Australian gold producer Oceanagold is to commence the process of closing down of some of its West Coast and Otago production in New Zealand.

The company plans to progressively reduce production at Macraes mine in order to lower the cost of mining in the Philippines.

According to Oceanagold, only $33m of its total capital expenditures of $100m would be spent on New Zealand operations.

Claimed to be New Zealand’s largest gold mine, the Macraes Goldfield has been in operation since 1990 and consists of the Macraes open pit and Frasers underground mines.

"According to Oceanagold, only $33m of its total capital expenditures of $100m would be spent on New Zealand operations."

Said to have produced around four million gold ounces, the mine cost is higher compared with the new Didipio gold and copper mine operated in the northern Philippines, according to Otago Daily Times.

Capital expenditure at Didipio mine is expected to be about $63m, including $23m for the underground development and $10m for connection to the power grid.

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Oceanagold announced the changes on 8 December along with the company’s 2015 guidance.

As previously stated, the reduction is a direct result of lower sustaining and capitalised mining costs at Macraes and at Reefton where the operation will transition into care and maintenance by the end of the year.

The new life-of-mine plan is said to have resulted in a reduction in the gold production over the remaining life of the Macraes assets, the company said.

Image: Macraes open pit mine aerial view. Photo: courtesy of OceanaGold Corporation.