OceanaGold [OCG-TSX, OCGT-ASX] is poised to restart its Didipio gold-copper mine after the Philippine Government renewed the Didipio Mine Financial and Technical Assistance Agreement (FTAA) for an additional 25 years.
The shares rallied on the news, rising 6.0% or 13.5 cents to $2.40 on volume of 3.26 million. The shares are currently trading in a 52-week range of $4.01 and $1.58.
The Didipio Mine is located on the island of Luzon and is held under a Financial or Technical Assistance Agreement (FTAA) with the Philippine government, granting title exploration and mining rights to the company withing a fixed fiscal regime.
At full speed, the operation directly employs over 1,500 workers, of which 97% are Philippine nationals and 59% are from local communities, the company has said.
Didipio has a measured and indicated resource of 1.3 million ounces of gold and 160,000 tonnes of copper.
The company was recently notified that the Office of the President of the Philippines had instructed the Department of Environment and Natural Resources to engage the company and the Department of Finance to finalise the renewal of the FTAA.
This follows the recent granting of a Certificate of Non-Overlap to the company which states that the FTAA area is outside of ancestral domain of the Indigenous Cultural Communities/Indigenous Peoples.
Oceana Gold launched a bid to renew the 25-year permit in 2018. After it expired in June, 2019, the company kept Didipio operating under a temporary license. However, a blockade backed by the local government forced the company so suspend operations a few weeks later.
On Wednesday OceanaGold said the renewed FTAA reflects similar financial terms and conditions while providing additional benefits to the regional communities and provinces that host the operation.
“We are pleased to confirm the renewal of the Didipio Mine’s FTAA and thank the Philippine Government for their endorsement and renewal,” said OceanaGold President and CEO Michael Holmes.
“We look forward to commencing restart activities and continuing to work in partnership with our regulators, communities, employees, and all stakeholders to contribute to the Philippines’ post-COVID-19 economic recovery,” he said.
The mine and associated facilities have been maintained in a state of operational stand-by. The first priority now 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.
The company plans a staged restart of operations with milling to recommence as soon as possible, utilising stockpiled ore of which the operation has approximately 19 million tonnes available.
OceanaGold aims to achieve full underground production capacity within 12 months. Once it is fully ramped up, the company expects Didipio to produce approximately 10,000 gold ounces and 1,000 tonnes of copper per month at first-quartile all-in-sustaining costs.