OceanaGold Third Quarter 2012 Results

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Oct 30, 2012, 08:40 ET

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(All references in US Dollars)

MELBOURNE, Oct. 30, 2012 /CNW/ - OceanaGold Corporation (ASX: OGC, TSX: OGC, NZX: OGC) (the "Company") has reported EBITDA (earnings before interest, taxes, depreciation and amortisation excluding gain/(loss) on hedges) of $28.6 million, a 12% increase on the previous quarter.

In its Third Quarter 2012 Results released today, the Company reported revenue for the quarter of $91.2 million from an average gold price received of $1,665 per ounce, a 5.1% increase over Q2 due to an increase in gold ounces sold and a higher average price of gold received. Gold sales for the third quarter improved to 54,750 ounces, versus the previous quarter of 53,756 ounces sold. This increase was attributable to a draw down of inventories (gold in circuit) during Q3.

Gold production in the third quarter was 49,514 ounces, which was down from the second quarter production of 55,709 ounces. This decrease was attributable to a lower volume of ore mined at both Macraes Open Pit and Reefton, however production at Frasers Underground improved due to higher grades.

The third quarter cash cost per ounce increased slightly to $1,081 due to a reduction in inventory and a stronger New Zealand dollar, partly offset by higher ounces of gold sold and lower electricity costs.

Year-to-date 2012 revenue was $266.4 million from sales of 160,358 ounces of gold at a cash cost of $1,077 per ounce sold. In the third quarter, the Company announced that it finalised $225 million term and revolving credit facilities with a syndicate of banks. The credit facilities provide additional liquidity should it be required for repayment of the convertible bonds and includes a $50 million working capital facility.

Tremendous progress continued at the Didipio Project in the Philippines and construction nears completion. The Company is pleased to announce that commissioning activities have commenced and are on schedule to commence milling in November.

During the third quarter, the Company invested $3.1 million on exploration with $2.7 million incurred in New Zealand. On 25 October 2012, the Company announced favourable results from drilling of the Blackwater deposit where recent deep drilling successfully intersected the reef at 950 metres down plunge from the old workings with the best result thus far so far being 1.1 metres @ 85.2g/t gold from Hole WA22D.

OceanaGold CEO, Mick Wilkes, said the Company continues to focus on commissioning Didipio and increasing gold production from the New Zealand operations in the fourth quarter of 2012.

"We are pleased to announce the commencement of commissioning activities at the Didipio Project, including successfully commissioning the crusher with rock after the end of the quarter, and remain on-track for milling in November. In addition we were also pleased to secure the $225 million credit facility and finalise the Offtake Agreement with Trafigura which have further de-risked the project. In New Zealand, the Company has commenced mining higher grade ore at both Macraes Open Pit and Reefton and as a result, we expect production to be higher in the fourth quarter."

Mr. Wilkes went on to add, "We have narrowed and adjusted the FY2012 production and cash cost guidance as we enter the final quarter of the year to 225,000-230,000 ounces of gold at $1,000-$1,050 per ounce. This was previously guided to be at the lower end of the 230,000-250,000 ounces range and at the higher end of the cash cost range of $900-$980 per ounce, and the adjusted range is consistent with the current market consensus based on analysts covering OceanaGold which is 228,650 ounces of gold from the New Zealand mines at $1,023 per ounce."

Other highlights from the OceanaGold Third Quarter 2012 Results include:

Effective November 7, Michael Holmes will join OceanaGold as Chief Operating Officer. Michael is a mining engineer who has worked in a variety of mining companies including major global companies and junior miners in Australia. He brings significant experience in both underground and open pit mining in gold and copper as a senior operations executive. Mark Cadzow has been appointed to the new role of Chief Development Officer and will be responsible for managing the project development team overseeing technical studies, expansions and new developments including the commissioning of the Didipio Project.
Awarded a plaque of appreciation by the Mines and GeoSciences Bureau in the Philippines for the Company's Health, Safety and Environment Programs.

Conference Call / Webcast

The Company will host a conference call / webcast to discuss the Q3 2012 Financial Results. The call will take place at 8:00 am on Wednesday 31 October (Melbourne, Australia time) / 5.00 pm on Tuesday 30 October (Toronto, Canada time). Details are available on the OceanaGold website at www.oceanagold.com.

About OceanaGold

OceanaGold Corporation is a significant Asia Pacific gold producer with projects located on the South Island of New Zealand and in the Philippines. The Company's assets encompass New Zealand's largest gold mining operation at the Macraes goldfield in Otago which is made up of the Macraes Open Pit and the Frasers Underground mines. Additionally on the west coast of the South Island, the Company operates the Reefton Open Pit mine. OceanaGold produces approximately 230,000 ounces of gold per annum from the New Zealand operations. The Company also owns the Didipio Project in northern Luzon, Philippines where commissioning activities are currently underway. Currently, Didipio is expected to produce 100,000 ounces of gold and 14,000 tonnes of copper per year over an estimated 16 year mine life.

OceanaGold is listed on the Toronto, Australian and New Zealand stock exchanges under the symbol OGC.

Cautionary Statement

Statements in this release may be forward-looking statements or forward-looking information within the meaning of applicable securities laws. Any statements that express or involve discussions with respect to predictions, expectations, beliefs, plans, projections, objectives, assumptions or future events or performance (often, but not always, using words or phrases such as "expects" or "does not expect", "is expected", "anticipates" or "does not anticipate", "plans", "estimates" or "intends", or stating that certain actions, events or results "may", "could", "would", "might" or "will" be taken, occur or be achieved) are not statements of historical fact and may be forward-looking statements. Forward-looking statements such as production forecasts are subject to a variety of risks and uncertainties which could cause actual events or results to differ materially from those reflected in the forward-looking statements. They include, among others, the accuracy of mineral reserve and resource estimates and related assumptions, inherent operating risks and those risk factors identified in the Company's most recent Annual Information Form prepared and filed with securities regulators which is available on SEDAR at www.sedar.com under the Company's name. There are no assurances the Company can fulfil such forward-looking statements and, subject to applicable securities laws, the Company undertakes no obligation to update such statements. Such forward-looking statements are only predictions based on current information available to management as of the date that such predictions are made; actual events or results may differ materially as a result of risks facing the Company, some of which are beyond the Company's control. Accordingly, readers should not place undue reliance on forward-looking statements.

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 and drilling programs, timing of filing of updated technical information, anticipated production amounts, 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, 2011, 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 actual results, performance, achievements or events to differ from those anticipated, estimated or intended. Also, many of the factors are outside or beyond the control of the Company, its officers, employees, agents or associates. 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. All forward-looking statements and information made herein are qualified by this cautionary statement. This Management Discussion & Analysis may use the terms "Measured", "Indicated" and "Inferred" Resources. U.S. investors are advised that while such terms are recognised and required by Canadian regulations, the Securities and Exchange Commission does not recognise them. "Inferred Resources" have a great amount of uncertainty as to their existence and as to their economic and legal feasibility. It cannot be assumed that all or any part of an Inferred Resources will ever be upgraded to a higher category. Under Canadian rules, estimates of Inferred Resources may not form the basis of feasibility or other economic studies. U.S. investors are cautioned not to assume that all or any part of Measured or Indicated Resources will ever be converted into reserves. U.S. investors are also cautioned not to assume that all or any part of an Inferred Resource exists, or is economically or legally mineable. This document does not constitute an offer of securities for sale in the United States or to any person that is, or is acting for the account or benefit of, any U.S. person (as defined in Regulation S under the United States Securities Act of 1933, as amended (the "Securities Act")) ("U.S. Person"), or in any other jurisdiction in which such an offer would be unlawful.

Technical Disclosure

Dr Michael Roache, (PhD) - Head of Exploration, Mr Jonathan Moore - Group Mine Geology Manager, and Mr Knowell Madambi - Principal Development Engineer all of OceanaGold, are responsible for the technical disclosure in this document, and are Qualified Persons under the Canadian Securities Administrators' National Instrument 43-101 - Standards of Disclosure of Mineral Projects ("NI 43-101"). Dr Roache is a member of both the AusIMM and Australasian Institute of Geoscientists while Messrs. Moore and Madambi are both members and Chartered Professionals with the AusIMM. Dr Roache, Messrs Moore and Madambi have sufficient experience, which is relevant to the style of mineralisation and type of deposits under consideration, and to the activities which they are undertaking, to qualify as Competent Persons as defined in the 2004 Edition of the "Australasian Code for Reporting of Exploration Results, Mineral Resources and Ore Reserves" ("JORC Code"). Soil samples, and drill samples collected at 1 metre intervals or less, from both reverse circulation chips and sawn diamond core, were prepared and assayed by fire assay methods at either the SGS facilities at Macraes, Reefton, Westport and Waihi, New Zealand, or the ALS facilities in Brisbane and Townsville, Australia. Philippine soil samples were prepared and assayed at McPhar laboratories in Manila, Philippines. Standard reference materials were inserted to monitor the quality control of assay data. Dr Roache and Messrs. Moore, and Madambi consent to the inclusion in this document of the matters based on their information in the form and context in which the information appears.

For further scientific and technical information (including disclosure regarding mineral resources and mineral reserves) relating to the Reefton Project, the Macraes Project and the Didipio Project please refer to the NI 43-101 compliant technical reports available at sedar.com under the Company's name.

OceanaGold Corporation
2012
Third Quarter Results
September 30, 2012
www.oceanagold.com

Management Discussion and Analysis of
Financial Condition and Results of Operations for
the Quarter Ended June 30, 2012

HIGHLIGHTS

Revenue of $91.2 million for the quarter from gold sales of 54,750 ounces at an average price of $1,665 per ounce and cash costs of $1,081 per ounce.
EBITDA (earnings before interest, taxes, depreciation and amortisation, excluding gain/(loss) on undesignated hedges)* was $28.6 million, an increase of 12% versus the second quarter. (EBITDA including gain/(loss) on undesignated hedges was $27.6 million).
The Company has narrowed and adjusted full year 2012 production and cash cost guidance to 225,000 - 230,000 ounces of gold at $1,000 - $1,050 per ounce. This is consistent with the current market consensus of 228,650 ounces of gold from New Zealand operations at cash costs of $1,023 per ounce, which is based on analysts covering OceanaGold.
Commissioning has commenced at the Didipio Project with the main crusher commissioning on rock. The project remains on schedule for milling in November.
At Blackwater, drilling showed continuity of the vein structure 950 metres below the lowest previous workings with the best result thus far being 1.1 metres @ 85.2 g/t gold from Hole WA22D.
Corporate refinancing of $225 million was signed during the quarter with a syndicate of international banks.
OceanaGold signed a minimum 5 year Offtake Agreement with Trafigura in relation to the sale and purchase of 100% of the gold/copper concentrate from the Didipio Project.
Effective November 7, Michael Holmes will join OceanaGold as the Chief Operating Officer. Mark Cadzow has been appointed to the new role of Chief Development Officer and will be responsible for managing the project development team overseeing technical studies, expansions and new developments including the commissioning of the Didipio Project.

All statistics are compared to the corresponding 2011 period unless otherwise stated.

OceanaGold has adopted USD as its presentation currency and all numbers in this document are expressed in USD unless otherwise stated.

* EBITDA (earnings before interest, taxes, depreciation and amortisation, excluding gain/(loss) on undesignated hedges) is a non GAAP measure. Refer to page 26 for explanation of non GAAP measures.

OVERVIEW

Results from Operations

OceanaGold (the "Company") recorded revenue of $91.2 million in the third quarter of 2012 from sales of 54,750 ounces of gold at a cash cost of $1,081 per ounce. Revenue for year to date (YTD) 2012 was $266.4 million from sales of 160,358 ounces of gold at cash costs of $1,077 per ounce sold.

Gold production for the third quarter 2012 was 49,514 ounces, which was down from the 55,709 ounces produced in the previous quarter. This decrease was attributable to lower grades through the mill overall from Macraes Open Pit and Reefton. Adverse weather conditions hampered mining activities at Macraes affecting access to higher grade benches. Additionally, a higher proportion of stockpiled oxide material was processed at Reefton. Gold sales were 10% higher than production for the quarter due to an increased drawdown of inventories (gold in circuit) from the previous quarter. Total production achieved for YTD 2012 was 156,065 ounces of gold.

The average gold price received in the third quarter 2012 was $1,665 per ounce and versus $1,613 per ounce in the second quarter. Operating cash cost per ounce sold increased to $1,081 versus the prior quarter of $1,029. This increase was attributable to a stronger New Zealand dollar, processing of low grade ore stockpiles and a decrease in inventory due to drawing down on gold in circuit inventory. The cost associated with production of this inventory was previously capitalised. The increase in cash costs were partly offset by lower electricity costs and an increase in ounces sold. The cash operating margin of $584 per ounce sold was in line with the previous quarter due to the higher gold ounces sold and higher average price of gold received offset by higher cash costs.

Total material mined was down 6% in the third quarter to 14.6 million tonnes compared to the previous quarter due to the unfavourable weather conditions in August that resulted in lower movements at Macraes Open Pit and at Reefton.

Mill throughput in the third quarter was 1.89 million tonnes versus 1.91 million tonnes in the second quarter. The mill feed grade was lower at 1.01 g/t compared to 1.15 g/t in the previous quarter. This was a result of lower grade ore mined out of the Macraes Open Pit and Reefton and processing of stockpiled oxide material at Reefton. While grades at Frasers Underground were above our expectation, mined ore tonnage was lower than expected resulting in fewer high grade tonnes processed during the quarter.

The overall recovery for the third quarter was 80.7%, versus the previous quarter's recovery rate of 79.0%. This increase was attributable to higher oxidation rates achieved through the autoclave at Macraes.

In the third quarter, the Company also announced that it had signed documents for term and revolving credit facilities with a syndicate of banks. The $225 million credit facilities provides additional liquidity should it be required for repayment of the convertible bonds and includes a $50 million working capital facility.

Cash flow from operations for the third quarter was $13.3 million and $55.0 million for YTD 2012. The cash balance at the end of the quarter was $24.2 million, after a drawdown of $20 million on the working capital facility.

Production & Cost Guidance

In December 2011, the company reported FY2012 production guidance set at 230,000 - 250,000 ounces of gold at cash costs of $900 - $980 per ounce (assumes NZD/USD exchange rate of $0.80). The current market consensus based on analysts covering the Company is 228,650 ounces of gold from the New Zealand operations at cash costs of $1,023 per ounce.

The Company has been guiding towards the lower end of the production range, however it has elected to narrow and adjust the range to 225,000 - 230,000 ounces for the remainder of FY2012. As previously stated, the Company expects that higher grades at both Macraes Open Pit and Reefton will contribute to a strong finish to the year.

While unit cash costs per ounce will decline in the fourth quarter given the higher production rate, the strengthening New Zealand Dollar which is currently above the December 2011 forecast rate of NZD/USD $0.80 along with the adjusted production range has resulted in the Company adjusting its cash cost guidance to $1,000 - $1,050 per ounce for FY2012.

Didipio Project

Construction at the Didipio Project progressed to plan during the quarter with commissioning activities now underway and on schedule for milling in November.

As at the end of the third quarter, construction of the Didipio Project was over 90% complete with all structural and mechanical completed. Concrete foundations were completed by the end of the quarter and those contractors have since demobilised. The structural steel erection and plate work was completed with the remaining work being the electrical cable installation and termination and process plant piping. Subsequent to the end of the quarter, the Company had run 12 power generating systems synchronously in readiness for the process plant energisation. The project currently has over 1,200 contractors and employees and demobilisation of the construction workforce has commenced.

The Tailings Storage Facility (TSF) was completed in the third quarter and is ready to accept tailings. Piping to and from the TSF including the return water line was completed subsequent to the quarter end.

During the quarter, $46.8 million was spent on construction. Total spend since the project recommenced in June 2011 was $207.8 million. Total capital costs for construction and commissioning remain in line with the revised budget of $220 million plus $27 million working capital.

In the third quarter, open pit mining continued to provide competent waste rock for construction of the TSF, road sheeting, and other construction purposes. With the completion of these activities prior to the quarter end, the primary focus of the mining operations has been on mining ore in preparation for commissioning. In the third quarter, mining of oxide mineralisation was completed and fresh ore mining commenced and is being delivered to stockpiles on to the ROM pad.

Recruitment of operations managers and superintendents is complete and the current focus is on ramping up the operator training programs prior to the start of production. The Company expects a total workforce including contractors of 1,000 during full production.

Subsequent to quarter end, the Company was pleased to announce the signing of an Offtake Agreement with Trafigura. Under the terms of the minimum 5 year agreement, the Company will sell 100% of the Didipio gold/copper concentrate production to Trafigura at competitive terms and conditions and standard treatment and refining charges. Trafigura will manage all transportation and logistics from the mine to the smelter.

In the third quarter, the Company commenced construction of classrooms in Didipio and the nearby community of Alimit. Company funded water system development projects that provide a potable water supply for community residents were completed. The Company commenced the establishment of a 100 hectare agroforestry plantation and continued to provide scholarships to local students. The local community development corporation formed in 2011 ("DiCorp") continued work on awarded contracts such as, the ongoing maintenance of the access road, waste and recycling services and employee transport services. During the quarter, the Company awarded DiCorp the housekeeping services for the camp accommodation.

Early in the third quarter, the Company was awarded a plaque of appreciation by the Mines and GeoSciences Bureau in the Philippines for its Health, Safety & Environment programs. The recognition marked the first time a mining company in the region had received the prestigious distinction.

Exploration

The Company invested $3.1 million on exploration during the third quarter with the majority ($2.7 million) incurred in New Zealand.

At Reefton, exploration during the quarter focused on greenfields and brownfields drilling and the deep drilling program at the Globe Progress Mine was completed during the third quarter.

Helicopter assisted diamond drilling was completed within the Krantz Creek (EP) 40 705 and Bullswool (EP) 50 216 Exploration Permits. The deep drilling at the historic Blackwater mine continued during the quarter.

The second deep drill hole (WA22C) and a daughter hole (WA22D) at the historic Blackwater Underground mine successfully intersected the Birthday Reef at 950 metres down plunge (680 metre vertical) below previously mined workings (16 Level). WA22C successfully intersected the reef at 1,632 metres down hole returning 0.61 metres (estimated true width of 0.5 metres) @ 15.65 g/t gold. Daughter hole WA22D successfully intersected the reef at 1,624 metres down hole, approximately 11 metres from WA22C, and returned 1.13 metres of reef (estimated true width of 1.0 metre) @ 85.2 g/t gold. The next planned drill hole (WA24) has been designed to test the northern strike extent of the Birthday Reef at a significant depth below the historical workings. This hole has commenced and the results are expected to be reported on in the first half of 2013.

Exploration drilling continued at the Frasers Underground mine with mineralisation being confirmed to the north and northeast of the current workings. Mineralisation remains open in both directions. Exploration drilling will continue in the down dip areas of Panel 2 of the underground to convert Inferred resources to Indicated resources.

Philippines exploration focused on preparation for scout drilling at Mogambos, D'Beau, and Papaya prospects in anticipation of the approval of the FTAA exploration extension which is expected in the near-term.

- Table 1 -
Key Financial and Operating Statistics

Financial Statistics	Q3 Sep 30 2012	Q2 Jun 30 2012	Q3 Sep 30 2011	YTD Sep 30 2012	YTD Sep 30 2011

Gold Sales (ounces)	54,750	53,756	60,646	160,358	186,746

	USD	USD	USD	USD	USD

Average Price Received ($ per ounce)	1,665	1,613	1,706	1,661	1,548
Cash Operating Cost ($ per ounce)*	1,081*	1,029*	956	1,077*	851
Cash Operating Margin ($ per ounce)	584	584	750	584	697

Non-Cash Cost ($ per ounce)	406	375	409	402	350

Total Operating Cost ($ per ounce)	1,487	1,404	1,365	1,479	1,201

Total Cash Operating Cost ($ per tonne processed)	31.95	30.18	30.71	32.00	27.96


Combined Operating Statistics	Q3 Sep 30 2012	Q2 Jun 30 2012	Q3 Sep 30 2011	YTD Sep 30 2012	YTD Sep 30 2011

Gold Produced (ounces)	49,514	55,709	59,090	156,065	186,749

Total Ore Mined (tonnes)	1,674,062	1,571,658	2,024,496	4,653,069	5,792,878

Ore Mined Grade (grams/tonne)	1.08	1.29	1.12	1.22	1.18

Total Waste Mined (tonnes) incl pre-strip	12,904,895	14,006,959	15,082,892	40,520,636	44,806,173

Mill Feed (dry milled tonnes)	1,889,121	1,909,670	1,888,978	5,605,495	5,685,986

Mill Feed Grade (grams/tonne)	1.01	1.15	1.21	1.08	1.23

Recovery (%)	80.7%	79.0%	82.5%	80.4%	83.1%


Combined Financial Results	Q3 Sep 30 2012 $'000	Q2 Jun 30 2012 $'000	Q3 Sep 30 2011 $'000	YTD Sep 30 2012 $'000	YTD Sep 30 2011 $'000
EBITDA (excluding gain/(loss) on undesignated hedges)	28,614	25,632	43,270	77,532	120,261
Reported EBITDA (including gain/ (loss) on undesignated hedges)	27,578	25,632	43,270	76,496	120,261
Reported earnings/(loss) after income tax (including gain/(loss) on undesignated hedges)	(397)	735	10,912	(3,525)	29,831

* Cash operating costs per ounce has been adjusted in 2012 to reflect the decision to combine the administrative functions of the Melbourne, Dunedin and Makati offices under single management from 1 January 2012. In particular, previously the activities of the Dunedin office, such as finance, legal, regulatory, information technology, technical and supply services were treated as part of mine operating costs. With the start-up of the Didipio operations scheduled for Q4 2012, this change reflects the development of the business into a multi-regional mining company.

PRODUCTION

Gold production for the third quarter of 2012 was 49,514 ounces versus 55,709 ounces from the previous quarter. This decrease was attributable to lower mining movements due to adverse weather conditions and as a result, less higher grade ore was accessed at both Macraes and Reefton. Additionally, a higher proportion of stockpiled oxide material was processed at Reefton. Higher grade benches at Macraes Open Pit are now being readily accessed resulting in improved head grade through the mill. At Reefton, higher grade ore from the Souvenir Pit is being delivered to the ROM pad and it is expected that most of the mining fleet will be focused there in November and December. The total production for YTD 2012 was 156,065 ounces of gold.

Cash operating costs for the third quarter of 2012 were $1,081 per ounce sold versus $1,029 per ounce in the second quarter. This increase was attributable to a stronger New Zealand dollar, processing of low grade ore stockpiles and a decrease in inventory due to drawing down on gold in circuit inventory. The cost associated with production of this inventory was previously capitalised. The increase in cash costs was partly offset by lower electricity costs and an increase in ounces sold. The cash operating margin of $584 per ounce sold was in line with the previous quarter due to the higher gold ounces sold and higher average price of gold received offset by higher cash costs.

OPERATIONS

Macraes Goldfield (New Zealand)

The Macraes operations (Open Pit and Underground) incurred three lost time injuries (LTI)s during the third quarter. An underground operator sustained an injury to his hand when clearing a blockage, an underground operator sustained shoulder and rib injuries when he was struck by a boom and a processing operator sustained a back injury whilst clearing spillage. In all three cases, failure to follow the required standard operating procedures was determined to be the cause and steps have been taken to retrain personnel.

The Macraes Goldfield produced 36,874 gold ounces in the third quarter compared to 39,012 gold ounces in the previous quarter. This decrease in production was attributable to lower grade mined and milled from Macraes Open Pit due to lower than expected movements. The amount of ore mined from Frasers Underground was lower than our expectation, however it was partially offset by better grades.

Total material mined from the Macraes Open Pit was 9.6 million tonnes in the quarter, down 7.3% on the previous quarter. In August, the mine experienced unusually adverse weather conditions, which resulted in 10 days of less ore mined and lower grade stockpiles being processed in place of higher grade ore from the open pit. Mining continued in the Frasers 5 cutback area to expose higher grade benches heading into the fourth quarter.

At Frasers Underground, mining continued in Panel 2 and in the Deeps area. Total ore mined for the quarter was up 3.0% on the second quarter to 184,000 tonnes however, was lower than expected due to lower jumbo utilisation and bogger availability.

Mill throughput was 1.47 million tonnes compared to 1.48 million tonnes in the previous quarter. Mill feed grade for the quarter was 0.96 g/t, compared to the previous quarter of 1.03 g/t. Delayed access to higher grade areas of the open pit on account of adverse weather conditions and lower than expected tonnes of ore mined from the underground were the main contributors though this was offset slightly by 12.0% higher grade from Frasers Underground.

The process plant recovery in the third quarter improved to 81.1% compared to 79.1% the previous quarter due to higher oxidation rates achieved through the autoclave.

Mining of the higher grade ore at Macraes Open Pit is now underway and will continue into 2013.

Reefton Goldfield (New Zealand)

There were no LTIs during the third quarter at the Reefton operations.

Gold produced for the quarter was 12,640 ounces, versus 16,697 ounces in the prior quarter. The reduction of ounces produced was due to lower grades mined and to lower feed grades from treating a higher proportion of stockpiled oxide material. Additionally, due to an extreme snow event, the plant was shut down for 3, 12-hour periods while repairs were made to the power infrastructure into the plant that was damaged as a result of the event.

Total material mined was 4.8 million tonnes, down 5.5% from the previous quarter. The Souvenir Pit mining cutback was completed during the quarter and ore from that higher grade pit is now being mined and should result in higher mill grade for the fourth quarter.

The total ore mined for the third quarter improved to 323,123 tonnes versus 268,365 tonnes in the prior quarter. The increase in ore mined was attributable to the Globe Pit producing more tonnage, although at lower grades.

Process plant throughput decreased by 1.9% to 423,764 tonnes, versus the previous quarter of 431,921 tonnes. The reduction in plant throughput was due to adverse weather conditions that resulted in a shutdown of the plant. Grade through the mill was 1.16 g/t in the third quarter versus 1.53 g/t in the previous quarter. The decrease was due to treating a higher proportion of stockpiled oxide ore and the lower grade of ore mined. Gold recovery improved to 79.5% versus 78.8% in the previous quarter.

- Table 2 -
Macraes Operating Statistics

Macraes Goldfield Operating Statistics	Q3 Sep 30 2012	Q2 Jun 30 2012	Q3 Sep 30 2011	YTD Sep 30 2012	YTD Sep 30 2011

Gold Produced (ounces)	36,874	39,012	42,136	110,737	130,400

Total Ore Mined (tonnes)	1,350,939	1,303,293	1,701,287	3,742,469	4,695,535

Ore Mined Grade (grams/tonne)	1.06	1.23	1.01	1.15	1.05

Total Waste Mined (tonnes) incl pre-strip	8,457,277	9,226,327	10,982,615	26,866,619	33,917,644

Mill Feed (dry milled tonnes)	1,465,357	1,477,749	1,431,238	4,335,166	4,346,288

Mill Feed Grade (grams/tonne)	0.96	1.03	1.10	0.99	1.12

Recovery (%)	81.1%	79.1%	83.1%	80.3%	83.6%

- Table 3 -
Reefton Operating Statistics

Reefton Goldfields Operating Statistics	Q3 Sep 30 2012	Q2 Jun 30 2012	Q3 Sep 30 2011	YTD Sep 30 2012	YTD Sep 30 2011

Gold Produced (ounces)	12,640	16,697	16,954	45,328	56,349

Total Ore Mined (tonnes)	323,123	268,365	323,209	910,600	1,097,343

Ore Mined Grade (grams/tonne)	1.18	1.57	1.70	1.49	1.78

Total Waste Mined (tonnes) incl pre-strip	4,447,618	4,780,632	4,100,277	13,654,017	10,888,529

Mill Feed (dry milled tonnes)	423,764	431,921	457,740	1,270,329	1,339,698

Mill Feed Grade (grams/tonne)	1.16	1.53	1.54	1.38	1.59

Recovery (%)	79.5%	78.8%	80.7%	80.5%	81.4%

DEVELOPMENT

Didipio Project (The Philippines)

There were two LTIs in the third quarter. Early into the third quarter, the Company regretfully announced the fatality of a contractor in an incident arising from a severe rain event that impacted the site. A safety investigation was undertaken and appropriate actions were employed to prevent reoccurrence.

The Didipio Project currently has over 1,200 contractors and employees, of which over 98% are Filipinos, on site engaged in construction activities. Demobilisation of the construction workforce has commenced.

The Project is entering the final stages of the construction with all major equipment including the power generating plant, SAG and Ball mills, flotation circuit and primary crusher in place. All reagents and media have been delivered to the site and the majority of the plant spares/first fills inventory is in storage. All major mine roads are completed. The high and low voltage switch rooms are installed for the process plant.

Concrete foundations were completed by the end of the quarter and those contractors have since demobilised. The structural steel erection and plate work was completed during the quarter with the remaining outstanding work being electrical cable installation and termination and process plant piping.

Subsequent to the quarter end, 12 power generating units had been run synchronously in readiness for the process plant energisation. Commissioning of the process plant has commenced and the Company expects to commence milling in November.

During the quarter, $46.8 million was spent on the construction. Total spend on construction since the project recommenced in June 2011 was $207.8 million. Capital costs for construction and commissioning remain in line with the revised budget of $220 million plus $27 million working capital.

In the third quarter, open pit mining continued to provide competent waste rock for construction of the TSF, road sheeting, and other construction purposes. With the completion of these activities prior to the quarter end, the primary focus of the mining operations has been on mining ore in preparation for the commissioning activities. The mining of the 20 metre thick oxide mineralisation in stage 2 of the open pit was completed in the third quarter and fresh ore mining commenced during the quarter. The fresh ore continues to be stockpiled on the ROM pad in preparation for the first ore through the mill.

Recruitment of operations managers and superintendents was completed in the third quarter and the current focus is on ramping up the operator training programs in preparation for production. The Company expects a total workforce including contractors of 1,000 during full production.

The mining contractor has taken delivery of the larger haul trucks and excavators to complement the current equipment at site. This will continue through to the first quarter of 2013.

As part of its Financial or Technical Assistance Agreement (FTAA) at Didipio, the Company commits 1.5% of its operating costs to funding initiatives under the Social Development and Management Plan (SDMP). The SDMP benefits are shared amongst the host community (Didipio) and nine other upstream and downstream communities.

During the third quarter of 2012, a number of projects funded by the Company as part of its SDMP were completed. This included the construction of two water system development projects in Barangay Tucod, Cabarroguis Quirino, providing a potable water supply for the community residents. Also, the concreting of a farm-to-market road for Barangay Dingasan was completed in the quarter.

As part of OceanaGold's commitments in the Memorandum of Agreement with the Didipio Community, the Company funded construction project of road widening and slope stabilisation and drainage got underway along the central road through the Didipio community.

Additionally, construction commenced on classrooms in Didipio and the nearby community of Alimit in September. The Company maintained salary assistance for 20 teachers in Didipio and surrounding villages. During the quarter, the company commenced an agroforestry program in preparation for the establishment of a planned 100 hectares plantation. This is a long term program aimed at developing a sustainable agroforestry business in the Didipio area which will bring sustainable benefits to the community.

In the third quarter, the local community development corporation formed in 2011 ("DiCorp") continued work on ongoing maintenance of the access road, waste and recycling services, employee transport services, equipment hire and construction services. During the quarter, the Company awarded DiCorp the housekeeping services of the camp accommodation.

The Company continues to maintain scholarship assistance to 75 college students from host and neighbouring communities enrolled in local universities as of the first semester 2012-13. Additionally, the Company continued to provide tuition and miscellaneous assistance for students from the 10 beneficiary communities.

All figures available on website.
Figure 1: Overview of Process Plant, October 2012
Figure 2: Ball and SAG mills at night, October 2012
Figure 3: Crushed rock stockpile, October 2012

EXPLORATION

New Zealand

Exploration expenditure in New Zealand was $2.7 million during the third quarter and $9.7 million for YTD 2012.

Reefton Goldfield

The deep drilling program at Reefton was completed during the third quarter. The deep drilling at the historic Blackwater mine continued during the quarter. Helicopter assisted diamond drilling was conducted on Krantz Creek Exploration Permit (EP) 40 705 and Bullswool Exploration Permit (EP) 50216 (Figure 4).

The deep drilling program at the historic Blackwater Underground mine commenced in November 2011. In April 2012, the Company announced that the first drill hole WA21A¹ successfully intersected the reef at 1,316 metres down hole and approximately 605 metres down-plunge (430 vertical metres) from the base of the old workings. The assay results from WA21A of 1.0 metres (estimated true width of 0.5 metres) grading 23.3 g/t Au were consistent with the average grade and thickness obtained from historical mining records. In late August, the second deep drill hole (WA22C) successfully intersected the reef at 1,632 metres down hole and 950 metres down plunge (680 vertical metres) from the base of the previously mined workings (16 Level). WA22C intersected 0.61 metres (estimated true width of 0.5 metres¹) @ 15.65 g/t gold (Figure 5 and Table 4). In late September, a daughter hole WA22D successfully intersected the reef at 1,624 metres down hole, approximately 11 metres away from the parent hole. WA22D intersected 1.13 metres (estimated true width of 1.0 metres) of quartz reef @ 85.2 g/t gold (Figure 5 and Table 4). The next planned hole (WA24) has been designed to test the northern strike extent to the Birthday Reef at a significant depth below the historical workings. This hole is now underway and the results are expected in Q2 2013.

At Reefton, the 21-drill hole program was completed in the third quarter 2012 (Figure 4). Of the 21 holes, 10 consolidated mineralisation within the Globe Open Pit while 8 tested extensions, known as Globe Deeps, beneath the final pit design. Assay results have been received for all of the 18 holes. Results are shown in Table 5. The assay results from all drill holes are expected to be received and integrated into a revised resource model in the fourth quarter.

At the Krantz Creek Exploration Permit (EP) 40 705, a three-hole (KC001 to KC003) 508 meters, helicopter-assisted diamond drilling program was completed in August targeting coincident gold and arsenic geochemical anomalies within the Krantz Creek shear. The area is located 12 kilometres SSW of the Reefton processing plant (Figure 4). Assay results for the Krantz Creek diamond drill holes (KC001 to KC003) were received during the quarter. Best results include 3.0 metres (down hole) @ 1.21 g/t Au from 15 metres in KC002 (Table 6).

A two-hole, 500 metre diamond drill program commenced during the third quarter in the Bullswool Exploration Permit (EP) 50 216 located 12.5 kilometres SSW of the Reefton processing plant (Figure 4). The assay results from all drill holes are expected to be received in the fourth quarter 2012.

Mapping is continuing in the Blackwater Exploration Permit (EP) 40 542 with the aim of defining potential narrow, high-grade Blackwater-style targets.

Macraes Goldfield

Underground exploration and resource infill drilling continued at the Frasers Underground mine with 5,532 metres from 21 diamond drill holes completed from the exploration drive in the third quarter. The drilling confirmed mineralisation extends to the north and north-east of the underground workings and the deposit remains open in both directions.

A further 129 metres comprising one diamond drill hole was completed from a jump-up rise on the western edge of Panel 2 to test for extensions to the mineralisation in this area. The program is now completed. Mining of a second rise commenced towards the end of the quarter and will be used to test southern extensions of the Lower Zone in the fourth quarter.

¹The down plunge and vertical depths of WA21C intercept vary from that reported in Q2 2012 due to recalculation of the extent of historic mining activity.

All figures available on website.

Figure 4: Reefton Exploration
Overview

Figure 5: Oblique view of the Blackwater (Birthday Reef) historical mine (drill intercept locations with estimated true widths and gold assay results)

Table 4: Blackwater Deep Drilling Results received during Q3 2012

Hole ID		From (m)	To (m)	Intercept (m)	True Width (m)*	Au (g/t) ^
WA22C		1,630.75	1,632.91	2.16	1.5	5.73
	Including	1,630.75	1,630.99	0.24	0.1	2.94
		1,630.99	1,632.30	1.31	0.9	1.63
		1,632.30	1,632.91	0.61	0.5	15.65
WA22D		1,616.00	1,617.00	1.0	0.75	2.23
		1,620.60	1,621.00	0.4	0.3	1.87
		1,621.00	1,622.00	1.0	0.75	1.09
		1,623.90	1,625.03	1.13	1	85.2

Results quoted in Table 4 are intercepts returning ≥1 grams per tonne. * = The true width of drill intercepts may vary slightly from those reported due to local variations in the orientation of the reef. ^ = Assayed by screen fire assay (method code Au-SCR22AA) at the Townsville ALS Laboratory, Australia.

Table 5: Globe Deeps Drilling Results received during Q3 2012

Hole ID		From (m)	To (m)	Intercept (m)	True Width (m)	Au (g/t)

RCD0016		259	280	21	*	3.16
RCD0016		282	284	2	*	1.57
RCD0016		294	296	2	*	1.10
RCD0016		300	303	3	*	1.12
RCD0019		270	278	8	*	2.03
RCD0020		239.6	241	1.4	*	0.64
RCD0021		191	192	1	*	1.57
RCD0021		196	206	10	*	1.10
RCD0022		260	277	17	*	2.55
RCD0022		283	300	17	*	4.16
RCD0023		185	193	8	*	2.12
RCD0023		199	205	6	*	1.23
RCD0024		224	230	6	*	1.98
RCD0024		253	261	8	*	1.68
RCD0025		158	162	4	*	1.76
RCD0025		201	205	4	*	1.70
RCD0026		180	183	3	*	3.94
RCD0026		200	214	14	*	2.41
RCD0027		218	230	12	*	2.17
RCD0027		234	238	4	*	1.74
RCD0027		261	276	15	*	2.28
RCD0028		219	220	1	*	2.78
RCD0028		261	265	4	*	2.24
RCD0028		269	279	10	*	0.98
RCD0029		235	245	10	*	3.14
RCD0029		253	259	6	*	1.49
RCD0031		218	233	14	*	2.09
RCD0032		214	217.2	3.2	*	4.03
RCD0032		219	220	1	*	1.81
RCD0032		222.5	225	2.5	*	1.29
RCD0033		225	228	3	*	2.12
RCD0033		270	275	5	*	1.64
RCD0033		307	315	8	*	1.69
RCD0034		271.5	305	32	*	1.62
RCD0034	including	282	295	15	*	2.59
RCD0035		240	250.9	10.9	*	1.86
RCD0035		255.2	267	12	*	1.88
RCD0035		273	276	3	*	2.81
* = true widths were not calculated because of variable orientations of mineralised structures

Table 6: Krantz Creek EP 40 705 Drill Results

Hole ID		From (m)	To (m)	Intercept (m)	True Width (m)	Au (g/t)

KC001	No Significant Results
KC002		15	18	3	2.3	1.21
KC003	No Significant Results

Results quoted in Table 6 are intercepts returning ≥1 gram metres (true width (metre) multiplied by gold grade in grams per tonne)

PHILIPPINES

Exploration expenditure in the Philippines for the third quarter of 2012 totalled $0.4 million and $1.1 million YTD 2012.

Didipio

Exploration continues on the FTAA and adjacent tenements during the quarter (Figure 6). Within the FTAA, activity was focused on preparation of the Mogambos, D'Beau, and Papaya prospects for scout drilling in anticipation of the approval of the FTAA Exploration Period Extension.

Scout drilling at Mogambos, 4 kilometres north of Didipio, will test coincident Au-Cu soil anomalies over an area of 1.6 kilometres by 1 kilometre. Drill pad and access preparations commenced in late September.

The D'Beau prospect, located 1 kilometre southeast of Didipio, comprises narrow Au-Cu mineralised monzonite dikes. Previous sampling of the dikes returned assays of up to 3.81 g/t Au and 1.16% Cu.

These dikes may be derived from a larger mineralised intrusive body at depth. A drill program is being designed to test this concept.

Soil samples from the Papaya prospect were re-assayed for Vanadium (V), an element associated with epithermal gold mineralisation in alkalic rocks elsewhere. Results revealed that 16 of the 714 pulps analysed, yielded high V assays from 0.1% to 0.4% that correspond with elevated Au-Cu soil geochemistry. Five drill holes are planned to further test geochemical anomaly and mineralised structures.

Mapping, and limited soil sampling was carried out at the MMB area. Hydrothermally altered rocks were mapped at the boundary between Wangal and Binugawan that coincide with an area of anomalous gold in soils. One sample of the altered rocks at Wangal returned 0.88 g/t Au, 0.62% Mo, and 381 ppm As. Additional mapping and sampling works are scheduled at MMB for the fourth quarter 2012.

All figures available on website

Figure 6: Summary results of the Mogambos, MMB, TNN, Papaya, and D'Beau prospects showing soil and rock sampling, Didipio FTAA.

FINANCIAL SUMMARY
The Table below provides selected financial data comparing Q3 2012 with Q2 2012, Q3 2011 and comparing YTD 2012 to YTD 2011.

STATEMENT OF OPERATIONS	Q3 Sep 30 2012 $'000	Q2 Jun 30 2012 $'000	Q3 Sep 30 2011 $'000	YTD Sep 30 2012 $'000	YTD Sep 30 2011 $'000
Gold sales	91,153	86,719	103,455	266,430	289,006
Cost of sales, excluding depreciation and amortisation	(61,173)	(57,523)	(57,453)	(179,383)	(157,935)
General & Administration	(3,649)	(3,561)	(4,008)	(10,304)	(10,900)
Foreign Currency Exchange Gain/(Loss)	941	(31)	1,322	(711)	(8)
Other income/(expense)	1,342	28	(46)	1,500	98
Earnings before interest, tax, depreciation & amortisation (EBITDA) (excluding gain/(loss) on undesignated hedges)	28,614	25,632	43,270	77,532	120,261
Depreciation and amortisation	(21,938)	(20,009)	(24,424)	(63,770)	(64,302)
Net interest expense and finance costs	(5,803)	(4,034)	(3,307)	(13,840)	(9,386)
Earnings/(loss) before income tax and gain/(loss) on undesignated hedges	873	1,589	15,539	(78)	46,573
Tax (expense)/ benefit on earnings/ loss	(545)	(854)	(4,627)	(2,722)	(16,742)
Earnings/(loss) after income tax and before gain/(loss) on undesignated hedges	328	735	10,912	(2,800)	29,831
Gain/(loss) on fair value of undesignated hedges	(1,036)	-	-	(1,036)	-
Tax (expense)/ benefit on gain/loss on undesignated hedges	311	-	-	311	-
Net Profit/(Loss)	(397)	735	10,912	(3,525)	29,831
Basic / Diluted earnings per share	$(0.00)	$0.00	$0.04	$(0.01)	$0.11

CASH FLOWS
Cash flows from Operating Activities	13,306	20,912	22,216	55,035	98,545
Cash flows used in Investing Activities	(68,742)	(69,261)	(37,491)	(203,148)	(98,851)
Cash flows used in Financing Activities	6,820	(4,561)	(2,733)	(1,356)	(11,515)

BALANCE SHEET	As at Sep 30 2012 $'000	As at Dec 31 2011 $'000
Cash and cash equivalents	24,165	169,989
Other Current Assets	69,560	56,491
Non Current Assets	796,756	591,155
Total Assets	890,481	817,635
Current Liabilities	149,135	123,623
Non Current Liabilities	242,092	215,772
Total Liabilities	391,227	339,395
Total Shareholders' Equity	499,254	478,240

RESULTS OF OPERATIONS

Net Earnings

The Company reported a third quarter net loss of $0.4 million versus a net profit of $0.7 million in the second quarter 2012. This result was largely attributable to higher cost of sales which was impacted by a stronger New Zealand dollar and depletion of low grade ore; lower interest income; and loss on both gold put options and forward rate contracts entered into during the quarter as a condition for securing the USD banking facilities. These factors were partly offset by higher ounces of gold sold and higher average gold price received in the third quarter.

Gold sold in the third quarter was 54,750 ounces, which represents a 1.8% increase from the previous quarter. This increase was attributable to draw down of gold inventories in the process circuit. The average price received was $1,665 versus $1,613 per ounce in the second quarter.

Gold production for the third quarter 2012 was 49,514 ounces, which was down from the 55,709 ounces produced in the previous quarter. This decrease was attributable to lower grades through the mill overall from Macraes Open Pit and Reefton. Adverse weather conditions hampered mining activities at Macraes affecting access to higher grade benches. Additionally, a higher proportion of stockpiled oxide material was processed at Reefton. Gold sales were 10% higher than production for the quarter due to increased drawdown of inventories (gold in circuit) from the previous quarter. The cost associated with production of this inventory was previously capitalised.

The Company reported EBITDA (excluding loss on undesignated hedge) of $28.6 million in the third quarter compared to $25.6 million in the second quarter of 2012. This was due to an increase in gold ounces sold and higher gold price received which was partly offset by an increase in cost of sales.

The net result before income tax and before gain/(loss) on undesignated hedges was a profit of $0.9 million for the third quarter 2012 compared to a profit of $1.6 million in the second quarter.

Sales Revenue

Gold revenue in the third quarter 2012 of $91.2 million is a 5.1% increase over the second quarter due to higher ounces of gold sold and higher average price of gold received.

The average gold price received in the third quarter was $1,665 per ounce compared to $1,613 in the previous quarter. Gold sales for the third quarter 2012 of 54,750 ounces were 1.8% higher than the previous quarter's sales of 53,756 ounces. The increase in gold ounces sold was due to a higher draw down of gold in circuit in the quarter.

Operating Costs & Margins

Cash costs per ounce sold were $1,081 for the third quarter, an increase of 5.1% compared to second quarter 2012 costs of $1,029. This increase was attributable to a stronger New Zealand dollar, processing of low grade ore stockpiles and to a decrease in inventory due to drawing down on gold in circuit inventory. The cost associated with production of this inventory was previously capitalised. The increase in cash costs was partly offset by lower electricity costs and an increase in ounces sold.

The average cash margin was $584 per ounce for the third quarter 2012, was in line with the second quarter. This reflected the higher gold price received and higher ounces sold offset by the higher cash cost per ounce sold.

Depreciation and Amortisation

Depreciation and amortisation charges include amortisation of mine development, deferred pre- stripping costs and depreciation on equipment.

Depreciation and amortisation charges are calculated on a unit of production basis and totalled $21.9 million for the third quarter 2012 compared to $20.0 million in the previous quarter.

Net Interest Expense and finance costs

The net interest expense of $5.8 million for the third quarter 2012 increased from the previous quarter of $4.0 million, reflecting the amortisation of transaction costs and establishment fees related to the banking facility obtained during the quarter.

Undesignated Hedges Gains/Losses

Unrealised gains and losses calculated as a fair value adjustment of the Company's undesignated hedges are brought to account at the end of each reporting period and reflect changes in the spot gold price and changes in market premiums of AUD forwards. These valuation adjustments as at September 30, 2012, reflect a loss for year to date 2012 of $1.0 million.

Details of the derivative instruments held by the Company at quarter end are summarised below under "Derivative Assets/ Liabilities".

DISCUSSION OF CASH FLOWS

Operating Activities

Cash inflows from operating activities were $13.3 million during the quarter compared to $22.2 million in the third quarter 2011. The decrease reflected lower ounces sold, lower average price per ounce received and higher cost of sales when compared to the same period last year.

Investing Activities

Investing activities comprised expenditures for pre-strip mining, sustaining capital and exploration expenditure at the New Zealand operations, plus capitalised development costs mainly associated with the construction of the Didipio Project in the Philippines.

Cash used for investing activities totalled $68.7 million during the quarter compared to $37.5 million in the same quarter a year ago. The expenditure reflects predominantly constructions costs for the Didipio Project of $46.8 million during the third quarter.

Financing Activities

Financing inflows for the third quarter 2012 were $6.8 million compared to cash outflows of $2.7 million in third quarter 2011. This reflects the drawdown of $20 million from the new working capital facility for additional liquidity, offset by the payment of related transaction costs, establishment fees and line fees. Other cash outflows included $5.8 million for finance leases.

DISCUSSION OF FINANCIAL POSITION AND LIQUIDITY

Company's funding and capital requirements

For the quarter ended Sept 30, 2012, the Company recorded a net loss of $0.4 million. As at that date, cash funds held were $24.2 million. Net current liabilities were $55.4 million at quarter end which includes a current liability of the convertible bond repayment due in December 2012.

During the third quarter, the Company announced that it had signed documents for term and revolving credit facilities with a syndicate of six banks. The $225 million credit facility will provide additional liquidity should it be required for repayment of convertible bonds, A$53 million convertible bonds maturing in December 2012 and A$110 million convertible bonds maturing in 2013 and includes a $50 million working capital facility. As at the quarter end $20 million was drawn down from the working capital facility.

Commitments

OceanaGold's capital commitments as at September 30, 2012 are as follows:


	Sept 30, 2012 $'000
Within 1 year	33,867

This includes equipment for New Zealand operations and contracts supporting the construction and operations of the Didipio Project.

Financial position

Current Assets

As at September 30, 2012 current assets were $93.7 million compared to $142.6 million at the end of the June 30, 2012. Current assets have decreased by $48.9 million primarily due to a decrease in cash, being used for construction of the Didipio Project.

Non-Current Assets

At September 30, 2012 non-current assets were $796.8 million compared to $717.4 million at June 30, 2012. The increase mainly reflects expenditure of $71.5 million on Property, Plant and Equipment, and Mining Assets resulting from the acquisition of additional equipment, some of which was previously leased being greater than depreciation, and further capitalised expenditure in the third quarter 2012 for the construction of the Didipio Project.

Current Liabilities

Current liabilities increased by $0.2 million in the third quarter to $149.1 million compared to $148.9 million in second quarter. This increase was attributable mainly to the recognition of a hedge liability on the forward rate agreement entered into as part of obtaining USD banking facilities.

Non-Current Liabilities

Non-current liabilities were $242.1 million at September 30, 2012, compared with $221.8 million at June 30, 2012. The increase reflects the $20 million drawdown of the working capital facility.

Derivative Assets / Liabilities

As part of satisfying the Conditions Precedent of the Credit Facility the Company entered into a contract for gold put options covering 82,998 ounces of gold from New Zealand production at a strike price of US$1,400 covering a period from October 2012 to June 2013. In addition, the Company purchased a forward contract for A$168.5M as a hedge against foreign exchange movements to ensure that the potential US denominated credit facility draw downs would be sufficient in the repayment of the AUD denominated convertible notes maturing in December 2012 and December 2013. These hedges are undesignated and do not qualify for hedge accounting.

A summary of OceanaGold's marked to market derivatives is as per below:


	Sep 30 2012 $'000	Dec 31 2011 $'000
Current Assets
Forward rate agreements	-	-
Gold put options	423	-
	423

Non Current Assets
Forward rate agreements	181
Gold put options	-	-
Total Assets	604	-


	Sep 30 2012 $'000	Dec 31 2011 $'000
Current Liabilities
Forward rate agreements	826	-
		-
Non Current Liabilities
Forward rate agreements	-	-
		-
Total Liabilities	826	-

Shareholders' Equity

A summary of the movement in shareholders' equity is set out below:


	Quarter Ended Sep 30, 2012 $'000
Total equity at beginning of financial period	489,252
Profit/(loss) after income tax	(397)
Movement in other comprehensive income	9,089
Movement in contributed surplus	423
Movement in Other Reserves
Issue of shares (net of costs)	887
Total equity at end of financial period	499,254

Shareholders' equity has increased by $10.0 million to $499.3 million at September 30, 2012 mainly as a result of currency translation differences reflected in Other Comprehensive Income that arise from the translation of entities with a functional currency other than USD, and also resulting from a loss for the period.

Capital Resources

As at September 30, 2012, the share and securities summary was:

Shares outstanding	263,260,596
Options and share rights outstanding	8,624,268

As at October 30, 2012 there was no change in shares and securities:

Shares outstanding	263,278,752
Options and share rights outstanding	8,606,112

As at June 30, 2012, the share and securities summary was:

Shares outstanding	262,886,876
Options and share rights outstanding	6,407,494

CRITICAL ACCOUNTING ESTIMATES AND ACCOUNTING POLICIES

The preparation of financial statements in conformity with IFRS requires management to make estimates and assumptions that affect the amounts reported in the consolidated financial statements and related notes. The accounting policies that involve significant management judgement and estimates are discussed in this section. For a list of the significant accounting policies, reference should be made to Note 2 of the December 31, 2011 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 and development 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.

Costs associated with the removal of overburden and other mine waste materials that are incurred in the production phase of mining operations are included in the costs of inventory in the period in which they are incurred, except when the charges represent a betterment to the mineral property.

Charges represent a betterment to the mineral property when the stripping activity provides access to reserves that will be produced in future periods that would not have been accessible without the stripping activity. When charges are deferred in relation to a betterment, the charges are amortised over the reserve in the betterment accessed by the stripping activity using the units of production method.

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 Comprehensive Income.

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 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 risk-adjusted future cash flows, the timing of those cash flows and the 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 the key assumptions.

Asset Impairment Evaluations

The carrying values of exploration, evaluation, mining properties in production or under development 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 discounted future cash flows from these assets, the assets are written down to the fair value of the estimated future cash flows based on OceanaGold's discount rate for the asset.

Derivative Financial Instruments/Hedge Accounting

The consolidated entity has used derivative financial instruments to manage commodity price and foreign currency exposures from time to time. 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 the reporting date. The fair value of forward exchange contracts is calculated by reference to the current forward exchange rate for contracts with similar maturity profiles.

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. Deferred tax assets including tax losses are recognised to the extent that it is probable that the company will generate future taxable income. Utilisation of the tax losses also depends on the ability of the entities to satisfy certain tests at the time the losses are recouped.

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"), New Zealand dollars ("NZD") or United States dollars ("USD") as their functional currency.

Foreign currency transactions are translated into the functional currency using the exchange rates prevailing at the dates of the transactions. Generally, foreign exchange gains and losses resulting from the settlement of foreign currency transactions and from the translation at year-end exchange rates of monetary assets and liabilities denominated in currencies other than an operation's functional currency are recognised in the statement of income.

ACCOUNTING ESTIMATES

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.

RISKS AND UNCERTAINTIES

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; possible variations of ore grade or recovery rates; changes in project parameters; 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; ability to secure long term financing and capital, water management, 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; general business, economic, competitive, political and social uncertainties and other development and operating risks.

For further detail and discussion of risks and uncertainties refer to the Annual Information Form available on the Company's website.

CHANGES IN ACCOUNTING POLICIES INCLUDING INITIAL ADOPTION

Adoption of new accounting policies

The accounting policies adopted during the quarter are consistent with those of the previous financial year and corresponding interim reporting period, except for the below new accounting policies adopted in line with the requirements of new transactions in the quarter.

Stock-based compensation
Performance Share Rights Plan ("PSRP")

The company has introduced a new plan which provides benefits to such directors and employees (participants) of the Group as designated by the Board of Directors, in the form of share-based compensation, whereby the designated participants render services and are compensated in part through grants of rights over shares ("equity settled transactions").

The cost of these equity-settled transactions with participants is measured by reference to the fair value of the compensation at the date at which they are granted. The fair value is determined by an external valuer using Monte Carlo simulation (using the Black-Scholes framework) to model the Company's future security price and TSR performance against the comparator group at vesting date.

The cost of equity-settled transactions is recognised, together with a corresponding increase in equity, over the period between the grant date and the date on which the relevant participants become fully entitled to the award ("vesting date").

The cumulative expense recognised for equity-settled transactions at each reporting date until vesting date reflects:

(a)	the extent to which the vesting period has expired, and
(b)	the number of awards that, in the opinion of the directors of the consolidated entity, may ultimately vest.

No adjustment is made for the likelihood of market performance conditions being met as the effect of these conditions are included in the determination of fair value at grant date.

Interests in Jointly Controlled Operations

Where the Company's activities are conducted through an unincorporated joint ventures that are jointly controlled operations, its proportionate share of the assets, liabilities, production and related operating costs are included in the financial statements.

Interests in Jointly Controlled Assets

Where the Company's activities are conducted through unincorporated joint ventures that are jointly controlled assets, its proportionate share of the assets, liabilities, production and related operating costs are included in the financial statements.

Non-derivative financial assets
Available-for-sale financial assets

Available-for-sale assets are non-derivative financial assets that are designated as available for sale or are not classified as: Financial assets at fair value through profit or loss; Held-to-maturity financial assets; Loans and receivables; or Cash and cash equivalents. Available-for-sale financial assets are recognised initially at fair value plus any directly attributable transaction costs.

Subsequent to initial recognition, they are measured at fair value and changes therein, other than impairment losses, and foreign currency differences on available-for-sale debt instruments, are recognised in other comprehensive income and presented in the available-for-sale equity reserve (which forms part of other reserves). When an investment is derecognised, the cumulative gain or loss in equity is reclassified to profit or loss.

Accounting policies effective for future periods

IFRS 9 - "Financial instruments - classification and measurement"
This is the first part of a new standard on classification and measurement of financial assets that will replace IAS 39, Financial Instruments: Recognition and Measurement. IFRS 9 has two Measurement categories: amortised cost and fair value. All equity instruments are measured at fair value.

A debt instrument is at amortised cost only if the entity is holding it to collect contractual cash flows and the cash flows represent principal and interest. Otherwise it is at fair value through profit or loss. Effective for years beginning on/after January 1, 2015. The Group does not have any liabilities designated at fair value so there is no impact expected for reporting.

IFRS 9 - "Financial instruments - classification and measurement"
Updated to include guidance on financial liabilities and de-recognition of financial instruments. Effective for years beginning on/after January 1, 2015. The Company has not assessed the impact of this new standard.

IAS 1 - "Presentation of items of other comprehensive income ("OCI")"
Change to the disclosure in OCI, including a requirement to separate items presented into two groups based on whether or not they may be recycled to profit or loss in the future. Effective for years beginning on/after July 1, 2012.

IAS 19 - "Employee benefits"
Amended for (i) changes to recognition and measurement of defined benefit pension expense and termination benefits, and (ii) expanded disclosure. Effective for years beginning on/after January 1, 2013. Not expected to have a material impact on the Company.

IFRS 13 - "Fair value measurement and disclosure requirements"
Provides a single source of guidance on how to measure fair value and enhances disclosure requirements for fair value measurements. Effective for years beginning on/after January 1, 2013. Not expected to have a material effect on the Company.

"New standards addressing scope of reporting entity"

IFRS 10, - "Consolidated Financial Statements",
IAS 27, - "Consolidated and Separate Financial Statements", and
SIC-12, - "Consolidation - Special Purpose Entities"
IFRS 11, - "Joint Arrangements"
Entities in joint operations will follow accounting for jointly controlled assets and jointly controlled operations under IAS 31.
IFRS 12, - "Disclosure of Interests in Other Entities", Effective for years beginning on/after January 1, 2013.
Not expected to have a material effect on the Company disclosure.

IFRIC 20 - "Stripping costs in the production phase of a surface mine"

Provides guidance on the accounting for overburden (pre-strip) in the production phase. Costs can only be recognised as an asset if they can be attributed to an identifiable component of the ore body. Effective January 1, 2013. Not expected to have a material impact on the Company.

IFRS 7 - "Financial instruments" - disclosures
Amended to enhance disclosure requirements relating to offsetting of financial assets and financial liabilities. Effective for annual periods beginning on/after January 1, 2013. Not expected to affect the accounting of offsetting arrangements or have a material effect on the Company.

IAS 32 - "Financial instruments" - presentation
Amended to clarify requirements for offsetting of financial assets and financial liabilities. Effective for annual periods beginning on/after January 1, 2014. Not expected to affect the treatment of offsetting arrangements or have a material effect on the Company.

SUMMARY OF QUARTERLY RESULTS OF OPERATIONS

The following table sets forth unaudited information for each of the eight quarters ended December 31, 2010 through to September 30, 2012. 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. On adoption to IFRS there were no material differences to the income statements and management believes the results are comparable as they were prepared on a consistent basis.


STATEMENT OF OPERATIONS	Sep 30 2012 $'000	Jun 30 2012 $'000	Mar 31 2012 $'000	Dec 31 2011 $'000	Sep 30 2011 $'000	Jun 30 2011 $'000	Mar 31 2011 $'000	Dec 31 2010 $'000
Gold sales	91,153	86,719	88,558	106,603	103,455	94,805	90,746	93,777
EBITDA (excluding gain/(loss) on undesignated hedges)	28,614	25,632	23,285	43,622	43,270	32,994	43,998	49,259
Earnings/(loss) after income tax and before gain/(loss) on undesignated hedges (net of tax)	328	735	(3,863)	14,336	10,912	4,147	14,772	20,655
Net Profit/(Loss)	(397)	735	(3,863)	14,336	10,912	4,147	14,772	20,979
Net earnings/(loss) per share Basic Diluted	$(0.00) $(0.00)	$0.00 $0.00	$(0.01) $(0.01)	$0.05 $0.05	$0.04 $0.04	$0.02 $0.02	$0.06 $0.06	$0.08 $0.08

The most significant factors causing variation in the results are the variability in the grade of ore mined from the Macraes and Reefton Open Pit mines 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 revenue and returns. Adding to the variation are large movements in foreign exchange rates between the USD and the NZD.

NON-GAAP MEASURES
Throughout this document, we have provided measures prepared according to IFRS ("GAAP"), as well as some non-GAAP performance measures. As non-GAAP performance measures do not have a standardised 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 amortisation (EBITDA) is one such non-GAAP measure and a reconciliation of this measure to net Profit /(Loss) is provided on page 18.

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.


STATEMENT OF OPERATIONS	Q3 Sep 30 2012 $'000	Q2 Jun 30 2012 $'000	Q3 Sep 30 2011 $'000	YTD Sep 30 2012 $'000	YTD Sep 30 2011 $'000
Cost of sales, excluding depreciation and amortisation	61,173	57,523	57,453	179,383	157,935
Depreciation and amortisation	21,938	20,009	24,424	63,770	64,302

Total cost of sales	83,111	77,532	81,877	243,153	222,237
Add sundry general & administration	131	116	551	361	1,044
Add non cash & selling costs	285	144	362	621	1,101

Total operating cost of sales	83,527	77,792	82,790	244,135	224,382
Gold Sales from operating mines (ounces)	54,750	53,756	60,646	160,358	186,746

Total Operating Cost ($/ounce)	1,526	1,447	1,365	1,522	1,201
Less Non-Cash Cost and 2012 Corporate Admin adjustment ($/ounce)	445	418	409	445	350
Cash Operating Costs ($/ounce)	1,081*	1,029*	956	1,077*	851

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 June 30, 2012. 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 Sept 30, 2012 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

Management of OceanaGold, including the Chief Executive Officer and Chief Financial Officer, have evaluated the effectiveness of the design and operation of the Company's of the internal controls over financial reporting and disclosure controls and procedures as of June 30, 2012.

Based on this evaluation, the Chief Executive Officer and Chief Financial Officer have concluded that they were effective at a reasonable assurance level.

There were no significant changes in the Company's internal controls, or in other factors that could significantly affect those controls subsequent to the date the Chief Executive Officer and Chief Financial Officer completed their evaluation, nor were there any significant deficiencies or material weaknesses in the Company's internal controls requiring corrective actions.

The Company's management, including the Chief Executive Officer and the Chief Financial Officer, does not expect that its disclosure controls and internal controls over financial reporting will prevent all errors and fraud. A cost effective system of internal controls, no matter how well conceived or operated, can provide only reasonable not absolute, assurance that the objectives of the internal controls over financial reporting are achieved

*Refer to page 6 for further details.

SOURCE: OceanaGold Corporation

OceanaGold Corporation

Investor Relations - Melbourne
Nova Young or Darren Klinck
Tel: +61(3) 9656 5300

Investor Relations - Toronto
Sam Pazuki
+1 416 915 3123

[email protected] | www.oceanagold.com

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