Company Overview: OceanaGold Corporation is a gold mining company. The Company is engaged in the exploration, development and operation of gold and other mineral mining activities. The Company's segments are New Zealand, the Philippines, the United States and All other segments. The Company's assets encompass its flagship operation, the Didipio Gold-Copper Mine located on the island of Luzon in the Philippines. On the north island of New Zealand, the Company operates the high-grade Waihi Gold Mine. On the south island of New Zealand, the Company operates the gold mine in the country at the Macraes Goldfield, which is made up of a series of open pit mines and the Frasers underground mine. In the United States, the Company is constructing the Haile Gold Mine, an asset located in South Carolina along the Carolina Slate Belt.


OGC Details

OceanaGold Corporation is a mid-tier, low-cost, multinational gold producer with assets located in the Philippines, New Zealand and the United States. The Company’s assets encompass its flagship operation, the Didipio Gold-Copper Mine located on the island of Luzon in the Philippines. On the north island of New Zealand, the Company operates the high-grade Waihi Gold Mine. On the south island of New Zealand, OceanaGold operates the largest gold mine in the country at the Macraes Goldfield, which is made up of a series of open pit mines and the Frasers underground mine. The Company has a solid mineral endowment from its portfolio of high-quality assets. The Company upgraded its 2018 consolidated gold production guidance on the back of strong operating performance and improvements to the mine plan at the Didipio Operation. The Company undertakes an exploration program which is designed to unlock the million-ounce resource target at Waihi which it expects would help sustaining current mining operations out to 2030 at historical production levels and will continue the drill programs in the next 18 months.


Performance of OceanaGold on Index (Source: Company Reports)

Update on its FY18 Second Quarter Production Activities- The Company recently previewed its production report for the second quarter and first half ended 30 June 2018. It reported a consolidated 2018 half year production of 268,597 ounces of gold and 7,808 tonnes of copper including 142,950 ounces of gold and 3,919 tonnes of copper in the second quarter. In fact, it reported an increase of 14 per cent of gold production that amounted to 142,950 ounces as compared to the first quarter of 2018, and this reflected stronger production across all assets and reported a copper production of 3,919 tonnes in-line with the previous quarter. While in US, Haile produced 75,693 ounces of gold, including 38,644 ounces of gold in the second quarter and reflected improved plant availability and utilisation rates.


Updated 2018 Production and Cost Guidance (Source: Company Reports)

In the Philippines, Didipio produced 58,797 ounces of gold and 7,808 tonnes of copper in the first half of 2018, including 33,140 ounces of gold and 3,919 tonnes of copper in the second quarter and this increase of 30 per cent quarter on-quarter reflected continued ramp-up of underground operations and the implementation of a revised mine plan. While in New Zealand, Waihi produced 39,320 ounces of gold, including 20,798 ounces of gold produced in the second quarter and this 12 per cent increase on a quarter-on-quarter basis reflected better equipment utilisation and higher mill throughput. At Macraes, the operation produced 94,786 ounces of gold, including 50,368 ounces of gold produced in the second quarter and this 13 per cent increase quarter-on-quarter reflected processing of higher grades and better recoveries.


Production Summary as on 30 June 2018 (Source: Company Reports)

Extension of High-Grade Gold Mineralisation at WKP - The Company announced the intersection of further high-grade gold mineralisation along the East Graben vein at the Company’s WKP prospect in New Zealand and the latest drill results supported the significance of this exciting exploration program that targeted high grade ore mined from underground, and its potential to contribute to a further extension of mine life at its Waihi operation. The Company commenced exploration of the WKP prospect in August 2017 with 1 - 2 diamond rigs drilling 8,005 metres in 17 holes to date and it has been reported that since November 2017 exploration update, 6,803 metres have been drilled at WKP focussing on the potential of the East Graben Vein and this kind of drilling activity has returned a best true width intercept of 8.7 m @ 24.54 g/t Au within a broader zone of 51.3 m @ 7.18 g/t Au.


Plan View of geology and distribution of known veins at WKP (Source: Company Reports)

In fact, two other significant veins, West and T Stream, have also been drill tested with encouraging widths and grades of gold mineralisation intersected in several holes and on the West vein, three holes for a total of 1,299 metres were drilled with a best true width intercept of 9.8 m @ 4.53 g/t Au and 4.2 g/t Ag (West: 2 WKP48B). This reflected that the recent holes intersected deeper levels of the vein and either below the optimal zone of mineralisation or outside of the mineralised shoot.


Long Section on East Graben Vein (Source: Company Reports)

Other Updates - Van Eck Associates Corporation changed its substantial holding in the Group and now holds 12.62 per cent of the voting power, up from 11.59 per cent since 27 June 2018and 77,873,734 shares. The Group announced the intersection of high-grade mineralisation along two large veins (Martha and Empire) beneath the Martha Pit at Waihi in New Zealand and these results were from a drill program that form only a subset of a much more extensive drill program along kilometres of the combined strike and hundreds of metres of vertical vein extent. The Group announced about the Martha Project that comprises an underground mine and the recommencement of open pit mining operations from Phase 4 of the Martha Pit. It is expected that the permitting process for the Martha Project will be completed by the end of 2019, with resource potential to allow continuity of mining operations at Waihi to at least 2030.


Plan View Across the Martha Underground Drill Targets (Source: Company Reports)

Outlook - The Company’s main business strategy is to maintain steady-state production in New Zealand, to maximise profitability through efficient operations and judicious investment and to develop new reserves and resources at its existing mines, from in-pit and near mine exploration, or from satellite projects located within the current tenements. The Group increased 2018 production guidance range to between 500,000 to 540,000 ounces for FY18 of gold and 15,000 to 16,000 tonnes of copper with All-In Sustaining Costs that range from $725 to $775 per ounce sold.


Comparative Analysis of Free Cash Flow Yield with Peers (Source: Company Reports)

The progress of expansion of the process plant at Haile was also tracking well and the Group expects to complete commissioning of the Pebble Crusher before the end of the July month and production at Didipio was stronger on the back of continued ramp-up of underground operations and mining of higher grades in the breccia zone. It is expected that in the remaining FY2018, 7,800 metres of diamond drilling will be undertaken to follow up on the excellent results to date. The Company will release its financial and operational results for the second quarter ending 30 June 2018 on 26 July 2018. The Martha Underground is expected to yield tonnages of between 3.5 million and 5.0 million tonnes and grades ranging between 5.0 g/t and 7.0 g/t gold for 500,000 to 700,000 ounces of gold.

Stock Performance - The Company has a significant pipeline of organic growth and exploration opportunities in the Australasia and Americas regions. The Company pursues selective accretive acquisition and exploration opportunities that are complementary and add low cost gold reserves to its business. The Company has operated sustainably over the past 27 years and has a proven track-record for environmental management and community and social engagement. The Group had a strong operating and financial performance in the first half of this year with its operations achieving better than expected results. ROE and ROIC improved from 1.6 per cent and 1.2 per cent in September 2017 to 6.1 per cent and 5 per cent in December 2017, respectively, and the ROE is greater than industry median of 3.1 per cent. Debt to Equity improved and moved from 0.22 in September 2017 to 0.16 in December 2017. The stock price has been rising high on ASX since it has been listed and was up by 6.11 per cent in last three months and by 143.81 per cent in 5 years as on 17 July 2018. The stock was up by 2.35 per cent as on 18 July 2018. We give a “Buy” recommendation at the current market price of $3.91 as the Group is continuously putting efforts so that it positions itself as one of the most profitable gold companies globally.

 

OGC Daily Chart (Source: Thomson Reuters)

 
 
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