OceanaGold is tanking on a merger with Canada's Romarco

David Booth with his Iron Age Gold unearthed in Scotland. Jeff J Mitchell/Getty Images

Shares in OceanaGold fell hard after the miner announced it was merging with Romarco Minerals to create the lowest cost gold producer in the world.

The all share deal values the Toronto-listed company at $C856 million ($A902 million). After the merger, OceanaGold shareholders will own 51% and Romarco’s 49%.

OceanaGold, which is also listed in Canada, says the combined company will produce an estimated 540,000 ounces of gold annually by 2017 at an all-in cost of less than $US600 per ounce.

Gold has been trading down lately but is still at $US1,088.60 an ounce.

The group will have four operating platforms in three countries with 75% of gold production expected to come from New Zealand and the United States.

OceanaGold also today announced a fall in second quarter production to 85,853 ounces, down from 91,146 in the previous three months.

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