OceanaGold Corporation (TSX: OGC) (ASX: OGC) (the “Company”) reported its financial and operational results for the quarter ended March 31, 2021 . Details of the consolidated financial statements and the Management Discussion and Analysis (“MD&A”) are available on the Company’s website at www.oceanagold.com
Highlights
- First quarter consolidated gold production of 83,191 ounces at consolidated All-In Sustaining Costs (“AISC”) of $1,229 per ounce on sales of 82,847 ounces of gold.
- Total immediate available liquidity of $195.5 million , including $145.5 million of cash and $50 million in undrawn credit facilities.
- First quarter revenue of $148.9 million with adjusted Earnings before Interest, Depreciation and amortisation (“EBITDA”) of $66.5 million ; adjusted net earnings of $21.8 million or $0.03 per share.
- Operating cash flow of $47.6 million in the first quarter with fully diluted cash flow per share before working capital movements of $0.09 per share.
- Announced an increase to Gold Proven and Probable Reserves of 0.75Moz and Measured and Indicated Resources of 0.66Moz; first reserves of 0.62Moz declared at Martha Underground.
- Advanced organic growth projects, including development of 2,311 metres at Waihi’s Martha Underground and progressed the main access and ventilation declines for Golden Point Underground at Macraes.
- Full year 2021 guidance reaffirmed.
Michael Holmes , President and CEO of OceanaGold said, “First quarter 2021 results demonstrate our determination to deliver on our commitments. Despite one-off milling challenges at Haile and Macraes, the ingenuity of our teams ensured we delivered on first quarter expectations, and we remain on-track to achieve full year 2021 guidance. At Haile, the operation delivered record total mining movements during the first quarter and quickly identified, evaluated, and resolved disruptions to milling. At Macraes, despite failure of one of our mill motors that slowed throughputs, the operation produced just under 35,000 gold ounces during the quarter, and full year guidance remains unchanged.”
“We continue to advance our organic growth pipeline of three new underground mines over the next two years in favourable jurisdictions. In New Zealand , Martha Underground is on-track to begin continuous production late in the second quarter and underpins the greater Waihi District. We plan on drilling at Waihi for years to come and adding to the already robust mine life. At Macraes, main access and ventilation declines for the Golden Point Underground are underway, and the project is on-track for first production by year-end. Haile Underground preparation continues in anticipation for portal development later this year.”
“We remain in dialogue with appropriate representatives at national and local levels on Didipio’s FTAA renewal status. Currently the renewal is with the Department of Environment and Natural Resources for re-endorsement to the Office of the President. In the meantime, we are maintaining Didipio in a state of operational stand-by and planning for the transition to full production. COVID-19 risks remain elevated in the Philippines and at site where nine members of our workforce have tested positive for the virus over the last year. Ongoing risks associated with the pandemic could impact the timeline associated with returning to full operations.”
“OceanaGold is a resilient and dynamic gold miner with a strong and sustainable future. We are excited about the next few years and the opportunity we have to drive value from internal growth. Our relentless focus on delivering on our commitments, restarting Didipio and advancing organic growth is expected to create value for shareholders over the long-term.”
Table 1 – Production and Cost Results Summary
|
Quarter ended 31 Mar 2021
|
Haile
|
Didipio
|
Waihi
|
Macraes
|
Consolidated
|
|
Q1 2021
|
Q1 2020
|
|
Gold Produced
|
koz
|
44.3
|
–
|
4.3
|
34.5
|
83.2
|
80.7
|
|
Gold Sales
|
koz
|
45.3
|
–
|
3.1
|
34.5
|
82.8
|
91.4
|
|
Average Gold Price
|
US$/oz
|
1,795
|
–
|
1,718
|
1,782
|
1,786
|
1,509 (1)
|
|
Copper Produced
|
kt
|
–
|
–
|
–
|
–
|
–
|
–
|
|
Copper Sales
|
kt
|
–
|
–
|
–
|
–
|
–
|
–
|
|
Average Copper Price
|
US$/lb
|
–
|
–
|
–
|
–
|
–
|
–
|
| |
|
|
|
|
|
|
|
|
Material Mined
|
kt
|
10,639
|
–
|
50.4
|
11,933
|
22,622
|
21,185
|
|
Waste Mined
|
kt
|
9,621
|
–
|
4.3
|
10,625
|
20,250
|
18,839
|
|
Ore Mined
|
kt
|
1,018
|
–
|
46.1
|
1,308
|
2,372
|
2,346
|
|
Mill Feed
|
kt
|
675
|
–
|
49
|
1,233
|
1,957
|
2,264
|
|
Mill Feed Grade
|
g/t
|
2.46
|
–
|
3.12
|
1.03
|
1.57
|
1.37
|
|
Gold Recovery
|
%
|
82.7
|
–
|
88.4
|
84.3
|
83.9
|
80.9
|
| |
|
|
|
|
|
|
|
|
Cash Costs
|
US$/oz
|
773
|
–
|
972
|
818
|
800
|
802
|
|
Site AISC (2)
|
US$/oz
|
994
|
–
|
702
|
1,335
|
1,229
|
1,218
|
|
(1)
|
Realised gains and losses on gold hedging are included in the consolidated average gold price. Realised gains and losses on gold hedging are not included in the site average gold prices.
|
|
(2)
|
Site AISC are exclusive of Corporate general and administrative expenses and have been restated in prior periods accordingly; Consolidated AISC is inclusive of Corporate general and administrative expenses.
|
|
(3)
|
The lower AISC (relative to Cash Costs) at Waihi reflects the inclusion of proceeds from the sale of sustaining assets during the periods and the relative low sales volume.
|
Table 2 – Financial Summary
Quarter ended 31 Mar 2021
(US$m)
|
Q1
31 Mar 2021
|
Q4
31 Dec 2020
|
Q1
31 Mar 2020
|
|
Revenue
|
148.9
|
168.2
|
138.2
|
|
Cost of sales, excluding depreciation and amortization
|
(66.7)
|
(76.9)
|
(74.0)
|
|
General and administration – indirect taxes (2)
|
(0.1)
|
(0.3)
|
(1.2)
|
|
General and administration – idle capacity charges (1)
|
(4.5)
|
(9.1)
|
(7.2)
|
|
General and administration – other
|
(12.6)
|
(13.1)
|
(12.2)
|
|
Foreign currency exchange gain/(loss)
|
(3.4)
|
(8.6)
|
(1.3)
|
|
Other income/(expense)
|
0.4
|
1.1
|
0.1
|
|
EBITDA (excluding gain/(loss) on undesignated hedges and
impairment charge)
|
62.0
|
61.3
|
42.4
|
|
Depreciation and amortization
|
(36.3)
|
(55.8)
|
(50)
|
|
Net interest expense and finance costs
|
(2.7)
|
(2.5)
|
(2.8)
|
|
Earnings/(loss) before income tax (excluding gain/(loss) on
undesignated hedges and impairment charge)
|
23.0
|
2.9
|
(10.5)
|
|
Income tax expense on earnings
|
(5.7)
|
(10.2)
|
(0.2)
|
|
Earnings/(loss) after income tax and before gain/(loss) on
undesignated hedges and impairment charge
|
17.3
|
(7.1)
|
(10.7)
|
|
Write off exploration/property expenditure / investment (3)
|
(1.3)
|
–
|
–
|
|
Gain/(loss) on fair value of undesignated hedges
|
–
|
15.3
|
(21.2)
|
|
Tax (expense) / benefit on gain/loss on undesignated hedges
|
–
|
(4.3)
|
5.9
|
|
Net Profit/(loss)
|
16.0
|
3.9
|
(26.0)
|
|
Basic earnings/(loss) per share
|
$0.02
|
$0.01
|
$(0.04)
|
|
Diluted earnings/(loss) per share
|
$0.02
|
$0.01
|
$(0.04)
|
|
(1)
|
The Company did not record any revenue or cost of sales from the Didipio mine during the year ended 31 March 2021. In addition, General and Administration – other – idle capacity charges reflects the non-production costs related to maintaining Didipio’s operational readiness.
|
|
(2)
|
Represents production-based taxes in the Philippines specifically excise tax, local business and property taxes.
|
|
(3)
|
Represents write-off of projects due to formal withdrawal from the Highland, Spring Peak and Bravada joint venture activities.
|
Table 3 – Cash Flow Summary
|
Quarter ended 31 Mar 2021
(US$m)
|
Q1
31 Mar 2021
|
Q4
31 Dec 2020
|
Q1
31 Mar 2020
|
|
Cash flows from Operating Activities
|
47.6
|
(1.6)
|
120.6
|
|
Cash flows used in Investing Activities
|
(71.9)
|
(62.7)
|
(33.8)
|
|
.Cash flows from / (used) in Financing Activities
|
(6.7)
|
117.2
|
44.8
|
Operations
For the quarter ended March 31, 2021 , the Company produced 83,191 ounces of gold, reflecting a 3% increase over the previous March quarter and 16% decrease quarter-on-quarter. Increased production relative to the first quarter of 2020 reflects stronger performance from Haile partly offset by lower production from the New Zealand operations. Decreased production quarter-on-quarter is primarily attributable to New Zealand where a milling disruption impacted Macraes, and Waihi ran a reduced processing campaign as planned. Haile was also lower with a higher average feed grade offset by lower mill throughput. Didipio remained in a state of operational standby.
Increasing consolidated cash costs of $800 per ounce and All-in Sustaining Costs (“AISC”) of $1,229 per ounce sold reflected the lower production and higher capitalised pre-stripping quarter-on-quarter, particularly at Macraes. The Company recorded gold sales of 82,847 ounces in the first quarter, a 14% decrease from the fourth quarter of 2020.
At Haile, the operation produced 44,341 gold ounces in the first quarter, up 51% from the previous March quarter on improved mining productivity. First quarter gold production and mill throughput were 10% and 20% lower respectively quarter-on-quarter, due to challenges with the flow of saturated saprolitic ore to the plant (which were addressed and rectified during the quarter) and a planned three-day plant shutdown. Concurrently, total mining movements increased 24% and 7% over the prior March quarter and fourth quarter 2020 respectively, and the operation achieved record total movements in the quarter.
Unit mining and milling cost increases at Haile during the first quarter reflect lower plant throughput, the impact of one-off costs related to mitigating plant disruption from saturated ore, and to a lesser extent, additional headcount to address COVID-19-related workforce absenteeism. Confirmed COVID-19 cases at site increased from 63 at the end of 2020 to 111 during the first quarter. The Company continues to expect Haile to produce 150,000 to 170,0000 gold ounces at a site AISC of $950 to $1,100 per ounce sold and notes that the outlook could be adversely impacted by additional challenges related to the COVID-19 pandemic.
In New Zealand , Waihi produced 4,337 gold ounces in the first quarter. Activities at Waihi primarily focussed on the development of Martha Underground, including the completion of 2,311metres of underground development during the first quarter. In addition, the Company declared the first Reserve of 620,000 gold ounces at Martha Underground (“MUG”) in conjunction with the completed feasibility-level study. Development of MUG is on-track for continuous production to begin in June following the replacement of Waihi’s existing SAG mill. Full year 2021 guidance at Waihi remains unchanged.
Macraes production decreased 19% quarter-on-quarter and 12% over the prior March quarter primarily as a result of a one-off disruption to milling operations from a mill motor outage in early February. In addition, exceptionally high rainfall in January required evacuation of Frasers Underground for two weeks and temporarily prevented access to ore mining in open pits; as such, mining efforts were directed to increased waste mining and pre-stripping at Deepdell North open pit. Higher first quarter AISC reflects the lower mill throughputs and increased sustaining capital investments and pre-stripping activities. Full year guidance for Macraes remains unchanged. The Company expects to replace the mill motor in the second quarter concurrent to the scheduled rebricking of the autoclave.
Didipio remains in a state of operational standby, and there was no production in the first quarter due to the suspension of operations due to the ongoing blockade of the access road. The Company expensed $4.5 million of holding costs as part of consolidated Corporate General and Administration, which related to maintaining Didipio in a state of operational standby. This compares to $9.1 million in the prior quarter. The Financial or Technical Assistance Agreement (“FTAA”) is currently pending re-endorsement from the Philippine Department of Environment and Natural Resources (“DENR”) to the Office of the President. The Company is unable to provide a specific timeline to complete the renewal. The spread and effective management of COVID-19 in the Philippines may be a factor in the timeline for resumption of normal operations, which could take up to 12 months. Since March 2020 , nine positive COVID-19 cases have been managed at Didipio, four of which occurred in the first quarter of 2021.
Financial
In the three months ended March 31, 2021 , the Company generated $148.9 million in revenue and adjusted EBITDA of $66.5 million , 11% and 6% lower than the previous quarter, respectively, due to lower gold sales from New Zealand . First quarter revenue and adjusted EBITDA increased 8% and 34% above the prior March quarter, respectively, due to improved performance from Haile and an 18% higher average gold price received during the period.
Adjusted net profit (excluding Didipio carrying costs) was $21.8 million or $0.03 per share in the first quarter, benefitting from the improvement in average gold price received over the prior year quarter.
Operating cash flows in the first quarter were $47.6 million , an increase quarter-on-quarter due to the stronger gold price and lower carrying costs for Didipio. This was partly offset by working capital movements from an increase in inventories at Haile. Fully diluted cash flow per share before working capital movements was $0.09 per share.
Investing cash flows of $71.9 million in the first quarter increased quarter-on-quarter with higher capital expenditure at Haile for expansion of waste storage and pre-stripping activities at Macraes as well as ongoing investment in development of the Martha Underground at Waihi.
As at March 31, 2021 , the Company’s cash balance stood at $145.5 million and $50.0 million remains undrawn on the credit facility.
Advance Notice Policy
The Company further announces that the Board of Director have adopted an Advance Notice Policy (“Policy”) for the Company. The Policy establishes a framework for the nomination of Directors in connection with a shareholder meeting and is keeping with best practices in corporate governance consistent with other advance notice policies adopted by Canadian companies.
The Policy is intended to:
(i) facilitate an orderly and efficient annual general or special meeting process;
(ii) ensure that all shareholders receive adequate notice of the director nominations and sufficient information regarding all director nominees; and
(iii) allow shareholders to register an informed vote after having been afforded reasonable time for appropriate deliberation.
The Policy fixes a deadline by which shareholders of record of common shares of the Company must submit director nominations to the Company prior to any annual or special meeting of shareholders and sets forth the information that a shareholder must include in the notice to the Company for the notice to be in proper written form.
In the case of an annual meeting of shareholders (including an annual and special meeting), notice to the Company must be given:
- not less than 30 days prior to the date of the annual meeting, or
- if the meeting is to be held less than 50 days from the date of first public announcement (“Notice Date”), then not later than 10 days following the Notice Date, or
- in the case of a special meeting (which is not also an annual meeting), not later than the close of business 15 days following the Notice Date.
The Policy is in full force and effect with immediate effect and ensures all shareholders receive adequate notice and information related to director nominations to make informed decisions.
The Company will seek shareholder ratification of the Policy by ordinary resolution at its next annual general and special meeting of shareholders (the “Meeting”) scheduled to be held on 29 June 2021 at 5:00 p.m. (Eastern Daylight Time) / 30 June 2021 at 7:00 a.m. (Australian Eastern Standard Time). If the Policy is not confirmed at the Meeting by ordinary resolution of shareholders, the Policy will terminate and be of no further force and effect following the termination of the Meeting.
The full text of the Policy is available under the Company’s profile at www.sedar.com and a summary of the Policy will be included in the management information circular which will be sent to shareholders in due course.
Conference Call
The Company will host a conference call / webcast to discuss the financial and operating results at 7:30 am on Friday April 30, 2021 ( Brisbane , Eastern Standard Time) / 5:30 pm on Thursday April 29, 2021 ( Toronto , Eastern Daylight Time).
Webcast Participants
To register, please copy and paste the link below into your browser:
https://produceredition.webcasts.com/starthere.jsp?ei=1449908&tp_key=cdfe7d41a8
Teleconference Participants (required for those who wish to ask questions)
Local (toll free) dial in numbers are:
North America : 1 888 390 0546
Australia : 1 800 076 068
New Zealand : 0 800 453 421
United Kingdom : 0 800 652 2435
Switzerland : 0 800 312 635
All other countries (toll): + 1 416 764 8688
Playback of Webcast
If you are unable to attend the call, a recording will be available for viewing on the Company’s website.
Authorised for release to market by OceanaGold Corporate Company Secretary, Liang Tang .
www.oceanagold.com | Twitter: @OceanaGold
About OceanaGold
OceanaGold is a multinational gold producer committed to the highest standards of technical, environmental and social performance. For 30 years, we have been contributing to excellence in our industry by delivering sustainable environmental and social outcomes for our communities, and strong returns for our shareholders.
Our global exploration, development, and operating experience has created a significant pipeline of organic growth opportunities and a portfolio of established operating assets including Didipio Mine in the Philippines ; Macraes and Waihi operations in New Zealand ; and Haile Gold Mine in the United States of America .
Cautionary Statement for Public Release
Certain information contained in this public release may be deemed “forward-looking” within the meaning of applicable securities laws. Forward-looking statements and information relate to future performance and reflect the Company’s expectations regarding the generation of free cash flow, achievement of guidance, execution of business strategy, future growth, future production, estimated costs, results of operations, business prospects and opportunities of OceanaGold Corporation and its related subsidiaries. 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 are subject to a variety of risks and uncertainties which could cause actual events or results to differ materially from those expressed in the forward-looking statements and information. They include, among others, the outbreak of an infectious disease, 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 forward-looking statements and information. Such forward-looking statements and information 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. Although the Company believes that any forward-looking statements and information contained in this press release is based on reasonable assumptions, readers cannot be assured that actual outcomes or results will be consistent with such statements. Accordingly, readers should not place undue reliance on forward-looking statements and information. The Company expressly disclaims any intention or obligation to update or revise any forward-looking statements and information, whether as a result of new information, events or otherwise, except as required by applicable securities laws. The information contained in this release is not investment or financial product advice.
SOURCE OceanaGold Corporation
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