risks of the mining industry; political instability or insurrection
or war; labour force availability and turnover; delays in obtaining financing
or governmental approvals or in the completion of development or construction
activities or in the commencement of operations; as well as those factors
discussed in the section entitled "Risk Factors" contained in the Company's
Annual Information Form in respect of its fiscal year-ended December 31, 2007,
which is available on SEDAR at www.sedar.com under the Company's name.
Although the Company has attempted to identify important factors that could
cause actual actions, events or results to differ materially from those
described in forward-looking statements and information, there may be other
factors that cause actions, events or results to differ from those
anticipated, estimated or intended. Forward-looking statements and information
contained herein are made as of the date of this Management Discussion &
Analysis and, subject to applicable securities laws, the Company disclaims any
obligation to update any forward-looking statements and information, whether
as a result of new information, future events or results or otherwise. There
can be no assurance that forward-looking statements and information will prove
to be accurate, as actual results and future events could differ materially
from those anticipated in such statements. Accordingly, readers should not
place undue reliance on forward-looking statements and information due to the
inherent uncertainty therein.

    
    Management's Discussion and Analysis of Financial Condition and Results
    of Operations for the Year Ended December 31, 2008

    HIGHLIGHTS

    -   Sold a Life of Mines record 74,816 ounces of gold during the fourth
        quarter, a 19% increase over the previous quarter (Q3 2008).

    -   Increased annual gold sales by 49% to 264,124 ounces compared to
        FY2007.

    -   Achieved EBITDA (earnings before interest, taxes, depreciation and
        amortisation but excluding gain/loss on undesignated hedges) of
        $24.3 million for the fourth quarter and $66.1 million for FY2008.
        This compares to FY2007 EBITDA of $8.7 million.

    -   Reduced cash costs in the fourth quarter to $416 ($307 after year end
        adjustments) per ounce which represents the lowest quarterly cash
        costs for the 2008 year and was due primarily to increased gold sales
        and declining consumable costs.

    -   Commissioned the Frasers Underground mine - the Company's second new
        gold mine in New Zealand (NZ) in the past two years.

    -   Exceeded design throughput rates at the Reefton operation and
        processed 27% more ore than plan in the fourth quarter.

    -   Completed 60% of the bulk earthworks and detailed design for Didipio
        before temporarily placing the project into care & maintenance
        pending completion of a project redesign to reduce capital
        requirements.

    (*)  All statistics are compared to the corresponding 2007 period unless
         otherwise stated.
    (xx) OceanaGold has adopted USD as its presentation currency, the
         financial statements are presented in USD and all numbers in this
         document are expressed in USD unless otherwise stated.

                                   OVERVIEW

    Results from Operations
    

    OceanaGold achieved record gold sales totalling 74,816 ounces for the
fourth quarter and 264,124 ounces for the 2008 year.
    The 42% increase in production year-on-year reflects the successful
commissioning of the Reefton open pit and Frasers Underground mines in
2007/2008. The Company now has three operations in New Zealand that combined
are expected to produce between 280,000 and 300,000 oz of gold in 2009.
    Cash costs for the quarter were $307 per ounce. This included two
year-end adjustments: $61 per ounce credit attributable to a classification
adjustment in the pre-stripping account and a $48 per ounce credit for the
increase in the net realisable value of low grade stockpiles based upon
stronger forecast gold prices. Excluding these adjustments, cash costs for the
quarter were $416 per ounce. For the 2008 year, cash costs for the year were
$532 per ounce with the increase in the net realisable value of the low grade
stockpiles positively affecting costs by $17 per ounce.
    The cash operating margin for 2008 was up 106% over 2007 to $290 per
ounce. Higher average gold prices combined with lower cash operating costs
resulted in the expanded margins.
    During 2008, OceanaGold experienced unprecedented volatility with key
consumable costs at the New Zealand operations. By the fourth quarter, diesel
costs had declined by 50% from the highs in July. Electricity spot rates
exceeded NZ$0.50/kWh in the second quarter and subsequently declined to as low
as NZ$0.01/kWh by the end of the year. The company is currently working to
affect hedging programs for these two key consumables as in 2008 they
represented approximately 32% of our cash costs.
    The New Zealand dollar (NZD) continued its decline against the U.S dollar
(USD) finishing 2008 at an exchange rate of 0.57 USD:NZD compared to a high of
0.81 reached in February. The weaker NZD is a strong value driver for the New
Zealand business as approximately 70-80% of our costs are denominated in NZD
but revenues are based solely on USD priced gold.
    Earnings before interest, taxes, depreciation and amortisation (excluding
gains/losses on hedges) for the quarter were $24.3 million bringing total
EBITDA (excluding gains/losses on hedges) for FY2008 to $66.1 million. This
compares to $8.7 million for FY2007.

    Frasers Underground Mine

    The Frasers Underground mine at the Macraes gold field was successfully
commissioned in January 2008. Frasers is expected to produce 55,000-65,000
ounces of gold per year. After ramping up in the first quarter, the mine
continued to demonstrate improved performance and by the third quarter was
operating to plan. Good stoping conditions resulted in stable mining rates and
minimal dilution during the fourth quarter with grades slightly outperforming
the resource model. Further exploration drilling is planned here in 2009 to
test for down dip extensions at the higher grade Panel 2 area of the mine.

    Didipio Gold - Copper Project

    OceanaGold made considerable progress toward development of the Didipio
gold-copper project in Northern Luzon, Philippines. By mid-year bulk
earthworks and detailed design had exceeded 60% completion, building of some
site infrastructure had commenced and fabrication of long lead-time items was
well underway or in some cases completed.
    In May 2008, OceanaGold announced modifications to the project's scope
and an increase in expected capital to complete the project. Given the erosion
in the global economy and international credit markets, the company was unable
to source supplementary funding. As a result, OceanaGold announced a temporary
suspension of major development activities in June 2008. By December,
continued deterioration of global economic conditions resulted in the decision
to place Didipio on care and maintenance pending an improvement in the credit
markets.
    Didipio remains one of the highest grade gold-copper porphyries at
development stage in the world. The Company will continue to examine
strategies to resume development of the project including the effect of
reduced scale and capital required to commission.

    
                                 - Table 1 -
                   Key Financial and Operating Statistics

    -------------------------------------------------------------------------
                                              Q/E          Q/E          Q/E
                                            Dec 31       Sep 30       Dec 31
    Financial Statistics                     2008         2008         2007
    -------------------------------------------------------------------------

    Gold Sales (Ounces)                     74,816       62,753       58,803

                                               USD          USD          USD
                                               ---          ---          ---
    Average Price Received ($ per ounce)       640          861          754
    Cash Operating Cost ($ per ounce)          307          640          544
    Cash Operating Margin ($ per ounce)        333          222          210

    Non-Cash Cost ($ per ounce)                171          181          211
    Total Operating Cost ($ per ounce)         478          821          755

    Total Cash Operating Cost
     ($ per tonne  processed)                13.48        23.29        16.80
    -------------------------------------------------------------------------

    -------------------------------------------------------------------------

                                             Year         Year         Year
    Financial Statistics                     2008         2007         2006
    -------------------------------------------------------------------------

    Gold Sales (Ounces)                    264,124      177,722      180,035

                                               USD          USD          USD
                                               ---          ---          ---
    Average Price Received ($ per ounce)       822          697          526
    Cash Operating Cost ($ per ounce)          532          556          404
    Cash Operating Margin ($ per ounce)        290          141          123

    Non-Cash Cost ($ per ounce)                190          190           78
    Total Operating Cost ($ per ounce)         722          746          482

    Total Cash Operating Cost
     ($ per tonne  processed)                20.80        13.50        13.18
    -------------------------------------------------------------------------


    -------------------------------------------------------------------------
                                              Q/E          Q/E          Q/E
                                            Dec 31       Sep 30       Dec 31
    Combined Operating Statistics            2008         2008         2007
    -------------------------------------------------------------------------

    Gold produced (ounces)                  75,418       63,270       63,505

    Total Ore Mined (tonnes)             1,559,806    1,381,744    1,434,549
    Ore Mined grade (grams/tonne)             1.83         1.66         1.74

    Total Waste Mined (tonnes) -
     incl pre-strip                     12,780,037   12,644,334   13,563,299

    Total Material Mined (tonnes) -
     incl pre-strip                     14,339,843   14,026,078   14,997,848

    Total Material Moved (tonnes)       14,845,544   14,881,646   15,399,244

    Mill Feed (dry milled tonnes)        1,691,511    1,722,753    1,576,118
    Mill Feed Grade (grams/tonne)             1.68         1.46         1.65
    Recovery (%)                             80.8%        81.9%        78.0%
    -------------------------------------------------------------------------

    -------------------------------------------------------------------------

                                             Year         Year         Year
    Combined Operating Statistics            2008         2007         2006
    -------------------------------------------------------------------------

    Gold produced (ounces)                 259,812      183,209      182,288

    Total Ore Mined (tonnes)             5,629,135    4,680,384    5,678,195
    Ore Mined grade (grams/tonne)             1.69         1.41         1.23

    Total Waste Mined (tonnes) -
     incl pre-strip                     52,726,488   55,748,837   48,363,629

    Total Material Mined (tonnes) -
     incl pre-strip                     58,355,623   60,429,221   54,041,824

    Total Material Moved (tonnes)       61,063,786   63,039,572   55,915,129

    Mill Feed (dry milled tonnes)        6,737,962    6,166,485    5,513,634
    Mill Feed Grade (grams/tonne)             1.52         1.20         1.24
    Recovery (%)                             79.1%        77.5%        82.5%
    -------------------------------------------------------------------------


    -------------------------------------------------------------------------
                                              Q/E          Q/E          Q/E
                                            Dec 31       Sep 30       Dec 31
                                             2008         2008         2007
    Combined Financial Results              $'000        $'000        $'000
    -------------------------------------------------------------------------
    EBITDA (excluding unrealized
     gain/(loss) on hedges)                 24,294       18,991        9,057
    -------------------------------------------------------------------------
    Earnings/(loss) after income tax
     and before undesignated gain/(loss)
     on hedges                               1,917        2,806       (5,880)
    -------------------------------------------------------------------------

    -------------------------------------------------------------------------
    Reported EBITDA (including
     unrealized gain/(loss)
     on hedges)                              2,376         (596)     (21,345)
    -------------------------------------------------------------------------
    Reported earnings/(loss) after
     income tax (including unrealized
     gain/(loss) on hedges)                (13,426)     (10,905)     (27,162)
    -------------------------------------------------------------------------

    -------------------------------------------------------------------------

                                             Year         Year         Year
                                             2008         2007         2006
    Combined Financial Results              $'000        $'000        $'000
    -------------------------------------------------------------------------
    EBITDA (excluding unrealized
     gain/(loss) on hedges)                 66,109        8,724       16,002
    -------------------------------------------------------------------------
    Earnings/(loss) after income tax
     and before undesignated gain/(loss)
     on hedges                              (3,545)     (25,461)      (1,476)
    -------------------------------------------------------------------------

    -------------------------------------------------------------------------
    Reported EBITDA (including
     unrealized gain/(loss)
     on hedges)                             (7,022)     (53,529)     (16,761)
    -------------------------------------------------------------------------
    Reported earnings/(loss) after
     income tax (including unrealized
     gain/(loss) on hedges)                (54,735)     (69,039)     (23,427)
    -------------------------------------------------------------------------
    

    PRODUCTION

    Production for the fourth quarter of 2008 totalled 75,418 gold ounces
representing a company record for quarterly gold production. Total gold sales
for the quarter were 74,816 ounces bringing the year-end total to 264,124, an
increase of 49% over FY2007.
    As expected, higher grade material from the Macraes open pit contributed
to increased production in the quarter. The addition of the Frasers
Underground operation and exceptional performance from the Reefton operation
contributed to higher production in the quarter and for the year.
    Total combined cash operating costs were $307 per ounce for the quarter
resulting in cash costs of $532 per ounce for the year. This was slightly
better then expected and due in part to declining consumable costs during the
fourth quarter (diesel, electricity) and the progressive weakness of the NZD
compared to the USD. There was also a $17 per ounce gain for the year
associated with an increased valuation of the net realisable value of low
grade stockpiles.
    Consistent improvement in production performance and declining consumable
costs during the second half of 2008 resulted in gold production and operating
costs falling broadly in line with the Company's production and cost guidance
for FY2008.
    Cash flow generated from operations for the fourth quarter was $19.9
million representing more than 40% of the FY2008 total of $47.7 million. The
fourth quarter generated the highest cash flow of the year due to declining
consumable costs, increased production, and the continued decline of the NZD
against the USD.

    
    OPERATIONS

    Macraes Goldfield (New Zealand)
    

    The Macraes Goldfield operations (open-cut and underground) incurred one
lost time injury (LTI) for the quarter. This was the first and only such
injury in 2008 and compares with three in 2007.
    Production from the Macraes Goldfield for the quarter was 52,508 gold
ounces for a total of 183,680 ounces for the year. Higher grades from the open
pit contributed to stronger quarterly production resulting in a 15% increase
over the third quarter.
    Total material moved at Macraes Goldfield (open pit and underground) was
11.2 million tonnes for the fourth quarter and 47.3 million tonnes for the
year. The yearly movement was slightly less than 2007 and is attributed to
increased weather delays and operator turnover. Rock haulage at the Macraes
open pit underperformed throughout much of the year but a change to a new 3.5
panel roster and the implementation of process improvement programs in the
second half have resulted in haulage rates increasing to expected levels in
the fourth quarter.
    At Frasers Underground mining continued in the Panel 2B area. Good
stoping conditions resulted in minimal dilution and stable mining rates.
Grades in this area have also slightly outperformed the resource model.
Overall for the year, while Frasers had a slower than expected commissioning
ramp up in the first quarter, the mine has been operating to plan for the past
two quarters. This is expected to continue in 2009 with mining rates of
approximately 900,000 tonnes per annum.
    The Processing Plant operated to plan over the year with mill feed of
5.55 million tonnes compared to 5.56 million tonnes in 2007. As expected, mill
feed grade was higher in the fourth quarter at 1.48g/t Au, a 20% improvement
over Q3. Grades through the mill for 2008 were up 25% compared to 2007 largely
due to the commissioning of the higher grade Frasers Underground Mine and
higher grade run of mine material from the open pit.
    Macraes process plant recoveries were 80.4% for the quarter, and 78.6%
for the year. Lower recoveries were experienced in the first quarter of the
year while processing controls were optimized for the Reefton concentrate.
Recoveries over the past two quarters have been in line with plan and are
expected to be maintained at similar levels in 2009.

    Reefton Goldfield (New Zealand)

    There were no LTIs in the fourth quarter compared to two during the same
period last year. Overall for the year Reefton had five LTIs compared to five
in 2007.
    Total material moved for the quarter was 3.65 million tonnes compared to
3.08 million tonnes in Q3. This was slightly ahead of expectations as improved
equipment availabilities and fewer weather delays resulted in strong overall
mining performance.
    Production from Reefton concentrate for the fourth quarter was 22,910
gold ounces which slightly exceeded expectations. Total material through the
mill was 319,000 tonnes which was a further improvement on the third quarter
and about 27% above design throughput capacity. Total throughput for the year
was just under 1.2 million tonnes and almost 20% above design capacity.
Overall gold recovery for Reefton remained stable at 82.5% for the quarter,
resulting in 81.8% for the year.
    Throughout 2008, the Reefton operation continuously demonstrated
improvement in both the mining and processing areas. 2008 marked the first
full year of production for the operation and the mine ended the year
operating consistently above design expectations.

    Community Relations

    The fourth quarter was a successful period for OceanaGold's Macraes Trout
Hatchery which is operated as a joint venture with Fish & Game New Zealand.
More than 27,000 trout fry are in their early stages at the hatchery. Some of
these will be raised for future breeding stock with the majority to be
released into local lakes and reservoirs.
    The Company's Heritage and Art Park located at the Macraes mine,
commissioned a new art exhibit during the fourth quarter. The outdoor art park
is the vision of OceanaGold to transform land that had once been used in
mining activities into a sustainable tourist initiative for the local
community and one that will continue to attract visitors long after mining
activity has ceased.
    The Haast Eagle (Figure A) designed by New Zealand artist Mark Hill,
stands approximately 7.5 meters tall with a wingspan of 11.5 meters. It was
constructed out of stainless steel tubing and sheet and is the artist's
rendition of the Haast Eagle which last soared above the skies of the South
Island of New Zealand in the 19th century.

    
                                 - Table 2 -
                        Macraes Operating Statistics

    -------------------------------------------------------------------------
                                              Q/E          Q/E          Q/E
    Macraes Goldfield                       Dec 31       Sep 30       Dec 31
    Operating Statistics                     2008         2008         2007
    -------------------------------------------------------------------------

    Gold produced (ounces)                  52,508       45,843       46,818

    Total Ore Mined (tonnes)             1,207,149    1,053,701    1,113,591
    Ore Mined grade (grams/tonne)             1.65         1.49         1.54

    Total Waste Mined (tonnes)
     incl pre-strip                      9,520,930    9,921,061   10,655,037

    Total Material Mined (tonnes)
     incl pre-strip                     10,728,079   10,974,762   11,768,628

    Total Material Moved (tonnes)       11,199,726   11,803,712   12,115,134

    Mill Feed (dry milled tonnes)        1,372,116    1,409,432    1,317,352
    Mill Feed Grade (grams/tonne)             1.48         1.23         1.43
    Recovery (%)                             80.4%        81.7%        77.3%
    -------------------------------------------------------------------------

    -------------------------------------------------------------------------

    Macraes Goldfield
    Operating Statistics                     2008         2007         2006
    -------------------------------------------------------------------------

    Gold produced (ounces)                 183,680      145,312      182,288

    Total Ore Mined (tonnes)             4,322,001    3,796,184    5,678,195
    Ore Mined grade (grams/tonne)             1.52         1.22         1.23

    Total Waste Mined (tonnes)
     incl pre-strip                     40,339,489   43,752,396   48,363,629

    Total Material Mined (tonnes)
     incl pre-strip                     44,661,490   47,548,580   54,041,824

    Total Material Moved (tonnes)       47,255,177   50,059,468   55,915,129

    Mill Feed (dry milled tonnes)        5,545,008    5,564,873    5,513,634
    Mill Feed Grade (grams/tonne)             1.31         1.05         1.24
    Recovery (%)                             78.6%        77.5%        82.5%
    -------------------------------------------------------------------------


                                 - Table 3 -
                        Reefton Operating Statistics

    -------------------------------------------------------------------------
                                              Q/E          Q/E          Q/E
    Reefton Goldfield                       Dec 31       Sep 30       Dec 31
    Operating Statistics                     2008         2008         2007
    -------------------------------------------------------------------------

    Gold produced (ounces)                  22,910       17,427       16,687

    Total Ore Mined (tonnes)               352,657      328,043      320,958
    Ore Mined grade (grams/tonne)             2.44         2.20         2.42

    Total Waste Mined (tonnes)
     incl pre-strip                      3,259,107    2,723,273    2,908,262

    Total Material Mined (tonnes)
     incl pre-strip                      3,611,764    3,051,316    3,229,220

    Total Material Moved (tonnes)        3,645,818    3,077,934    3,284,110

    Mill Feed (dry milled tonnes)          319,395      313,321      258,766
    Mill Feed Grade (grams/tonne)             2.54         2.51         2.79
    Recovery (%)                             82.5%        82.8%        81.9%
    -------------------------------------------------------------------------

    -------------------------------------------------------------------------

    Reefton Goldfield
    Operating Statistics                     2008         2007         2006
    -------------------------------------------------------------------------

    Gold produced (ounces)                  76,132       37,897          n/a

    Total Ore Mined (tonnes)             1,307,134      884,200          n/a
    Ore Mined grade (grams/tonne)             2.24         2.24          n/a

    Total Waste Mined (tonnes)
     incl pre-strip                     12,386,999   11,996,441          n/a

    Total Material Mined (tonnes)
     incl pre-strip                     13,694,133   12,880,641          n/a

    Total Material Moved (tonnes)       13,808,609   12,980,104          n/a

    Mill Feed (dry milled tonnes)        1,192,954      601,612          n/a
    Mill Feed Grade (grams/tonne)             2.47         2.60          n/a
    Recovery (%)                             81.8%        77.1%          n/a
    -------------------------------------------------------------------------
    

    DEVELOPMENT

    Didipio Gold & Copper Project (Philippines)

    Development at the Didipio Gold and Copper project in Luzon, Philippines
was placed under care and maintenance on 3 December 2008. The Company has
limited its site work to securing and maintaining existing project
infrastructure. There were three LTIs for the quarter and a total of eight for
FY2008.
    Prior to the project's curtailment, detailed design was advanced to 69%
completion with procurement of all long lead items also well advanced or
completed. Site based activities included final construction works of the
access road to site and 60% completion of bulk earthworks for the ore storage
and processing plant facilities. Preliminary works for the accommodation camp
and office infrastructure were also completed.
    Long lead-time items such as the mills, cyclones, floatation cells and
gravity concentrators have been completed and will remain at the vendor
premises until they are required at site. Other vendor equipment contracts
have been terminated and settled.
    The plant area and run-of-mine (ROM) earthworks pads will be secured
during care and maintenance with 24 hour security and fencing of specific
areas. The Company will continue to examine strategies to resume development
of the project.

    Community Relations and Environment

    During the care and maintenance phase of the project, all environmental
controls will be maintained throughout the project footprint. Special
attention to water and soil erosion will remain a priority.
    Previously signed Memoranda of Agreement (MOAs) will also be honoured
during this phase of the project. The Company continues to work with its many
stakeholder groups and is a proud supporter of various programs in Northern
Luzon, such as the Global Fund Movement Against Malaria and the Didipio Green
Valley Institute School. Information in relation to the partnerships with both
of these groups is detailed in the third quarter report.

    EXPLORATION

    Exploration expenditure for the fourth quarter totalled $1.0 million.
FY2008 expenditure totalled $5.4 million.

    New Zealand

    Macraes Goldfield

    Exploration activities during the fourth quarter continued at the Frasers
Underground extension program and the Macraes open pit drilling along strike
of the Hyde Macraes Shear Zone (HMSZ). These programs are directed at
extending the Frasers Underground down dip and delineating near surface
mineralization at the northern perimeter of the current open pit mine.
    During the year over 4,000 metres of infill drilling on Panel 2 of
Frasers Underground was completed. The program confirmed the trend of
increasing grade with depth within the ore body. Mining commenced in Panel 2
during the second half of the year. It is expected that the majority of the
future exploration drilling there will be conducted from underground.
    A drill program commenced mid-year to delineate near surface,
open-pittable resources. Three such programs were completed, at Golden Ridge,
Trig 569 and Coronation, with best results reported from the latter. In total,
34 holes were drilled (for 3,069m) to test the Northeastern extension of the
Coronation deposit. Significant intercepts (with grades (greater than) 1g/t Au
over 1-5m) exist within the hanging wall shear zone itself and a
semi-concordant lode that occurs about 10m below. Both define shallow,
north-plunging shoots. Modelling of this deposit is underway and will be
included in the resource estimate update in H1 2009.
    A 3-D model of all grade control data (collected over the life of the
mine) is being compiled, and further work is planned over the northern
extension of the HMSZ through a collaboration of the New Zealand's GNS and
OceanaGold. A soil sampling program (1,361 samples, to date) to track the
trace of the HMSZ northwards, beyond Coronation, is ongoing. This area
represents a 2-3 km long untested interval of strike and is regarded as the
most prospective (for open-pittable resources) in the entire Macraes tenement
package.

    Reefton Goldfield

    During the fourth quarter a drill program designed to test for extensions
of mineralized zones on the Globe-Progress mining permit commenced. Reverse
circulation and diamond drill holes were completed with only a few assays
received. Further analysis of these results will continue early into 2009.

    Philippines

    Didipio & Near-Mine Prospects

    Near mine exploration drilling was completed during the quarter and assay
data is now being analysed. This review and analysis will continue into the
first quarter of 2009.
    9,085m was drilled into near mine targets at Didipio during 2008. Eight
different targets were tested with a number of thin monzonitic dykes
intersected. Detailed logging of alteration vein assemblages and an
interpretation of an IP survey indicate that there are at least two prospects
within this group of eight that remain untested. Additionally, there are at
least seven other targets that have not been tested within two kilometres of
Didipio.
    A comprehensive review of the historical drilling on all regional targets
at Didipio was conducted during 2008. This involved relogging numerous drill
holes (many hundreds of metres) and sampling of all zones of interest that had
not been sampled before. In addition, many of the holes were logged with a
PIMA instrument, as part of a hyperspectral orientation study aimed at
providing an objective means of logging subtle alteration. The ultimate
objective of this ongoing research program is to identify vectors to help
target additional mineralization.

    Manhulayan

    The Company commenced an exploration program at the Manhulayan project in
the first quarter of 2008 starting with a mapping and sampling program. The
main porphyry targets have had some previous drilling by Placer Dome which
identified long intervals of gold-copper mineralization. A soil sampling grid
was extended to the south of Costan Ridge to complete the geochemical coverage
of an area of small-scale workings that had not previously been sampled. A new
dipole-dipole IP survey was completed over the full grid. An interpretation of
these combined data sets has identified two targets and four proposed diamond
holes.

    
                              FINANCIAL SUMMARY

    The table below provides selected financial data comparing Q4 2008 with Q3
2008 and Q4 2007 and the last three full years.

    -------------------------------------------------------------------------
                                             Q/E          Q/E          Q/E
                                            Dec 31       Sep 30       Dec 31
                                             2008         2008         2007
    STATEMENT OF OPERATIONS                 $'000        $'000        $'000
    -------------------------------------------------------------------------
    Gold sales                              47,845       54,038       36,615
    -------------------------------------------------------------------------
    Cost of sales, excluding
     depreciation and amortization         (22,543)     (39,658)     (25,795)
    -------------------------------------------------------------------------
    General & Administration                (2,963)      (3,784)      (3,339)
    -------------------------------------------------------------------------
    Foreign Currency Exchange
     Gain/(Loss)                             1,924        8,367        1,480
    -------------------------------------------------------------------------
    Other income                                31           28           96
    -------------------------------------------------------------------------
    Earnings before interest, tax,
     depreciation & amortization
     (EBITDA) (excluding gain/(loss)
     on undesignated hedges)                24,294       18,991        9,057
    -------------------------------------------------------------------------
    Depreciation and amortization          (12,872)     (11,420)     (10,362)
    -------------------------------------------------------------------------
    Net interest expense                    (3,892)      (4,823)      (3,882)
    -------------------------------------------------------------------------
    Earnings/(loss) before income tax and
     gain/(loss) on undesignated hedges      7,530        2,748       (5,188)
    -------------------------------------------------------------------------
    Tax on earnings / loss                  (5,613)          58         (692)
    -------------------------------------------------------------------------
    Earnings/(loss) after income tax and
     before gain/(loss) on undesignated
     hedges                                  1,917        2,806       (5,880)
    -------------------------------------------------------------------------

    -------------------------------------------------------------------------
    Release from OCI of deferred
     unrealized gain/(loss) on
     designated hedges                           -            -          334
    -------------------------------------------------------------------------
    Gain/(loss) on fair value of
     undesignated hedges                   (21,919)     (19,587)     (30,736)
    -------------------------------------------------------------------------
    Tax on (gain)/loss on undesignated
     hedges                                  6,576        5,876        9,121
    -------------------------------------------------------------------------
    Net earnings/(loss)                    (13,426)     (10,905)     (27,162)
    -------------------------------------------------------------------------

    -------------------------------------------------------------------------
    Basic earnings/(loss) per share         ($0.08)      ($0.07)      ($0.17)
    -------------------------------------------------------------------------
    Diluted earnings/(loss) per share       ($0.08)      ($0.07)      ($0.17)
    -------------------------------------------------------------------------

    -------------------------------------------------------------------------
    CASH FLOW
    -------------------------------------------------------------------------
    Cash flows from Operating Activities    19,918       (2,730)       5,180
    -------------------------------------------------------------------------
    Cash flows from Investing Activities   (20,649)       8,940      (23,562)
    -------------------------------------------------------------------------
    Cash flows from Financing Activities    (4,525)     (30,650)         (27)
    -------------------------------------------------------------------------

    -------------------------------------------------------------------------
                                             Year         Year         Year
                                             2008         2007         2006
    STATEMENT OF OPERATIONS                 $'000        $'000        $'000
    -------------------------------------------------------------------------
    Gold sales                             217,214      104,395       94,750
    -------------------------------------------------------------------------
    Cost of sales, excluding
     depreciation and amortization        (138,154)     (81,669)     (72,684)
    -------------------------------------------------------------------------
    General & Administration               (15,338)     (11,632)      (5,906)
    -------------------------------------------------------------------------
    Foreign Currency Exchange
     Gain/(Loss)                             2,254       (2,661)        (306)
    -------------------------------------------------------------------------
    Other income                               133          291          148
    -------------------------------------------------------------------------
    Earnings before interest, tax,
     depreciation & amortization (EBITDA)
     (excluding gain/(loss) on
     undesignated hedges)                   66,109        8,724       16,002
    -------------------------------------------------------------------------
    Depreciation and amortization          (50,547)     (28,790)     (14,031)
    -------------------------------------------------------------------------
    Net interest expense                   (18,056)     (12,702)      (3,976)
    -------------------------------------------------------------------------
    Earnings/(loss) before income tax and
     gain/(loss) on undesignated hedges     (2,494)     (32,768)      (2,005)
    -------------------------------------------------------------------------
    Tax on earnings/loss                    (1,051)       7,307          529
    -------------------------------------------------------------------------
    Earnings/(loss) after income tax and
     before gain/(loss) on undesignated
     hedges                                 (3,545)     (25,461)      (1,476)
    -------------------------------------------------------------------------

    -------------------------------------------------------------------------
    Release from OCI of deferred
     unrealized gain/(loss) on
     designated hedges                         279      (16,407)     (27,684)
    -------------------------------------------------------------------------
    Gain/(loss) on fair value of
     undesignated hedges                   (73,408)     (45,847)      (5,079)
    -------------------------------------------------------------------------
    Tax on (gain)/loss on undesignated
     hedges                                 21,939       18,676       10,812
    -------------------------------------------------------------------------
    Net earnings/(loss)                    (54,735)     (69,039)     (23,427)
    -------------------------------------------------------------------------

    -------------------------------------------------------------------------
    Basic earnings/(loss) per share         ($0.34)      ($0.47)      ($0.29)
    -------------------------------------------------------------------------
    Diluted earnings/(loss) per share       ($0.34)      ($0.47)      ($0.29)
    -------------------------------------------------------------------------

    -------------------------------------------------------------------------
    CASH FLOW
    -------------------------------------------------------------------------
    Cash flows from Operating Activities    47,725       10,675       16,048
    -------------------------------------------------------------------------
    Cash flows from Investing Activities  (108,316)    (118,675)     (49,526)
    -------------------------------------------------------------------------
    Cash flows from Financing Activities   (49,134)     140,756       74,405
    -------------------------------------------------------------------------



    -------------------------------------------------------------------------
                                           As at        As at        As at
                                           Dec 31       Dec 31       Dec 31
                                            2008         2007         2006
    BALANCE SHEET                          $'000        $'000        $'000
    -------------------------------------------------------------------------
    Cash and cash equivalents                9,711      119,837       80,025
    -------------------------------------------------------------------------
    Other Current Assets                    35,980       35,401       40,686
    -------------------------------------------------------------------------
    Total Non Current Assets               584,299      652,704      503,018
    -------------------------------------------------------------------------
    Total Assets                           629,990      807,942      623,729
    -------------------------------------------------------------------------
    Total Current Liabilities               89,105       78,095       91,185
    -------------------------------------------------------------------------
    Total Non Current Liabilities          294,229      375,682      243,384
    -------------------------------------------------------------------------
    Total Liabilities                      383,334      453,777      334,569
    -------------------------------------------------------------------------
    Total Shareholders' Equity             246,656      354,165      289,160
    -------------------------------------------------------------------------
    

    RESULTS OF OPERATIONS

    The company reported 2008 earnings before interest, tax, depreciation and
amortization (EBITDA) and gains/losses on undesignated hedges in 2008 of $66.1
million compared with $8.7 million in the prior year. EBITDA before
gains/losses on undesignated hedges in the fourth quarter of 2008 was $24.3
million compared to $19.0 million in the third quarter. The results for the
year were characterised by increased production at Macraes and Reefton open
pits and Frasers Underground mines as well as an increased average realised
gold price per ounce. The increased average gold price received when compared
to 2007 was positively affected by 100% of production for the first three
quarters being sold into the spot market as hedged positions were rolled
forward.
    Cash costs per ounce in the fourth quarter were substantially lower than
the third quarter, mainly due to increased production and lower consumable
costs. In addition a revaluation of the low-grade ore stockpile and an
adjustment to pre-strip costs and waste for the full year had a positive
effect in the December quarter. Cash costs per ounce for the year recorded a
decrease in 2008 compared to 2007, while non-cash costs per ounce were stable.
Operating costs were higher than the prior year, reflecting increased
consumable commodity costs, higher expensed waste stripping and increased
depreciation and amortisation expenses associated with the start of the
Reefton and Frasers Underground mines. Increased interest costs associated
with higher levels of debt also impacted the result.

    
    Sales Revenue
    -------------
    
    Gold revenue of $217.2 million in 2008 exceeded the $104.4 million in
2007 by $112.8 million (108%) due to strong gold sales augmented by an
increase in the average gold price received.
    Gold sales volumes for 2008 of 264,124 ounces were 49% higher than 2007
(177,722 ounces). This was due to increased production from the Macraes open
pit mine, the commissioning of the Frasers Underground mine, increased
contribution from the Reefton mine and improved gold recoveries.
    The average price received per ounce in 2008 was $822, an 18% increase
over the 2007 average of $697.
    Gold sales volumes for the fourth quarter were 19% higher than the third
quarter but the average price received dropped 25% from $861 to $640. This was
due to a portion of production being sold into fixed forward contracts,
compared to gold produced in the third quarter that was sold entirely into the
spot market as hedge positions were rolled forward. The net result was an 11%
decrease in revenue from the third to fourth quarter.

    
    Undesignated Hedges Gains/Losses
    --------------------------------
    
    Unrealised gain/loss on the fair value of undesignated hedges has been
brought to account reflecting the movement in the spot gold price.
    The derivative instruments used to manage the impact of movements in gold
prices are summarised below under "Current and non-current derivative
liabilities".

    
    Operating Costs & Margins
    -------------------------
    
    Cash costs per ounce sold of $532 were $24 lower in 2008 than in 2007.
Excluding the adjustment for the net realisable value of low grade stockpiles,
cash costs declined slightly from $556 in 2007 to $549 in 2008. In addition,
the NZD has weakened by more than 24% against the USD during 2008 which has
improved the cash cost per ounce in USD terms. This was offset during the year
by the impact of sharp increases in the market prices of electricity and
diesel fuel as well as other consumables such as reagents, explosives, and
grinding media etc. These prices have recently retreated from highs
experienced mid-year.
    Cash costs per ounce sold in the fourth quarter of 2008 at $307 were less
than half the third quarter costs of $640 per ounce sold. Excluding the fourth
quarter adjustments, cash costs decreased by 35% from $640 to $416. The
reduction in cash costs per ounce reflects higher gold production, a sharp
reduction in electricity prices, the decline in diesel prices and the impact
of a weaker NZD.
    The increased margin resulted in earnings before interest, tax,
depreciation & amortisation (excluding undesignated hedge losses) of $66.1
million for the year, which compares to $8.7 million in 2007. The fourth
quarter of 2008 contributed $24.3 million to EBITDA compared to $19.0 million
in the third quarter, a 28% increase.

    
    Depreciation and Amortization
    -----------------------------
    
    Depreciation and amortization charges are calculated on a unit of
production basis and are consequently much higher in 2008 than in 2007.
Similarly the charges are higher in the fourth quarter than in the third
quarter due to increased production.
    Increased production from the commissioning of both the Reefton mine in
2007 and Frasers Underground mine in Q1 2008, together with the amortisation
of deferred waste stripping costs increased the depreciation and amortisation
charges.

    
    Net Interest expense
    --------------------
    
    The increase in net interest expense in 2008 is a result of the higher
levels of net debt carried by OceanaGold for 2008 compared with 2007. In
December 2008, the Company began paying the coupon on it's A$100 million
convertible bonds issued in 2006/2007.
    Net interest expense for the fourth quarter of 2008 was lower than the
third quarter, caused by a combination of lower interest rates, a weaker
Australian and New Zealand dollar and reduced principal after loan repayments
on the Company's outstanding project loan.

    
    Net earnings/(loss)
    -------------------
    
    The company reported a net loss of $54.7 million in 2008 compared with a
net loss of $69.0 million in 2007. The impact of non-cash charges for
undesignated hedge gains and losses was influential throughout the year with
undesignated hedge losses of $73.4 million. The value of the undesignated
hedges is only a non-cash accounting entry that reflects their value at the
end of the reporting period. This does not affect cash flow but can have a
significant influence on reported net earnings. As a result, EBITDA before
undesignated hedge gains/losses is reported to measure operating performance
on a consistent basis.
    Improvements in EBITDA for the year were primarily the net result of
higher gold production from the combined operations and the increased average
realised gold price received.

    DISCUSSION OF CASH FLOWS

    
    Operating Activities
    --------------------
    
    Cash flows from operating activities for 2008 increased to $47.7 million
compared to $10.7 million in 2007. The improvement was driven by the
significantly higher gold sales this year partially offset by increased mining
costs.
    Q4 2008 cash flows from operating activities were over $22 million higher
than the third quarter, reflecting the increased gold production.

    
    Investing Activities
    --------------------
    
    Expenditures were on the Didipio Project development as well as
pre-stripping and sustaining capital for the New Zealand operations.
    Cash used for investing activities in 2008 totalled $108.3 million which
was $10.4 million lower than 2007. Large increases in payments for development
at the Didipio project were more than offset by decreased expenditure on
property, plant and equipment and exploration and evaluation activities.
    Cash outflows due to investing activities in the fourth quarter were
$20.6 million for mining assets and development. This is broadly in line with
the third quarter cash inflow of $8.9 million if the cash inflow of $27.0
million from a restricted bank account to cash is excluded.

    
    Financing Activities
    --------------------
    
    Financing cash outflows in 2008 were $49.1 million resulting from
repayments of borrowings of $15.7 million, finance lease payments of $7.5
million and the $25.9 million settlement of gold hedge contracts at the end of
the third quarter.
    Cash flows from financing activities in the fourth quarter were a net
outflow of $4.5 million. This was comprised of a $2.9 million repayment of
borrowings and a $1.6 million repayment on a mining equipment finance lease.

    DISCUSSION OF FINANCIAL POSITION AND LIQUIDITY

    Company's funding and capital requirements

    For the twelve months ended December 31, 2008, the Company incurred a
loss of $54.7 million. As at December 31, 2008 the current liabilities of the
company exceed current assets by $43.4 million and the company has capital
commitments of $6.6 million. The company has cash on hand of $9.7 million.
Current cash flow projections indicate sufficient funds to continue as a going
concern for at least the next 12 months, however, should certain assumptions
in the forecasts not be achieved, cash flow deficits may occur, which could
lead to doubt as to the ability of the Company to meet its future obligations
as they fall due and, accordingly, whether the application of the going
concern principle is appropriate.
    The Company will consider alternatives to secure additional capital
including finance facilities and equity. Nevertheless, there is no assurance
that these initiatives would be successful or sufficient.
    The Company's ability to continue as a going concern is dependent upon
its ability to generate positive cash flows - either from operations,
additional financing, or realisation of assets in the ordinary course of
business. These financial statements do not reflect the adjustments to the
carrying values of assets and liabilities and the reported expenses and
balance sheet classifications that would be necessary where the going concern
assumption is inappropriate. These adjustments could be material.

    Capital commitments

    OceanaGold's existing capital commitments as at December 31 2008 are as
follows:

    
    -------------------------------------------------------------------------
                                         Payments due by period as at
                                               December 31 2008
    -------------------------------------------------------------------------
                                               $'000      $'000     $'000
                                     $'000   less than    1 - 2     2 - 3
                                     Total     1 year     years     years
    -------------------------------------------------------------------------
                                     6,573      5,656       247       670
    -------------------------------------------------------------------------

    Financial position

    Current Assets
    --------------
    Current assets declined by $110 million during 2008 primarily from a
reduction in cash.

    Non Current Assets
    ------------------
    During 2008 non-current assets decreased from $653 million to $584
million. The USD appreciation has decreased the value of Property, Plant and
Equipment and Mining Assets in USD terms.

    Current Liabilities
    -------------------
    The increase of $11 million during 2008 was a result of an $18.4 million
increase in the current unrealised derivative liabilities, partially offset by
a $4.8 million reduction in interest bearing liabilities in line with project
debt payments and adjusted for the movement of the USD.

    Non Current Liabilities
    -----------------------
    Interest-bearing loans and borrowings decreased by $56 million during 2008
as a result of foreign exchange movements and a repayment of project debt. A
$13 million reduction in future income tax liabilities related to capital
expenditure deductions in NZ.

    Current and non-current derivative liabilities
    ----------------------------------------------
    
    OceanaGold holds certain derivative instruments to manage the impact of
movements in the spot gold price.
    During the year the Company settled fixed forward gold hedge contracts
that had been rolled from the first nine months of the year to the end of the
third quarter. Contracts for 78,312 ounces were settled from the hedge
position resulting in a 25% reduction in the fixed forward position. The out
of the money position of $25.9 million was settled by cash against hedge
liabilities.
    Current instruments held include undesignated forward gold sales
contracts for 206,076 ounces (2007: 319,788 ounces) at NZ$773, undesignated
gold put options for 199,496 ounces (2007: 248,538 ounces) with an average
exercise price of NZ$1,068 and undesignated gold call options (sold) for
136,024 ounces (2007: 104,024 ounces) with an average exercise price of
NZ$1,172.

    
    A summary of OceanaGold's derivatives is:

                                                    Dec 31 2008  Dec 31 2007
                                                          $'000        $'000
    Current Assets
    Gold put options                                      1,493        1,084
                                                   --------------------------

    Non Current Assets
    Gold put options                                      1,997        4,097
                                                   --------------------------
    Total Assets                                          3,490        5,181

                                                    Dec 31 2008  Dec 31 2007
                                                          $'000        $'000
    Current Liabilities
    Gold forward sales contracts                         46,949       30,402
    Gold call options (sold)                              1,831            -
                                                   --------------------------
                                                         48,780       30,402
                                                   --------------------------
    Non Current Liabilities
    Gold forward sales contracts                         45,708       67,322
    Gold call options (sold)                             34,358       20,894
                                                   --------------------------
                                                         80,066       88,216
                                                   --------------------------
    Total Liabilities                                   128,846      118,618
                                                   --------------------------


    Shareholders' Equity
    --------------------

    A summary of OceanaGold's changes in shareholders' equity is set out
below:

                                                                  Year ended
                                                                 Dec 31 2008
                                                                       $'000

    Total equity at beginning of financial period                    354,165
                                                              ---------------
    Profit/(loss) after income tax                                   (54,735)
    Movement in other comprehensive income                           (54,292)
    Movement in contributed surplus                                    1,518
                                                              ---------------
    Total equity at end of financial period                          246,656
                                                              ---------------
    

    Shareholders' equity has decreased to $246.7 million at year end
primarily as a result of the loss incurred for the year and currency
translation differences reflected in other comprehensive income that arise on
consolidation of foreign entities.

    CRITICAL ACCOUNTING ESTIMATES AND ACCOUNTING POLICIES

    The accounting policies that involve significant management judgement and
estimates are discussed in this section. For a complete list of the
significant accounting policies, reference should be made to Note 1 of the
2008 audited consolidated financial statements of OceanaGold Corporation.

    Exploration and Evaluation Expenditure

    Exploration and evaluation expenditure is stated at cost and is
accumulated in respect of each identifiable area of interest.
    Such costs are only carried forward to the extent that they are expected
to be recouped through the successful development of the area of interest (or
alternatively by its sale), or where activities in the area have not yet
reached a stage which permits a reasonable assessment of the existence or
otherwise of economically recoverable resources, and active work is
continuing.
    Accumulated costs in relation to an abandoned area are written off to the
Statement of Operations in the period in which the decision to abandon the
area is made.
    A regular review is undertaken of each area of interest to determine the
appropriateness of continuing to carry forward costs in relation to that area
of interest.

    Mining Properties in Production or Under Development

    Expenditure relating to mining properties in production (including
exploration, evaluation and development expenditure) are accumulated and
brought to account at cost less accumulated amortisation in respect of each
identifiable area of interest. Amortisation of capitalised costs, including
the estimated future capital costs over the life of the area of interest, is
provided on the production output basis, proportional to the depletion of the
mineral resource of each area of interest expected to be ultimately
economically recoverable.
    A regular review is undertaken of each area of interest to determine the
appropriateness of continuing to carry forward costs in relation to that area
of interest. Should the carrying value of expenditure not yet amortised exceed
its estimated recoverable amount, the excess is written off to the Statement
of Operations.

    Asset Retirement Obligations

    OceanaGold recognises the fair value of future asset retirement
obligations as a liability in the period in which it incurs a legal obligation
associated with the retirement of tangible long-lived assets that results from
the acquisition, construction, development and/or normal use of the assets.
OceanaGold concurrently recognises a corresponding increase in the carrying
amount of the related long-lived asset that is depreciated over the life of
the asset.
    The key assumptions on which the fair value of the asset retirement
obligations are based include the estimated future cash flow, the timing of
those cash flows and the credit-adjusted risk-free rate or rates on which the
estimated cash flows have been discounted. Subsequent to the initial
measurement the liability is accreted over time through periodic charges to
earnings. The amount of the liability is subject to re-measurement at each
reporting period if there has been a change to certain of the key assumptions.

    Asset Impairment Evaluations

    The carrying values of exploration, evaluation, development costs and
plant and equipment are reviewed for impairment when events or changes in
circumstances indicate the carrying value may not be recoverable. If any such
indication exists and where the carrying value exceeds the undiscounted future
cash flows from these assets, the assets are written down to the fair value of
the future cash flows based on OceanaGold's average cost of borrowing.

    Derivative Financial Instruments /Hedge Accounting

    The consolidated entity benefits from the use of derivative financial
instruments to manage commodity price and foreign currency exposures.
    Derivative financial instruments are initially recognised in the balance
sheet at fair value and are subsequently re-measured at their fair values at
each reporting date.
    The fair value of gold hedging instruments is calculated by discounting
the future value of the hedge contract at the appropriate prevailing quoted
market rates at reporting date. The fair value of forward exchange contracts
is calculated by reference to current forward exchange rate for contracts with
similar maturity profiles.
    Certain derivative instruments do not qualify for hedge accounting or
have not been accounted for as fair value or cash flow hedges. Changes in the
fair value of these derivative instruments are recognised immediately in the
statement of operations. The company does not have any designated hedges.

    Stock Option Pricing Model

    Stock options granted to employees or external parties are measured by
reference to the fair value at grant date and are recognised as an expense in
equal instalments over the vesting period and credited to the contributed
surplus account. The expense is determined using an option pricing model that
takes into account the exercise price, the term of the option, the impact of
dilution, the non-tradable nature of the option, the current price and
expected volatility of the underlying share, the expected dividend yield and
the risk free interest rate for the term of the option.

    Income Tax

    The Group follows the liability method of income tax allocation. Under
this method, future tax assets and liabilities are determined based on
differences between the financial reporting and tax bases of assets and
liabilities and are measured using the substantially enacted tax rates and
laws that will be in effect when the differences are expected to reverse. A
valuation allowance is provided to the extent that it is more likely than not
that those future income tax assets will not be realised.

    ESTIMATES, RISKS AND UNCERTAINTIES

    The preparation of financial statements, in conformity with Canadian
GAAP, requires management to make estimates and assumptions that affect the
amounts reported in the consolidated financial statements and related notes.
Significant areas where management's judgment is applied include ore reserve
and resource determinations, exploration and evaluation assets, mine
development costs, plant and equipment lives, contingent liabilities, current
tax provisions and future tax balances and asset retirement obligations.
Actual results may differ from those estimates.

    In addition, this document contains some forward looking statements that
involve risks, uncertainties and other factors that could cause actual
results, performance, prospects and opportunities to differ materially from
those expressed or implied by those forward looking statements. Factors that
could cause actual results or events to differ materially from current
expectations include, among other things: volatility and sensitivity to market
prices for gold; replacement of reserves; procurement of required capital
equipment and operating parts and supplies; equipment failures; unexpected
geological conditions; political risks arising from operating in certain
developing countries; inability to enforce legal rights; defects in title;
imprecision in reserve estimates; success of future exploration and
development initiatives; operating performance of current operations;
environmental and safety risks; seismic activity, weather and other natural
phenomena; failure to obtain necessary permits and approvals from government
authorities; changes in government regulations and policies including tax and
trade laws and policies; ability to maintain and further improve labour
relations and other development and operating risks.

    FOREIGN CURRENCY TRANSLATION

    The consolidated financial statements are expressed in United States
dollars ("USD") and have been translated to USD using the current rate method
described below. The controlled entities of OceanaGold have either Australian
dollars ("AUD") or New Zealand dollars ("NZD") as their functional currency.
    OceanaGold employs the current rate method of translation for its
self-sustaining operations. Under this method, all assets and liabilities are
translated at the period end rates and all revenue and expense items are
translated at the average exchange rates for recognition in income.
Differences arising from these foreign currency translations are recorded in
shareholders' equity as a cumulative translation adjustment until they are
realized by a reduction in the net investment.
    OceanaGold employs the temporal method of translation for its integrated
operations. Under this method, monetary assets and liabilities are translated
at the period end rates and all other assets and liabilities are translated at
applicable historical exchange rates. Revenue and expense items are translated
at the rate of exchange in effect at the date the transactions are recognized
in income, with the exception of depreciation and amortization which is
translated at the historical rate for the associated asset. Exchange gains and
losses and currency translation adjustments are included in income.

    CHANGES IN ACCOUNTING POLICIES INCLUDING INITIAL ADOPTION

    There have been no material changes from the accounting policies of
FY2007.
    In 2006, Canada's Accounting Standards Board (AcSB) ratified a strategic
plan that will result in Canadian GAAP, as used by public companies, being
converged with International Financial Reporting Standards (IFRS) over a
transitional period. The AcSB has developed and published a detailed
implementation plan, with a changeover date for fiscal years beginning on or
after January 1, 2011. This convergence initiative is in its early stages and
at this time OceanaGold does not intend to early adopt IFRS. Accordingly, it
would be premature to assess the impact of the initiative on the Company at
this time.

    SUMMARY OF QUARTERLY RESULTS OF OPERATIONS

    The following table sets forth unaudited information for each of the
eight quarters ended March 31, 2007 through to December 31, 2008. This
information has been derived from our unaudited consolidated financial
statements which, in the opinion of management, have been prepared on a basis
consistent with the audited consolidated financial statements and include all
adjustments, consisting only of normal recurring adjustments, necessary for
fair presentation of our financial position and results of operations for
those periods.

    
    -------------------------------------------------------------------------
                                        Dec 31    Sep 30    Jun 30    Mar 31
                                         2008      2008      2008      2008
                                        $'000     $'000     $'000     $'000
    -------------------------------------------------------------------------
    Gold sales                          47,845    54,038    53,068    62,263
    EBITDA (excluding
     undesignated gain/(loss)
     on hedges)                         24,294    18,991     1,131    21,690
    Earnings/(loss) after
     income tax and before
     undesignated gain/(loss)
     on hedges                           1,917     2,806   (12,051)    3,783

    Net earnings/(loss)                (13,426)  (10,905)  (19,248)  (11,156)

    Net earnings per share
    Basic                               ($0.08)   ($0.07)   ($0.12)   ($0.07)
    Diluted                             ($0.08)   ($0.07)   ($0.12)   ($0.07)
    -------------------------------------------------------------------------

    -------------------------------------------------------------------------
                                        Dec 31    Sep 30    Jun 30    Mar 31
                                         2007      2007      2007      2007
                                        $'000     $'000     $'000     $'000
    -------------------------------------------------------------------------
    Gold sales                          36,615    24,367    22,644    20,769
    EBITDA (excluding
     undesignated gain/(loss)
     on hedges)                          9,057    (8,522)    2,787     5,404
    Earnings/(loss) after
     income tax and before
     undesignated gain/(loss)
     on hedges                          (5,880)  (16,169)   (4,066)     (300)

    Net earnings/(loss)                (27,162)  (47,730)   16,510   (10,656)

    Net earnings per share
    Basic                               ($0.17)   ($0.30)    $0.12    ($0.08)
    Diluted                             ($0.17)   ($0.30)    $0.11    ($0.08)
    -------------------------------------------------------------------------
    

    The most significant factors causing variation in the results are the
commissioning of both the Reefton open pit and Frasers underground mines, the
variability in the grade of ore mined from the Macraes open pit mine and
variability of cash cost of sales due to the timing of waste stripping
activities. The volatility of the gold price has a significant impact both in
terms of its influence upon gold sales revenue and its impact upon
undesignated gains/(losses) on hedges. Adding to the variation are the large
movements in foreign exchange rates between the USD and the NZD.
    As noted on page 4, the year end adjustment in the fourth quarter to the
pre-stripping is reflected in the Dec 2008 quarter above. If the adjustment is
updated to the quarter to which it relates there is an equal and offsetting
effect increasing Q2 EBITDA by $4.9 million, earnings after tax and net
earnings by $3.4 million and earnings per share by $0.02.

    NON-GAAP MEASURES

    Throughout this document, we have provided measures prepared according to
Canadian generally accepted accounting principles ("GAAP"), as well as some
non-GAAP performance measures. Because non-GAAP performance measures do not
have any standardized meaning prescribed by GAAP, they are unlikely to be
comparable to similar measures presented by other companies.
    We provide these non-GAAP measures as they are used by some investors to
evaluate OceanaGold's performance. Accordingly, such non-GAAP measures are
intended to provide additional information and should not be considered in
isolation, or a substitute for measures of performance in accordance with
GAAP.
    Earnings before interest, tax, depreciation and amortization (EBITDA) is
one such non-GAAP measure and a reconciliation of this measure to net
earnings/(loss) is provided on page 11.
    Cash and non cash costs per ounce are other such non-GAAP measures and a
reconciliation of these measures to cost of sales including depreciation and
amortisation is provided on the next page.

    
    -------------------------------------------------------------------------
                                              Q/E          Q/E          Q/E
                                            Dec 31       Sep 30       Dec 31
                                             2008         2008         2007
                                            $'000        $'000        $'000
    -------------------------------------------------------------------------
    Cost of sales, excluding depreciation
     and amortisation                       22,543       39,658       25,795
    Depreciation and amortisation           12,872       11,420       10,362

    Total cost of sales                     35,415       51,078       36,157

    Add operating general &
     administration                            411          552          598
    Less selling costs                         (96)        (114)         (82)

    Total operating cost of sales           35,730       51,516       36,673

    Gold Sales from operating mines
     (ounces)                               74,816       62,753       48,574
    Total Operating Cost ($ per ounce)         478          821          755
    Less Non-Cash Cost ($ per ounce)           171          181          211

    Cash Operating Cost ($ per ounce)          307          640          544
    -------------------------------------------------------------------------

    -------------------------------------------------------------------------
                                             Year         Year         Year
                                             2008         2007         2006
                                            $'000        $'000        $'000
    -------------------------------------------------------------------------
    Cost of sales, excluding depreciation
     and amortisation                      138,154       81,669       72,684
    Depreciation and amortisation           50,547       28,790       14,031

    Total cost of sales                    188,701      110,459       86,715

    Add operating general &
     administration                          2,479        1,516          162
    Less selling costs                        (459)        (312)        (100)

    Total operating cost of sales          190,721      111,663       86,777

    Gold Sales from operating mines
     (ounces)                              264,124      149,682      180,035
    Total Operating Cost ($ per ounce)         722          746          482
    Less Non-Cash Cost ($ per ounce)           190          190           78

    Cash Operating Cost ($ per ounce)          532          556          404
    -------------------------------------------------------------------------
    

    ADDITIONAL INFORMATION

    Additional information referring to the Company, including the Company's
Annual Information Form, is available on SEDAR at www.sedar.com and the
Company's website at www.oceanagold.com.

    DISCLOSURE CONTROLS AND PROCEDURES

    The Chief Executive Officer and Chief Financial Officer evaluated the
effectiveness of the Company's disclosure controls and procedures as at
December 31, 2008. Based on that evaluation, the Chief Executive Officer and
the Chief Financial Officer concluded that the design and operation of these
disclosure controls and procedures were effective as at December 31, 2008 to
provide reasonable assurance that material information relating to the
Company, including its consolidated subsidiaries, would be made known to them
by others within those entities.

    INTERNAL CONTROL OVER FINANCIAL REPORTING

    As at December 31, 2007 and December 31, 2008, the Chief Executive
Officer and Chief Financial Officer evaluated the design of the Company's
internal control over financial reporting. Based on that evaluation, the Chief
Executive Officer and the Chief Financial Officer concluded that the design of
internal control over financial reporting was effective as at those dates to
provide reasonable assurance regarding the reliability of financial reporting
and the preparation of financial statements for external purposes in
accordance with Canadian GAAP.

    FULL COMPANY RELEASE

    To view the full company release, including images please refer to the
company's website www.oceanagold.com



    
    -------------------------------------------------------------------------
          MANAGEMENT'S RESPONSIBILITY FOR THE FINANCIAL STATEMENTS
    -------------------------------------------------------------------------
    

    Management's Responsibility for Financial Reporting

    The accompanying consolidated financial statements of OceanaGold
Corporation were prepared by management in accordance with Canadian generally
accepted accounting principles. Management acknowledges responsibility for the
preparation and presentation of the consolidated financial statements,
including responsibility for significant accounting judgments and estimates
and the choice of accounting principles and methods that are appropriate to
OceanaGold Corporation and the entities it controls ("the Group's")
circumstances. The significant accounting policies of the Group are summarized
in note 2 to the consolidated financial statements.
    Management has established systems of internal control over the financial
reporting process, which are designed to provide reasonable assurance that
relevant and reliable financial information is produced.
    The Board of Directors is responsible for reviewing and approving the
consolidated financial statements and for ensuring that management fulfils its
financial reporting responsibilities. An Audit and Financial Risk Management
Committee assists the Board of Directors in fulfilling this responsibility.
The members of the Audit and Financial Risk Management Committee are not
officers of the Group. The Audit and Financial Risk Management Committee meets
with management to review the internal controls over the financial reporting
process, the consolidated financial statements and the auditors' report. The
Audit and Financial Risk Management Committee reports its findings to the
Board of Directors for its consideration in approving the consolidated
financial statements for issuance to the shareholders.
    Management recognizes its responsibility for conducting the Group's
affairs in compliance with established financial standards, and applicable
laws and regulations, and for maintaining proper standards of conduct for its
activities.

    
    (signed) Stephen A Orr                  (signed) Marcus Engelbrecht
    Chief Executive Officer                 Chief Financial Officer
    Melbourne, Australia                    Melbourne, Australia
    February 19, 2009                       February 19, 2009



    -------------------------------------------------------------------------
                              AUDITORS' REPORT
    -------------------------------------------------------------------------

                                                     PricewaterhouseCoopers
                                                     ABN 52 780 433 757
                                                     Freshwater Place 2
                                                     Southbank Boulevard
                                                     SOUTHBANK VIC 3006
                                                     GPO Box 1331L
                                                     MELBOURNE VIC 3001
                                                     DX 77 Telephone 61 3
                                                     8603 1000 Facsimile 61 3
                                                     8603 1999
                                                     Website:www.pwc.com/au
    


    To the Shareholders of OceanaGold Corporation

    We have audited the consolidated balance sheet of OceanaGold Corporation
as at December 31, 2008 and the consolidated statements of operations and
accumulated deficit and statement of cash flows for the year then ended. These
financial statements are the responsibility of the Company's management. Our
responsibility is to express an opinion on these financial statements based on
our audit.
    We conducted our audit in accordance with Canadian generally accepted
auditing standards. Those standards require that we plan and perform an audit
to obtain reasonable assurance as to whether the financial statements are free
of material misstatement. An audit includes examining, on a test basis,
evidence supporting the amounts and disclosures in the financial statements.
An audit also includes assessing the accounting principles used and
significant estimates made by management, as well as evaluating the overall
financial statement presentation.
    In our opinion, these financial statements present fairly, in all
material respects, the financial position of the Company as at December 31,
2008 and the results of its operations and its cash flows for the year then
ended in accordance with Canadian generally accepted accounting principles.
    The financial statements as at December, 31 2007 and the year then ended
were audited by other auditors who expressed an opinion without reservation on
those financial statements in their report dated February 27, 2008.

    
    (signed)

    PricewaterhouseCoopers
    Melbourne, Australia

    February 19, 2009

    Liability limited by a scheme approved under Professional Standards
Legislation



    -------------------------------------------------------------------------
                         CONSOLIDATED BALANCE SHEETS
    -------------------------------------------------------------------------
                           As at December 31 2008

    -------------------------------------------------------------------------
    (in thousands of United States dollars)  Notes         2008         2007
                                                          $'000        $'000

    ASSETS
    Current assets
    Cash and cash equivalents                             9 711      119 837
    Accounts receivable and other receivables    9        2 680        3 426
    Inventories                                 11       21 910       20 937
    Prepayments                                             961          945
    Derivatives                                 22        1 493         1084
    Future income tax assets                     7        8 936         9009
    -------------------------------------------------------------------------
    Total current assets                                 45 691      155 238

    Non-current assets
    Inventories                                 11       18 763       23 953
    Derivatives                                 22        1 997         4097
    Future income tax assets                     7       31 175       12 611
    Property, plant and equipment               12      131 377      196 320
    Mining assets                               13      400 987      415 723
    -------------------------------------------------------------------------
    Total non-current assets                            584 299      652 704
    -------------------------------------------------------------------------
    TOTAL ASSETS                                        629 990      807 942
    -------------------------------------------------------------------------
    -------------------------------------------------------------------------

    LIABILITIES AND SHAREHOLDERS' EQUITY
    Current liabilities
    Accounts payable and accrued liabilities             24 459       26 422
    Employee benefits                           21        1 726        2 291
    Derivatives                                 22       48 780       30 402
    Interest-bearing loans and borrowings       15       14 087       18 687
    Asset retirement obligation                 14           53          293
    -------------------------------------------------------------------------
    Total current liabilities                            89 105       78 095

    Non-current liabilities
    Other long term obligations                           3 216        7 717
    Employee benefits                           21           68            -
    Derivatives                                 22       80 066       88 216
    Future income tax liabilities                7       61 457       71 619
    Interest-bearing loans and borrowings       15      142 625      198 912
    Asset retirement obligation                 14        6 797        9 218
    -------------------------------------------------------------------------
    Total non-current liabilities                       294 229      375 682
    -------------------------------------------------------------------------
    TOTAL LIABILITIES                                   383 334      453 777
    -------------------------------------------------------------------------

    SHAREHOLDERS' EQUITY
    Share Capital                               16      334 975      334 975
    Accumulated deficit                                (111 526)     (56 791)
    Contributed surplus                         18       33 897       32 379
    Accumulated other comprehensive income      17      (10 690)      43 602
    -------------------------------------------------------------------------
    TOTAL SHAREHOLDERS' EQUITY                          246 656      354 165
    -------------------------------------------------------------------------
    TOTAL LIABILITIES AND SHAREHOLDERS' EQUITY          629 990      807 942
    -------------------------------------------------------------------------
    -------------------------------------------------------------------------

    Nature of operations and going concern (note 1)
    Commitments (note 25)
    Contingencies (note 26)

    On behalf of the Board of Directors:

    (signed) James Askew                 (signed) J Denham Shale
    Director                             Director

    The accompanying Notes to Consolidated Financial Statements are an
integral part of these financial statements.



    -------------------------------------------------------------------------
                    CONSOLIDATED STATEMENTS OF OPERATIONS
    -------------------------------------------------------------------------
                     For the year ended December 31 2008

    -------------------------------------------------------------------------
    (in thousands of United States           Notes         2008         2007
    dollars except per share amounts)                     $'000        $'000
    -------------------------------------------------------------------------

    Revenue
    Gold sales                                          217 214      104 395
    Release from other comprehensive
     income of deferred unrealised
     gain/(loss) on designated hedges                       279      (16 407)
    -------------------------------------------------------------------------
                                                        217 493       87 988
    Cost of sales, excluding depreciation
     and amortisation                                  (138 154)     (81 669)
    Depreciation and amortisation                       (50 547)     (28 790)
    General & administration                            (15 338)     (11 632)
    -------------------------------------------------------------------------
                                                         13 454      (34 103)
    -------------------------------------------------------------------------

    Other expenses
    Interest expense                                    (20 992)     (19 414)
    Foreign exchange gain/(loss)                          2 254       (2 661)
    -------------------------------------------------------------------------
                                                        (18 738)     (22 075)
    -------------------------------------------------------------------------

    Gain/(loss) on fair value of
     undesignated hedges                                (73 408)     (45 847)
    Interest income                                       2 936        6 712
    Other income                                 6          133          291
    -------------------------------------------------------------------------
    Earnings/(loss) before income taxes                 (75 623)     (95 022)
    Income taxes benefit/(expense)               7       20 888       25 983
    -------------------------------------------------------------------------
    Net earnings/(loss)                                 (54 735)     (69 039)
    -------------------------------------------------------------------------
    -------------------------------------------------------------------------

    Net earnings/(loss) per share:               8
    - basic & diluted                                    ($0.34)      ($0.47)


    -------------------------------------------------------------------------
               CONSOLIDATED STATEMENTS OF ACCUMULATED DEFICIT
    -------------------------------------------------------------------------
                     For the year ended December 31 2008

    -------------------------------------------------------------------------
    (in thousands of United States dollars)  Notes         2008         2007
                                                          $'000        $'000
    -------------------------------------------------------------------------

    Accumulated deficit at beginning of period          (56 791)      11 768
      Net earnings/(loss)                               (54 735)     (69 039)
      Other                                                   -          480
    -------------------------------------------------------------------------
    Accumulated deficit at end of period               (111 526)     (56 791)
    -------------------------------------------------------------------------
    -------------------------------------------------------------------------


    -------------------------------------------------------------------------
           CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME/(LOSS)
    -------------------------------------------------------------------------
                     For the year ended December 31 2008

    -------------------------------------------------------------------------
    (in thousands of United States dollars)  Notes         2008         2007
                                                          $'000        $'000
    -------------------------------------------------------------------------

    Net earnings/(loss)                                 (54 735)     (69 039)
    Other comprehensive income for the
     year, net of tax:
      Cash flow hedge gain/(loss)               17         (882)       9 857
      Currency translation differences          17      (53 410)      30 670
    -------------------------------------------------------------------------
                                                        (54 292)      40 527
    -------------------------------------------------------------------------
    Comprehensive income/(loss)                        (109 027)     (28 512)
    -------------------------------------------------------------------------
    -------------------------------------------------------------------------

    The accompanying Notes to Consolidated Financial Statements are an
integral part of these financial statements.



    -------------------------------------------------------------------------
                    CONSOLIDATED STATEMENTS OF CASH FLOWS
    -------------------------------------------------------------------------
                       For year ended December 31 2008

    -------------------------------------------------------------------------
    (in thousands of United States dollars)  Notes         2008         2007
                                                          $'000        $'000
    -------------------------------------------------------------------------
    Operating activities
    Net earnings/(loss)                                 (54 735)     (69 039)
    Charges/(credits) not affecting cash
      Depreciation and amortisation expense              50 547       28 790
      Net (gain) on disposal of property,
       plant and equipment                                  (34)        (179)
      Non-cash interest charges                           6 062        7 787
      Unrealised foreign exchange
       (gains)/losses                                    (2 719)       1 163
      Stock based compensation charge                     1 518        1 565
      Non-cash derivative expenses                       73 129       62 254
      Future tax expense/(benefit)                      (20 888)     (25 983)
    Changes in non-cash working capital
      (Increase)/decrease in accounts
       receivable and other receivables                    (555)        (520)
      (Increase)/decrease in inventory                   (5 811)      (9 782)
      (Decrease)/increase in accounts
       payable                                            5 155       10 548
      (Decrease)/increase in other working
       capital                                           (3 942)       4 071
    -------------------------------------------------------------------------
    Net cash provided by / (used for)
     providing by operating activities                   47 725       10 675
    -------------------------------------------------------------------------

    Investing activities
    Proceeds from sale of property,
     plant and equipment                                     46          330
    Payments for property, plant
     and equipment                                       (2 974)     (43 630)
    Payments for mining assets:
     exploration and evaluation                          (5 381)     (27 282)
    Payments for mining assets: development             (56 373)     (15 435)
    Payments for mining assets: in production           (43 634)     (32 658)
    -------------------------------------------------------------------------
    Net cash provided by/(used by) used for
     investing activities                              (108 316)    (118 675)
    -------------------------------------------------------------------------

    Financing activities
    Proceeds on issue of capital stock                        -       94 702
    Payment of transaction costs for equity
     raising                                                  -       (9 023)
    Payment of finance lease liabilities                 (7 513)      (1 808)
    Proceeds from finance leases                              -       12 651
    Settlement of derivatives                           (25 906)           -
    Proceeds/(repayments) from other borrowings         (15 715)      20 021
    Proceeds from convertible notes                           -       24 213
    -------------------------------------------------------------------------
    Net cash provided by/(used for)
     financing activities                               (49 134)     140 756
    -------------------------------------------------------------------------

    Effect of exchange rate changes on cash                (401)       7 056
    -------------------------------------------------------------------------
    Net increase/(decrease) in cash and
     cash equivalents                                  (110 126)      39 812
    Cash and cash equivalents at beginning
     of period                                          119 837       80 025
    -------------------------------------------------------------------------
    Cash and cash equivalents at end of period            9 711      119 837
    -------------------------------------------------------------------------
    -------------------------------------------------------------------------
    Cash interest paid                                  (15 130)     (11 627)

    The accompanying Notes to Consolidated Financial Statements are an
integral part of these financial statements.
    

    To view the notes to the consolidated financial statements please visit:
http://files.newswire.ca/435/OGC_2008_NOTES.pdf





For further information:

For further information: Mr. Darren Klinck, www.oceanagold.com


Custom Packages

Browse our custom packages or build your own to meet your unique communications needs.

Start today.

CNW Membership

Fill out a CNW membership form or contact us at 1 (877) 269-7890

Learn about CNW services

Request more information about CNW products and services or call us at 1 (877) 269-7890