/NOT FOR DISSEMINATION OR DISTRIBUTION IN
THE UNITED STATES AND NOT FOR
DISTRIBUTION TO US NEWSWIRE SERVICES./
(All financial figures in US Dollars unless
otherwise stated)
MELBOURNE, July 25, 2019 /CNW/ - OceanaGold Corporation
(TSX: OGC) (ASX: OGC) (the "Company") reported its
second quarter 2019 financial and operational results for the
quarter ended June 30, 2019. 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
Key Highlights
- Fully diluted per share adjusted earnings of $0.03 and adjusted cash flow before working
capital movement per share of $0.11.
- Significant improvement of the Haile operations with
quarter-on-quarter production increase of 45%, unit cash cost
decrease of 39% and AISC decrease of 23%; despite accelerated
pre-stripping activities.
- Development of Martha Underground commenced including raise
bore between drill drives.
- First half of 2019 consolidated production of 254,972 ounces of
gold and 7,871 tonnes of copper including second quarter production
of 129,290 ounces of gold and 3,961 tonnes of copper.
- First half 2019 consolidated All-In Sustaining Costs ("AISC")
of $1,073 per ounce on sales of
246,753 ounces of gold and 6,921 tonnes of copper.
- Second quarter consolidated AISC of $1,118 per ounce on sales of 125,609 ounces gold
and 3,597 tonnes copper.
- First half revenue of $365.5
million with Earnings before Interest, Depreciation and
Amortisation ("EBITDA") of $135.1
million and a net profit of $27.7
million.
- Second quarter revenue of $186.0
million with EBITDA of $70.7
million and a net profit of $15.3
million.
- Cash balance of $84.7 million
with total immediately available liquidity of $134.7 million
Mick Wilkes, President and CEO
said, "We are very pleased with the performance of our operations
in the second quarter, particularly at Haile where we had a
significant improvement from the previous quarter with production
higher 45%, total material mined increasing 45% and unit cash costs
decreasing 39%. To capitalise on improved weather conditions, we
have accelerated pre-stripping activities at the Red Hill pit,
which is now into ore mining, approximately one quarter ahead of
schedule. We have also brought forward pre-stripping of other
areas."
"Production at Didipio was broadly in line with the comparative
quarters and Waihi recorded higher production in the second quarter
which was partially offset by lower production from Macraes where
the operation focused on extensive pre-stripping ahead of ore
mining in the second half."
"Organic growth continues to be a major catalyst for the Company
and our growth projects are advancing well. I'm very pleased to
announce the start of development of the Martha Underground, which
will ramp-up over the course of the year. Exploration drilling
across our operational footprint continues to yield solid results
particularly at Waihi and WKP, which further increases our
confidence in delivering significant resource growth."
"In the Philippines, we
continue to work constructively with regulatory stakeholders on the
FTAA renewal process which is ongoing. We will continue to follow
due legal process, and put employee safety and community welfare
first, in seeking to secure an injunction against local orders
issued by the Provincial Governor seeking to restrain operations at
Didipio. We remain confident in the legal basis of our
position."
Table 1 – Production and Cost Results
Summary
Quarter ended 30 Jun
2019
|
Haile
|
Didipio
|
Waihi
|
Macraes
|
Consolidated
|
Q2 2019
|
Q1 2019
|
Gold
Produced
|
koz
|
37.2
|
33.1
|
21.2
|
37.8
|
129.3
|
125.7
|
Gold Sales
|
koz
|
34.0
|
31.7
|
20.2
|
39.7
|
125.6
|
121.1
|
Average Gold
Price
|
US$/oz
|
1,317
|
1,400
|
1,316
|
1,310
|
1,331
|
1,308
|
Copper
Produced
|
kt
|
-
|
4.0
|
-
|
-
|
4.0
|
3.9
|
Copper
Sales
|
kt
|
-
|
3.6
|
-
|
-
|
3.6
|
3.3
|
Average Copper
Price
|
US$/lb
|
-
|
2.60
|
-
|
-
|
2.60
|
3.12
|
|
|
|
|
|
|
|
|
Total Ore
Mined
|
kt
|
617
|
747
|
123
|
1,349
|
2,836
|
3,081
|
Tonnes
Processed
|
kt
|
757
|
1,022
|
126
|
1,526
|
3,431
|
3,306
|
Gold Grade
Processed
|
g/t
|
1.91
|
1.14
|
5.99
|
0.93
|
1.40
|
1.41
|
Gold
Recovery
|
%
|
79.4
|
87.9
|
86.9
|
82.8
|
83.8
|
83.7
|
|
|
|
|
|
|
|
|
Cash Costs
|
US$/oz
|
710
|
552
|
648
|
786
|
684
|
688
|
All-In Sustaining
Costs
|
US$/oz
|
1,379
|
733
|
815
|
1,356
|
1,118
|
1,026
|
Table 1 – Production and Cost Results
Summary
Year to date 30 Jun
2019
|
Haile
|
Didipio
|
Waihi
|
Macraes
|
Consolidated
|
YTD 2019
|
YTD 2018
|
Gold
Produced
|
koz
|
62.9
|
66.7
|
36.3
|
89.1
|
255.0
|
268.6
|
Gold Sales
|
koz
|
58.8
|
60.8
|
35.3
|
91.9
|
246.8
|
266.4
|
Average Gold
Price
|
US$/oz
|
1,310
|
1,364
|
1,309
|
1,307
|
1,320
|
1,315
|
Copper
Produced
|
kt
|
-
|
7.9
|
-
|
-
|
7.9
|
7.8
|
Copper
Sales
|
kt
|
-
|
6.9
|
-
|
-
|
6.9
|
7.2
|
Average Copper
Price
|
US$/lb
|
-
|
2.85
|
-
|
-
|
2.85
|
3.06
|
|
|
|
|
|
|
|
|
Total Ore
Mined
|
Kt
|
1,183
|
1,082
|
218
|
3,435
|
5,917
|
4,889
|
Tonnes
processed
|
Kt
|
1,506
|
2,029
|
221
|
2,981
|
6,738
|
6,126
|
Gold grade
processed
|
g/t
|
1.65
|
1.16
|
5.88
|
1.12
|
1.40
|
1.58
|
Recovery
|
%
|
77.8
|
88.1
|
86.6
|
83.3
|
83.6
|
86.5
|
|
|
|
|
|
|
|
|
Cash Costs
|
US$/oz
|
902
|
476
|
698
|
682
|
686
|
445
|
All-In Sustaining
Costs
|
US$/oz
|
1,551
|
687
|
889
|
1,092
|
1,073
|
744
|
Table 2 – Financial Summary
Quarter ended 30 Jun
2019
(US$m)
|
Q2
30 Jun
2019
|
Q1
(4)
31 Mar
2019
|
Q2
30 Jun
2018
|
YTD
Jun 30
2019
|
YTD
Jun 30
2018
|
Revenue
|
186.0
|
179.5
|
205.7
|
365.5
|
402.4
|
Cost of sales,
excluding depreciation and amortization
|
(99.7)
|
(101.0)
|
(83.3)
|
(200.7)
|
(168.0)
|
General and
administration – other
|
(11.9)
|
(11.6)
|
(12.7)
|
(23.5)
|
(22.9)
|
General and
administration – indirect
taxes (2)
|
(4.5)
|
(2.8)
|
(2.8)
|
(7.3)
|
(4.9)
|
Foreign currency
exchange gain/(loss)
|
0.2
|
(0.2)
|
1.3
|
0.0
|
1.9
|
Other
income/(expense)
|
0.6
|
0.5
|
1.5
|
1.1
|
2.1
|
EBITDA (excluding
gain/(loss) on undesignated hedges
and impairment charge)
|
70.7
|
64.4
|
109.7
|
135.1
|
210.6
|
Depreciation and
amortization
|
(41.7)
|
(40.4)
|
(47.7)
|
(82.1)
|
(99.1)
|
Net interest expense
and finance costs
|
(3.5)
|
(3.6)
|
(3.6)
|
(7.1)
|
(7.3)
|
Earnings before
income tax (excluding gain/(loss) on
undesignated hedges and impairment charge)
|
25.5
|
20.4
|
58.4
|
45.9
|
104.2
|
Income tax expense on
earnings
|
(3.4)
|
(4.4)
|
(10.7)
|
(7.8)
|
(17.9)
|
Earnings after
income tax and before gain/(loss) on
undesignated hedges and impairment charge
|
22.1
|
16.0
|
47.7
|
38.1
|
86.3
|
Write off deferred
exploration expenditure / investment
(3)
|
-
|
(4.6)
|
(2.9)
|
(4.6)
|
(2.9)
|
Gain/(loss) on fair
value of undesignated hedges
|
(9.5)
|
1.4
|
0.0
|
(8.1)
|
6.0
|
Tax (expense) /
benefit on gain/loss on undesignated hedges
|
2.7
|
(0.4)
|
(0.1)
|
2.3
|
(0.1)
|
Share of loss from
equity accounted associates
|
-
|
(0.0)
|
(0.1)
|
-
|
(0.2)
|
Net
Profit
|
15.3
|
12.4
|
44.6
|
27.7
|
89.1
|
|
|
(1)
|
The Company's
consolidated financial results for YTD June 30, 2018 reflected
adjustments on IFRS 15 adoption from January 1,
2018.
|
(2)
|
Represents
indirect taxes in the Philippines specifically excise tax (expensed
as from April 1, 2018), local business and property taxes. This
value is included in the Company's AISC calculation as from January
1, 2019 in accordance with the World Gold Council's updated
methodology.
|
(3)
|
Deferred
exploration related costs for the La Curva and Claudia projects
were written off due to termination of agreement with Mirasol
Resources Ltd
|
(4)
|
The Company's
consolidated financial results for the quarter ended March 31, 2019
reflected adjustments on IFRS 16 adoption from January 1,
2019.
|
Table 3 – Cash Flow Summary
Quarter ended 30 Jun
2019
(US$m)
|
Q2
30 Jun
2019
|
Q1
31 Mar
2019
|
Q2
30 Jun
2018
|
YTD
Jun 30
2019
|
YTD
Jun 30
2018
|
Cash flows from
Operating Activities
|
86.2
|
39.0
|
109.0
|
125.2
|
186.1
|
Cash flows used in
Investing Activities
|
(76.1)
|
(57.9)
|
(60.0)
|
(134.0)
|
(119.1)
|
Cash flows used in
Financing Activities
|
(10.1)
|
(2.6)
|
(8.3)
|
(12.7)
|
(12.7)
|
Operations
In the first half of the year, the Company produced 254,972
ounces of gold and 7,871 tonnes of copper including 129,290 ounces
of gold and 3,961 tonnes of copper in the second quarter. Gold
production in the first half of 2019 was slightly lower than over
the same period in 2018 due to the challenging mining conditions
impacting first quarter production at Haile. Quarter-on-quarter
gold production increased slightly with stronger production at
Haile and Waihi partially offsetting expected lower production from
Macraes.
Consolidated cash costs in the first half of the year were
$686 per ounces on sales of 246,753
ounces of gold while second quarter cash costs were $684 per ounce on sales of 125,609 ounces of
gold. Quarter-on-quarter cash costs were similar with significantly
lower costs at Haile being offset by higher costs at Didipio and
Macraes. All-In Sustaining Costs ("AISC") in the first half of the
year was $1,073 per ounce sold while
second quarter AISC was $1,118 per
ounce sold, an increase on the previous quarter on higher
pre-stripping investments at Haile and Macraes. The increase in
pre-stripping was partially offset by higher quarter-on-quarter
sales.
At Haile, the operation delivered a significant improvement on
the previous quarter with 37,182 ounces of gold produced, a 45%
increase on the previous quarter at cash costs of $710 per ounce sold. Cash costs were 39% lower
than the previous quarter's cash cost of $1,164 per ounce sold, contributing to a 23%
decrease in AISC quarter-on-quarter. Total mining movements
increased 45% from the previous quarter as a result of better
equipment productivity.
Favourable, dry weather conditions at Haile in the second
quarter facilitated accelerated pre-stripping activities. This
resulted in fast-tracking the Red Hill pit, the third pit in
sequence whereby ore mining commenced three months ahead of
schedule. As at the end of the second quarter, 75% of the planned
pre-stripping activities for the year were complete.
Processing at Haile saw higher mill feed despite the early
quarter plant shutdown to tie-in the upgraded regrinding circuit.
Mill feed grades improved by 37% quarter-on-quarter and recoveries
increased to nearly 80%. Commissioning of the regrinding circuit
continues as the operation seeks to maintain steady-state grind
sizes and recoveries. The Company expects to mill between 3.2 and
3.3 million tonnes of ore in 2019 and achieve throughput rates
greater than 3.5 million tonnes per annum before year-end and ahead
of schedule.
In late June, the Provincial Governor of Nueva Vizcaya issued an order directing his
local government units to 'restrain any operations' of the Company
("NV Order"). On July 1, 2019, a
local government unit prevented a large supply truck from accessing
the mine site and the Company decided to halt all truck movements
to prevent the potential for escalation.
On July 3, 2019, OceanaGold filed
a petition in the Regional Trial Court of Nueva Vizcaya seeking that the Court (a) declare
as null and void the NV Order, (b) prohibit and restrain the
Provincial Government of Nueva
Vizcaya and other local government units from performing any
act that may prevent the Company from conducting its mining
operations at Didipio; and (c) by way of an interim relief, issue
an injunction against the Provincial Government of Nueva Vizcaya
and local government units from interfering with the Didipio
operations.
The hearing took place on July 12,
2019, and the Company is currently awaiting a decision from
the Court. Subsequently, Didipio's underground mining has been
suspended due to the depletion of consumable mining supplies, while
other underground activities including pumping continue for safety
and environmental reasons. Processing of ore from stockpiles and
metal production is also continuing. The Company will provide
ongoing updates on the progress of this matter.
Financial
In the first half of 2019, the Company generated $365.5 million in revenue including $186.0 million in the second quarter. Revenue in
the first half decreased over the same period in 2018 due mainly to
lower sales. Quarter-on-quarter revenue increased on increased
sales. The EBITDA for the first half of the year was $135.1 million while second quarter EBITDA was
$70.7 million. The quarter-on-quarter
EBITDA growth of 9.8% was as a result of higher revenue and lower
costs.
Net profit before unrealised losses on undesignated hedges was
$22.1 million or $0.03 per share on a fully diluted basis. This
compares to analyst consensus of $0.02 per share.
Operating cash flows in the first half of the year were
$125.2 million while second quarter
operating cash flows were $86.2
million, a 121% increase on the previous quarter. The
quarter-on-quarter increase is a result of a higher EBITDA combined
with favourable working capital movements. Cash flows used in
investing activities increased on the previous quarter due mainly
to higher pre-stripping investments at Haile and Macraes. Fully
diluted cash flow per share before working capital was $0.11 for the quarter, which exceeds analyst
consensus of $0.10 per share.
As at the end of June 2019, the
Company's cash balance stood at $84.7
million, excluding approximately $44.3 million held in strategic equity
investments. Total liquidity was $134.7
million while net debt was $108.4
million.
Growth
At Waihi, the Company commenced development of the Martha
Underground with construction of a raise bore ventilation to
connect the two underground drill drives. The raise bore supports
commencement of horizontal development. Over the course of the next
twelve months, the Company will complete an all-encompassing
pre-feasibility study for the Waihi operation that would include
while continuing its resource drilling and mine plans for the
Martha Underground.
At Haile, the Company connected the upgraded regrinding circuit
to the process plant and continued commissioning the
IsaMillTM. With the upgraded regrinding circuit in
place, the operation has achieved higher throughput rates and with
further refinements to the IsaMillTM, the Company
expects to achieve higher recoveries more consistently. Permitting
of the larger open pits and the Horseshoe underground at Haile
continues to progress well, and the Company expects receipt of
these permits by the end of 2019 or early 2020.
At Macraes, the Company has previously stated that through
exploration and mine planning, it is seeking to extend the mine
life. One of these opportunities is at Golden Point, where the
Company is investigating the potential for a standalone underground
operation.
The Company will also host a conference call / webcast to
discuss the results at 7:30 am on Friday
July 26, 2019 (Melbourne,
Australian Eastern Standard Time) / 5:30 pm on Thursday July 25, 2019 (Toronto, Eastern Daylight Time).
Webcast Participants
To register, please copy and paste the link below into your
browser:
https://event.on24.com/wcc/r/2029539/533F01B25D56FBBB928D1DD5B1637A17
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
United Kingdom: 0 800 652
2435
Switzerland: 0 800 312 635
All other countries (toll): + 1 416 764 8688
Playback of Webcast
A recording will be available for viewing on the Company's
website following the webcast.
About OceanaGold
OceanaGold Corporation is a mid-tier, high-margin, multinational
gold producer with assets located in the
Philippines, New Zealand
and the United States. The
Company's assets encompass 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 while on the South Island of
New Zealand, the Company 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. In the United
States, the Company operates the Haile Gold Mine, a
top-tier, long-life, high-margin asset located in South Carolina. OceanaGold also has a
significant pipeline of organic growth and exploration
opportunities in the Americas and Asia-Pacific regions.
OceanaGold has operated sustainably since 1990 with a proven
track-record for environmental management and community and social
engagement. The Company has a strong social license to operate and
works collaboratively with its valued stakeholders to identify and
invest in social programs that are designed to build capacity and
not dependency.
In 2019, the Company expects to produce between 500,000 to
550,000 ounces of gold and 14,000 to 15,000 tonnes of copper at
All-In Sustaining Costs ranging between $850 and $900 per
ounce sold.
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, 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 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.
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