OceanaGold to restart Didipio mine after new deal with Philippines

Didipio has been idled for over two years. (Image courtesy of OceanaGold.)

Australia’s OceanaGold Corp. (TSX, ASX: OGC) said on Wednesday the Philippines has renewed its contract for the Didipio gold and copper mine for another 25 years, after almost two years of the operation being halted due to a dispute with a provincial government over the company’s license to operate.

The renewed Financial or Technical Assistance Agreement (FTAA) applies retroactively from June 19, 2019, and keeps financial terms and conditions unchanged, OceanaGold said. It does however provide an additional 1.5% of gross revenue to be allocated to regional communities and provinces that host the operation, the company noted.

Shares climbed almost 3% in Sydney on the news, closing at A$2.46, the highest price in July so far.

OceanaGold kicked off the renewal of the 25-year permit in 2018. After it expired in June 2019, the company kept Didipio operating under a temporary license, but a blockade backed by the local government forced the Brisbane-based miner to suspend operations a few weeks later. It also had to lay off hundreds of workers.

“The company’s first operational priority is the rehiring and training of its Philippine workforce, which will include a focus on safeguarding workers from the current risks associated with covid-19,” Oceana said in the statement.

One-year deadline

The miner, which plans to restart Didipio “as soon as possible” said operations will resume initially with the milling of stockpiled ore of about 19 million tonnes.

Didipio, which began production in 2013 and is located 270 km north of Manila, has a measured and indicated resource of 1.3 million ounces of gold and 160,000 tonnes of copper.

OceanaGold aims to achieve full underground production capacity within 12 months, with Didipio slated to generate about 10,000 ounces of gold and 1,000 tonnes of copper per month once production is fully ramped up.

The mine is a major direct and indirect employer in the provinces of Quirino and Nueva Vizcaya and a significant contributor of socio-economic benefits for the local and national economies.

OceanaGold also has assets in New Zealand and the United States.