OceanaGold Corporation 2009 First Quarter Results


    MELBOURNE, Australia, April 30 /CNW/ -


    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, 2008,
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 Quarter Ended March 31, 2009


    -   Achieved EBITDA (earnings before interest, taxes, depreciation and
        amortization and excluding unrealised gain/loss on undesignated
        hedges) of $31.0 million for the quarter

    -   Sold 81,093 ounces of gold during the first quarter, an 8% increase
        over the previous quarter, and the fourth consecutive quarter of
        increased gold sales

    -   Reduced cash costs for the fourth consecutive quarter to $279 per

    -   Increased cash operating margin by 21% to $403 per ounce compared to
        Q4 2008

    -   Subsequent to quarter end, announced the discovery of additional high
        grade gold mineralization at the Frasers Underground mine. The new
        structure is open in two directions.

    (*)    All statistics are compared to the corresponding 2008 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.


    Results from Operations

    OceanaGold exceeded the Q4 2008 gold sales to achieve a new gold sales
record totaling 81,093 ounces. Compared to the first quarter in 2008, gold
production increased 20% due to above operating design levels at all mine
    Operating cash costs for the quarter were $279 per ounce. Increased
ounces of production and declining commodity costs resulted in lower cash
costs in New Zealand Dollar (NZD) terms. A weaker New Zealand dollar also
contributed to the lower U.S. Dollar (USD) cash costs reported.
    The majority of OGC's consumable costs declined in real NZD terms.
Diesel, the largest contributor to cash costs declined a further 20% compared
to Q4 2008. Electricity, another key consumable, was also slightly lower
during the quarter. This was the second straight quarter of below average
power costs as hydro dams remained at above average levels in New Zealand.
    The improved operational performance and declining commodity costs
increased the cash operating margin for the quarter by 21% over the previous
quarter to $403 per ounce.
    The weaker NZD also contributed to the lower USD cash costs reported. The
NZD weakened against the USD averaging approximately $0.535 for the period.
This compares to an average foreign exchange rate of $0.782 during the same
period in 2008.
    Cash flow from operating activities was $23 million, 15% higher than the
previous quarter.

    Didipio Gold - Copper Project

    The Didipio project was put on care and maintenance in December 2008 and
the Company continues to maintain the project site offices and accommodation
camp for maintenance and site security personnel. Current activities are
directed to maintaining all community and environmental commitments. Community
activities during the quarter focused on maintaining the Memorandum of
Agreement (MOA) with the Didipio community and progressing the community hall
construction. Work also continues on the Didipio Barangay development plan, a
community based clean water project and the education & scholarship
    The Company recently commenced internal studies to re-examine the scope
and capital requirements for the project. This review is expected to provide
updated modeling to reflect the recent effects of dramatic commodity and
labour cost deflation currently evident across global capital markets.

                                 - Table 1 -
                   Key Financial and Operating Statistics

                                               Q/E          Q/E          Q/E
    Financial Statistics               Mar 31 2009  Dec 31 2008  Mar 31 2008

    Gold Sales (Ounces)                     81,093       74,816       67,724

                                               USD          USD          USD
                                               ---          ---          ---
    Average Price Received
     ($ per ounce)                             682          640          919
    Cash Operating Cost
     ($ per ounce)                             279          307          496
    Cash Operating Margin
     ($ per ounce)                             403          333          423

    Non-Cash Cost ($ per ounce)                165          171          209
    Total Operating Cost ($ per ounce)         444          478          705

    Total Cash Operating Cost
     ($ per tonne processed)                 12.99        13.48        20.24

                                               Q/E          Q/E          Q/E
    Combined Operating Statistics      Mar 31 2009  Dec 31 2008  Mar 31 2008

    Gold produced (ounces)                  84,037       75,418       62,835

    Total Ore Mined (tonnes)             1,488,861    1,559,806    1,488,052
    Ore Mined grade (grams/tonne)             2.34         1.83         1.59

    Total Waste Mined (tonnes)
     - incl pre-strip                   14,350,542   12,780,037   13,504,873

    Total Material Mined (tonnes)
     - incl pre-strip                   15,839,403   14,339,843   14,992,925

    Total Material Moved (tonnes)       16,684,835   14,845,544   15,397,035

    Mill Feed (dry milled tonnes)        1,743,030    1,691,511    1,660,765
    Mill Feed Grade (grams/tonne)             1.90         1.68         1.58
    Recovery (%)                             81.5%        80.8%        74.2%

                                               Q/E          Q/E          Q/E
                                       Mar 31 2009  Dec 31 2008  Mar 31 2008
    Combined Financial Results               $'000        $'000        $'000
    EBITDA (excluding unrealized
     gain/(loss) on hedges)                 31,032       24,294       21,690
    Earnings/(loss) after income tax
     and before undesignated
     gain/(loss) on hedges
     (net of tax)                           10,639        1,917        3,783

    Reported EBITDA (including
     unrealized gain/(loss) on
     hedges)                                28,767        2,376          349
    Reported earnings/(loss) after
     income tax (including unrealized
     gain/(loss) on hedges)                  9,054      (13,426)     (11,156)


    Production for the first quarter of 2009 totaled 84,037 gold ounces
representing a company record for quarterly gold production. Total gold sales
for the quarter were 81,093 ounces; also a record and the fourth consecutive
quarter of increased gold sales.
    Strong quarterly production resulted from higher grade ore in the Macraes
open pit and Frasers Underground mine, in addition to above-design throughput
at the processing plant.
    Total combined cash operating costs were $279 per ounce for the quarter.
This was lower than expected due to a steep decline in most consumable costs,
above budget production and a weaker NZD.
    Cash flow generated from operations for the quarter was $23.0 million.


    Macraes Goldfield (New Zealand)

    The Macraes operations (open-cut and underground) incurred two lost time
injuries (LTIs) in the first quarter. Corrective actions in both cases have
been taken to address possible causes for these LTIs and for further
improvement to safety at the mine site.
    Production from the Macraes Goldfield was 66,366 gold ounces, a 26%
improvement compared to Q4 2008. Higher grades from the open pit and
underground operations along with improved rock haulage rates were the main
contributors to this stronger performance.
    Total material moved at Macraes Goldfield (open pit and underground) was
13.0 million tonnes compared to 11.2 million tonnes for Q4 2008. This was a
result of reduced weather related delays and improved operator efficiency.
    Ore tonnes mined were greater than budgeted resulting in additional
higher grade material being stored on the Run Of Mine pad for processing in
future quarters.
    Mining and development continued to operate to plan at the Frasers
Underground mine. Favourable ground conditions in Panel 2 have resulted in
less dilution than expected, contributing to the mining and processing of
higher grades. A main underground double sump and pumping station were also
commissioned by the end of the quarter.
    The Processing Plant operated above plan during the quarter with mill
feed of 1.43 million tonnes processed compared to 1.37 million tonnes in Q4
2008. Additionally, mill feed grade was 20% higher in the first quarter
compared to Q4 2008. This was due to higher grade ore mined from the open pit
and the Panel 2 area of the Frasers Underground.
    Macraes process plant recoveries were 81.7% for the quarter and were in
line with expectations. This was slightly higher than recoveries for Q4 2008
and represented more than a 12% improvement on the same period of 2008. This
is the third consecutive quarter that recoveries have achieved plan.

    Reefton Goldfield (New Zealand)

    There were four LTIs in the first quarter compared to one during the same
period last year. This is an area that is receiving additional attention for
improvement by Reefton mine management, particularly given the extensive use
of contractors at this site.
    Total material moved for the quarter at Reefton was 3.62 million tonnes
compared to 3.65 million tonnes in Q4 2008. This was slightly ahead of
expectations, and has increased ore stockpiles.
    Gold production from Reefton concentrate was 17,671 gold ounces, and
slightly below plan for the first quarter. This was due to a conscious
decision to process more Macraes concentrate through the autoclave.
    Meanwhile, the processing plant at Reefton continues to produce
concentrate at 20-25% above design specification. This excess Reefton
concentrate will be stored and processed through the pressure oxidation
circuit in 2010.
    In relation to Reefton, total material through the mill was 312,902
tonnes and 25% above design throughput capacity. Mill feed grade was 2.52 g/t
Au and slightly greater than expected for the second quarter in a row. Overall
gold recovery for Reefton was slightly lower than the previous quarter at
80.7%. However, this was more than off-set by the higher grades.

    Community Relations

    OceanaGold Tours, a program which "opens the door" of modern mining to
interested local residents and tourists in the Otago region of the South
Island continues to expand. Visitor attendance increased 11% from the same
period in 2008.
    In conjunction with the mine tours, a school presentation has been
developed which will be used for educational purposes, either in the classroom
or at one of the many school mine site visits the Company hosts throughout the
    During the quarter, walkways were extended in the ecologically enhanced
wetland area that the Company has developed adjacent to the Macraes mine site.
This also forms part of the walking track to the most recently commissioned
art exhibit, "The Haast Eagle," at the Heritage & Art Park.
    At our Reefton operation, OceanaGold is successfully partnering with the
Department of Conservation to protect native ground birds through
predator/pest control. Discussions between OceanaGold and the Department have
commenced to look at ways which the program can be expanded to further improve
future sustainability. Also in the first quarter, a new Wildlife Management
Reserve was established in the West Coast Region. The land earmarked to
establish this new reserve was purchased from private interests by the
Department of Conservation through a fund established by OceanaGold as part of
the agreement when the Reefton mine was approved. The new wildlife reserve
will protect a large area of fertile wetland containing the only known
population of brown mudfish in the Greymouth area and is also a haven for a
large number of forest and wetland bird species.

                                 - Table 2 -
                         Macraes Operating Statistics

    Macraes Goldfield                          Q/E          Q/E          Q/E
     Operating Statistics              Mar 31 2009  Dec 31 2008  Mar 31 2008

    Gold produced (ounces)                  66,366       52,508       44,631

    Total Ore Mined (tonnes)             1,151,078    1,207,149    1,145,044
    Ore Mined grade (grams/tonne)             2.28         1.65         1.45

    Total Waste Mined (tonnes)
     incl pre-strip                     11,162,792    9,520,930   10,421,980

    Total Material Mined (tonnes)
     incl pre-strip                     12,313,870   10,728,079   11,567,024

    Total Material Moved (tonnes)       13,064,311   11,199,726   11,951,876

    Mill Feed (dry milled tonnes)        1,430,128    1,372,116    1,362,138
    Mill Feed Grade (grams/tonne)             1.77         1.48         1.40
    Recovery (%)                             81.7%        80.4%        73.1%

                                 - Table 3 -
                         Reefton Operating Statistics

    Reefton Goldfield                          Q/E          Q/E          Q/E
     Operating Statistics              Mar 31 2009  Dec 31 2008  Mar 31 2008

    Gold produced (ounces)                  17,671       22,910       18,204

    Total Ore Mined (tonnes)               337,783      352,657      343,008
    Ore Mined grade (grams/tonne)             2.55         2.44         2.06

    Total Waste Mined (tonnes)
     incl pre-strip                      3,187,750    3,259,107    3,082,893

    Total Material Mined (tonnes)
     incl pre-strip                      3,525,533    3,611,764    3,425,901

    Total Material Moved (tonnes)        3,620,524    3,645,818    3,445,159

    Mill Feed (dry milled tonnes)          312,902      319,395      298,627
    Mill Feed Grade (grams/tonne)             2.52         2.54         2.40
    Recovery (%)                             80.7%        82.5%        79.4%


    Didipio Gold & Copper Project (Philippines)

    Development at the Didipio Gold and Copper project in Luzon, Philippines
was placed under care and maintenance in December 2008. The Company continues
to maintain a reduced workforce at the project site. It also continued to
fulfill all community and social commitments related to the project during
this period.
    During the quarter, 125,579 man hours were completed without a Lost Time
Injury (LTI).
    Site based work has been limited to care and maintenance activities
furthering project environmental, safety and property security standards.
    Community activities have concentrated on maintaining the Memorandum of
Agreement with the Didipio community, progressing construction of the
community hall, furthering the Didipio Barangay development plan, a community
based clean water project and our educational scholarship commitments.


    Total exploration expenditure for the quarter was $325,000.

    New Zealand

    Macraes Goldfield

    A regional geochemical sampling program was conducted across the northern
strike extension of the Hyde Macraes Shear Zone (HMSZ). This area of the
goldfield has had a paucity of previous exploration work. A total of 1,429
samples were collected from Phase I of this programme, with results still
being received. Analysis of these results is ongoing and infill sampling is
    Modeling and resource calculations were undertaken at the Coronation
deposit located on the northern perimeter of the northernmost open pit in the
    At the Frasers Underground, an infill drilling programme continued
targeting the recently announced Panel 2 Deeps area of the mine. This
programme along with drilling focused on the down dip extension potential of
Panel 2 and will continue throughout the year.

    Reefton Goldfield

    Exploration activities at Reefton were limited during the quarter but are
planned to re-commence in Q2 starting with an in-pit RC drilling programme and
a continuation of regional structural mapping and geochemical sampling.
    Further analysis was undertaken during the quarter on the Blackwater
project. A drill programme is being planned for H2 2009 that will test for
continuity of the "Birthday Reef" structure that contained grades of 50-60 g/t
over a width of 0.5m - 1.0m. This project is located along the main mineral
trend and is south of the current Reefton operations. Blackwater was once the
site of the richest underground mine in the Reefton Goldfield before mining
stopped in 1951 due to a shaft collapse


    Exploration activities in the Philippines continued to meet work
programme commitments at the various tenements held by the Company.
    During the quarter, field work programmes were developed for exploration
areas that are awaiting permit approval. Additionally, further analysis and
modeling was undertaken on the assay results from drilling completed in 2008
at the Didipio project on near-mine prospects.


    The table below provides selected financial data comparing Q1 2009 with
    Q4 2008 and Q1 2008.

                                               Q/E          Q/E          Q/E
                                       Mar 31 2009  Dec 31 2008  Mar 31 2008
    STATEMENT OF OPERATIONS                  $'000        $'000        $'000
    Gold sales                              55,270       47,845       62,263
    Cost of sales, excluding
     depreciation and amortization         (22,342)     (22,543)     (33,000)
    General & Administration                (2,055)      (2,963)      (3,908)
    Foreign Currency Exchange
     Gain/(Loss)                               113        1,924       (3,697)
    Other expense/income                        46           31           32
    Earnings before interest, tax,
     depreciation & amortization
     (EBITDA) (excluding gain/(loss)
     on undesignated hedges)                31,032       24,294       21,690
    Depreciation and amortization          (13,473)     (12,872)     (14,204)
    Net interest expense                    (3,364)      (3,892)      (4,467)
    Earnings/(loss) before income tax
     and gain/(loss) on undesignated
     hedges                                 14,195        7,530        3,019
    Tax on earnings / loss                  (3,556)      (5,613)         764
    Earnings after income tax and
     before gain/(loss) on undesignated
     hedges                                 10,639        1,917        3,783

    Release from OCI of deferred
     unrealized gain/(loss) on
     designated hedges                           -            -          157
    Gain / (loss) on fair value of
     undesignated hedges                    (2,265)     (21,919)     (21,498)
    Tax on (gain)/loss on undesignated
     hedges                                    680        6,576        6,402
    Net earnings/(loss)                      9,054      (13,426)     (11,156)

    Basic earnings/ (loss) per share         $0.06       ($0.08)      ($0.07)
    Diluted earnings/ (loss) per share       $0.05       ($0.08)      ($0.07)

    Cash flows from Operating
     Activities                             22,963       19,918       19,732
    Cash flows from Investing
     Activities                            (11,570)     (20,649)     (31,938)
    Cash flows from Financing
     Activities                             (4,084)      (4,525)      (2,362)

                                             As at        As at
                                       Mar 31 2009  Dec 31 2008
    BALANCE SHEET                            $'000        $'000
    Cash and cash equivalents               17,366        9,711
    Other Current Assets                    47,457       35,980
    Non Current Assets                     554,428      584,299
    Total Assets                           619,251      629,990
    Current Liabilities                     98,382       89,105
    Non Current Liabilities                268,654      294,229
    Total Liabilities                      367,036      383,334
    Total Shareholders' Equity             252,215      246,656


    The Company reported earnings before interest, tax, depreciation and
amortization (EBITDA) and gains/losses on undesignated hedges in Q1 of $31.0
million compared with $21.7 million in Q1 last year. The results for the
period were characterised by increased production at Macraes open pit and
Frasers Underground mine supported by lower operating costs combined with
favourable movement in the New Zealand dollar. Offsetting these increases was
a decrease in the average gold price received by the Company as approximately
35% of production was delivered into out of the money hedges. This was in
contrast to Q1 2008 when all production was sold into the spot market.
    Cash costs per ounce in the first quarter were lower than Q4 2008 due to
increased production and lower consumable costs. Cash costs per ounce for the
period also decreased substantially compared to Q1 2008 as a result of lower
operating costs (diesel, power and other consumables) combined with the
benefit of a weakening New Zealand dollar.

    Sales Revenue
    Gold revenue of $55.3 million in Q1 exceeded the $47.8 million achieved
in the prior quarter by 15.5% due to strong gold sales combined with an
increase in the average gold price received. This contrasted with an 11.2%
decrease when compared to Q1 2008 when the Company reported revenue of $62.3
million. This was due primarily to a portion of production being sold into
fixed forward contracts, compared to gold produced in the comparative quarter
(Q1 2008) then sold entirely into the spot market.
    Gold sales volumes for Q1 2009 at 81,093 ounces were higher than both Q1
in 2008 and last quarter; by 19.7% and 8.4% respectively. This was due to
increased production from the Macraes open pit mine, the commissioning of the
Frasers Underground mine, stable month on month production and improved gold
    The average gold price received per ounce was $682, a small increase over
$640 in the prior quarter and is reflective of the increased gold price over
the period.

    Undesignated Hedges Gains/Losses
    Unrealised gains losses on the fair value of undesignated hedges are
brought to account at the end of each reporting period and reflect changes in
the spot gold price. In relation to these valuation adjustments, Q1 2009
reflected a loss of $2.3 million.
    The derivative instruments used to manage the impact of movements in gold
prices are summarised below under "Current and non-current derivative

    Operating Costs & Margins
    Cash costs per ounce sold of $279 were $28 (9%) lower than Q4 2008 and
$217 (44%) lower than the comparative period Q1 2008. This reflects the
decline of input costs from the peaks experienced in the first half of 2008.
In addition, the NZD has weakened, on average by more than 19% against the
average USD during 2008 which has improved the cash cost per ounce in USD
    The increased margin resulted in earnings before interest, tax,
depreciation & amortization (excluding undesignated hedge losses) of $31.0
million for the quarter, compared to $24.3 million in Q4 2008 and $21.7
million in Q1 2008.

    Depreciation and Amortization
    Depreciation and amortization charges are calculated on a unit of
production basis and these totaled $13.5 million for the quarter. These
charges were slightly higher compared to Q4 2008 due to increased production
    The depreciation and amortization charges include amortization of mine
development; depreciation on equipment; and amortization of deferred waste
stripping costs.

    Net Interest expense
    The decrease in net interest expense is a result of the lower levels of
net debt carried by OceanaGold for 2009 compared with 2008, as a project loan
and financial leases were repaid.
    A combination of lower interest rates, a weaker Australian and New
Zealand dollar have also contributed to reducing the outstanding debt reported
in USD terms.

    Net earnings/(loss)
    The company reported a net profit of $9.1 million in Q1 2009 compared
with a net loss of $13.4 million in Q4 2008 and a net loss of $11.2 million in
Q1 2008. The impact of non-cash charges for undesignated hedge gains and
losses was influential between the periods. The value of the undesignated
hedges is a non-cash accounting adjustment that is valued at the end of the
reporting period. This does not affect cash flow in the reporting period 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.
    Net improvements in EBITDA for the period were primarily the result of
higher gold production from the combined operations, increased average
realised gold prices received since Q4 2008 and lower costs reflecting the
lower prices for inputs.


    Operating Activities
    Cash flows from operating activities for Q1 were $23.0 million an increase
from Q4 2008 of approximately $3 million. The improvement was a reflection of
the higher gold sales volumes and lower mining costs.

    Investing Activities
    Investing activities were comprised of expenditures for pre-stripping and
sustaining capital for the New Zealand operations and a limited number of
final payments due on equipment previously ordered for the Didipio Gold-Copper
    Cash used for investing activities totaled $11.6 million compared to
$20.6 million and $31.9 million in Q4 2008 and Q1 2008 respectively.

    Financing Activities
    Financing cash outflows totaled $4.1 million being repayments of
borrowings, and finance lease payments. These payments continue to decline
with no further proceeds being redrawn from finance facilities during the


    Company's funding and capital requirements

    For the quarter ended March 31, 2009, the Company earned a profit of $9.0
million. As at March 31, 2009 the current liabilities of the Company exceeded
current assets by $33.6 million. Excluding the non-cash liabilities for hedge
derivatives (which will be settled by delivery of future gold production),
current assets exceed current liabilities by $25.8 million. The Company had
cash on hand of $17.4 million at March 31, 2009.
    Over the current 12 month period the Company is expected to generate
sufficient free cash flow from operations to meet all of its debt obligations
as they become due.

    Capital commitments

    OceanaGold's capital commitments as at March 31 2009 are as follows:

    Payments due by period
     as at March 31 2009
      $'000        (less than)                 $'000                  $'000
      Total            1 year            1 - 2 years            2 - 3 years
      3,640             2,754                    238                    648

    Financial position

    Current Assets
    Current assets have increased by $19.1 million since December 2008
primarily from increased cash balances ($7.6 million), increased inventories
($4.4 million) and an increase in future income tax assets ($6.5 million)
largely representing a reclassification from non-current assets.

    Non Current Assets
    During the quarter non-current assets decreased from $584 million to $554
million. The USD appreciation has decreased the value of Property, Plant and
Equipment and Mining Assets in USD terms and depreciation has exceeded the
capital expenditure. In addition, future income tax assets decreased by $11.7
million due to reclassification to current assets and utilization of tax

    Current Liabilities
    The increase of $9.3 million during the quarter largely reflects a $10.6
million increase in the current derivative liabilities which have been
reclassified from non current liabilities.

    Non Current Liabilities
    Interest-bearing loans and borrowings decreased by $6.3 million during the
quarter as a result of foreign exchange movements and a repayment of project
debt. Liabilities reduced by $14.6 million largely as a result of derivatives
reclassified to current liabilities.

    Current and Non Current derivative liabilities
    OceanaGold holds certain derivative instruments to manage the impact of
movements in the spot gold price.
    Current instruments held include undesignated forward gold sales
contracts for 177,765 ounces (Dec 2008: 206,076 ounces) at NZ$773,
undesignated gold put options for 146,142 ounces (Dec 2008: 199,496 ounces)
with an average exercise price of NZ$1,000 and undesignated gold call options
(sold) for 104,024 ounces (Dec 2008: 136,024 ounces) with an average exercise
price of NZ$1,062.
    A summary of OceanaGold's mark-to-market adjustment on derivatives is:

                                                    Mar 31 2009  Dec 31 2008
                                                          $'000        $'000
    Current Assets
    Gold put options                                        282        1,493
    Non Current Assets
    Gold put options                                      1,093        1,997
    Total Assets                                          1,375        3,490

                                                    Mar 31 2009  Dec 31 2008
                                                          $'000        $'000
    Current Liabilities
    Gold forward sales contracts                         50,621       46,949
    Gold call options (sold)                              8,767        1,831
                                                         59,388       48,780
    Non Current Liabilities
    Gold forward sales contracts                         37,814       45,708
    Gold call options (sold)                             27,695       34,358
                                                         65,509       80,066
    Total Liabilities                                   124,897      128,846

    Shareholders' Equity

    A summary of OceanaGold's movement in shareholders' equity is set out

                                                               Quarter ended
                                                                Mar 31 2009
    Total equity at beginning of financial period                    246,656
    Profit/(loss) after income tax                                     9,054

    Movement in other comprehensive income                            (3,504)
    Movement in contributed surplus                                        9

    Total equity at end of financial period                          252,215

    Shareholders' equity has increased to $252.2 million at year end
primarily as a result of the profit earned for the quarter partially offset by
currency translation differences reflected in other comprehensive income that
arise from consolidation of foreign entities.


    The accounting policies that involve significant management judgment 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
    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 installments 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.


    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.


    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.


    There have been no material changes from the accounting policies of

    International Financial Reporting Standards (IFRS)

    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.

    Mining Exploration Costs

    On March 27, 2009, the Emerging Issues Committee of the CICA approved an
abstract EIC-174, "Mining Exploration Costs", which provides guidance on
capitalization of exploration costs related to mining properties in
particular, and on impairment of long-lived assets in general. The Company has
applied this new abstract for the year ended December 31, 2008 and there was
no significant impact on its financial statements as a result of applying this


    The following table sets forth unaudited information for each of the
eight quarters ended June 30, 2007 through to March 31, 2009. 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

                                           Mar 31   Dec 31   Sep 30   Jun 30
                                             2009     2008     2008     2008
                                            $'000    $'000    $'000    $'000
    Gold sales                             55,270   47,845   54,038   53,068
    EBITDA (excluding undesignated
     gain/(loss) on hedges)                31,032   24,294   18,991    1,131
    Earnings/(loss) after income tax and
     before undesignated gain/(loss) on
     hedges (net of tax)                   10,639    1,917    2,806  (12,051)

    Net earnings/(loss)                     9,054  (13,426) (10,905) (19,248)

    Net earnings per share
    Basic                                   $0.06   ($0.08)  ($0.07)  ($0.12)
    Diluted                                 $0.05   ($0.08)  ($0.07)  ($0.12)

                                           Mar 31   Dec 31   Sep 30   Jun 30
                                             2008     2007     2007     2007
                                            $'000    $'000    $'000    $'000
    Gold sales                             62,263   36,615   24,367   22,644
    EBITDA (excluding undesignated
     gain/(loss) on hedges)                21,690    9,057   (8,522)   2,787
    Earnings/(loss) after income tax and
     before undesignated gain/(loss) on
     hedges (net of tax)                    3,783   (5,880) (16,169)  (4,066)

    Net earnings/(loss)                   (11,156) (27,162) (47,730)  16,510

    Net earnings per share
    Basic                                  ($0.07)  ($0.17)  ($0.30)   $0.12
    Diluted                                ($0.07)  ($0.17)  ($0.30)   $0.11

    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 in the December 2008 MD&A an adjustment in the fourth quarter
2008 to the pre-stripping account is reflected in the "December 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. This is considered a timing difference and therefore not significant
with the details and analysis provided above.


    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
    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 10.
    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
amortization is provided on the next page.

                                            Q/E          Q/E          Q/E
                                        Mar 31 2009  Dec 31 2008  Mar 31 2008
                                            $'000        $'000        $'000
    Cost of sales, excluding depreciation
     and amortization                       22,342       22,543       33,000
    Depreciation and amortization           13,473       12,872       14,204

    Total cost of sales                     35,815       35,415       47,204

    Add sundry general & administration
     adjustment                                304          411          739
    Less selling costs                         (92)         (96)        (126)

    Total operating cost of sales           36,027       35,730       47,817

    Gold Sales from operating mines
     (ounces)                               81,093       74,816       67,724
    Total Operating Cost ($ per ounce)         444          478          705
    Less Non-Cash Cost ($ per ounce)           165          171          209

    Cash Operating Cost ($ per ounce)          279          307          496


    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.


    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 and review to March 31 2009, 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 those dates 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.


    As at December 31, 2008, the Chief Executive Officer and Chief Financial
Officer evaluated the design and effectiveness of the Company's internal
control over financial reporting. Based on that evaluation and review to March
31 2009, 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.


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

For further information:

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

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