With the completion of an access road to all-weather status OceanaGold is about to start plant construction at its Didipio gold and copper project in the Philippines.

OceanaGold CEO Steve Orr says: "We are on schedule with our development timeline. The road upgrade now allows us to get in large mining equipment and large infrastructure components to construct the plant.

"We also have awarded our engineering, procurement, construction and management contract to Ausenco Limited. Their team is on site and we are starting work on the camp construction.

"We will construct the process facility and do the pre-strip for the open pit in 2008 before starting the commissioning phase in early 2009. The capital cost is expected to be about US$155 million although we are still to complete the final engineering at which point we'll be able to lock down definitive bids from suppliers."

Steve Orr says: "In 2009 our production will increase to 320,000 to 340,000 ounces. In addition, we'll begin producing copper for the first time and by 2010 we'll be producing 350,000 to 370,000 ounces of gold per annum and 15,000 to 20,000 tonnes of copper per annum.

"Copper production will have a significant beneficial impact on our cash costs. In 2007 our cash costs are anticipated to be about US$575 per ounce of gold although this year is a redevelopment year for Macraes and we've been processing a significant amount of low-grade stockpile material, resulting in high cash costs.

"In 2008 when all three New Zealand projects have been commissioned, we anticipate cash costs will be around US$320 to $340 per ounce, and by 2009 when Didipio is ramping up, we expect that to fall to around US$215 to $235 due to the copper by-product credit and the high-grade nature of the Didipio gold deposit.

"By 2010, once Didipio is operating at design capacity, we expect cash costs to drop to US$175 to $195. By 2011, we expect to generate between US$90 and $100 million in free cash flow based on a gold price of $500 per ounce and copper price of $1.90 per pound."

Steve Orr says Didipio is very important to the company's growth profile. "When Didipio is operating at full run rate, it's going to be making about 50% of the gold-equivalent contribution to the company."

OceanaGold took control of Didipio in 2006 after its acquisition of Climax Mining.This also gave it control over six prospective copper and gold exploration projects throughout the Philippines extending from the northern end of Luzon Island to the northern end of the Surigao Peninsula.

"We're budgeting US$5 million in 2008 to begin exploration on these projects. The first two we'll be testing are Manhulayan in the northern Surigao Peninsula and Papaya within our mining permit area close to Didipio." www.oceanagold.com