OceanaGold Corp. (TSX:OGC), the gold and copper miner headquartered in Melbourne, Australia, announced Monday its unaudited preliminary results on production and costs for the last quarter of 2016 and full-year 2016, as reported by Junior Mining Network.
The company also provided the market with guidance for 2017.
The company will release definitive data on gold production and costs together with the financial data for the last quarter of 2016 and full-year 2016 with the report of Feb. 23.
In 2016, the Canadian miner produced 416,741 ounces of gold in line with what the company expected to produce from its mines at all-in sustaining costs (AISC) of $708 and at a cash cost of $452. Both cost figures have been calculated based on one ounce of gold sold. The company’s guidance ranged between 385,000 ounces and 425,000 ounces of gold.
2016 AISC were in line with the guidance while cash costs were a little bit lower than expected.
Concerning the production of copper, the company slightly exceeded the upper limit of its guidance of 21,000 tonnes and produced approximately 21,123 tonnes.
From Didipio Mine, the gold-copper deposit in the Philippines, the company produced 147,150 ounces of gold and 21,123 tonnes of copper. At Didipio Mine the company maintained AISC of $239 per ounce.
From Waihi mine in New Zealand, where the production mainly comes from the Correnso Underground mine, OceanaGold produced 116,028 ounces of gold at AISC of $735.
From Macraes, the company’s biggest gold-producing mine in New Zealand, and Reefton mine, also located in New Zealand, OceanaGold produced between 153,563 ounces of gold at an AISC of $1,099 per ounce.
During the fourth quarter of 2016, OceanaGold produced more gold compared to the prior quarter: 102,428 ounces of gold versus approximately 89,068 ounces of gold produced in the third quarter of 2016. The company says that increased production was reported at each mine.
Concerning the development of its gold projects and exploration activities at Haile, Waihi and Didipio mines seeking for further deposit expansion, these are proceeding as scheduled and for 2017 the company says that it “has increased the exploration budget to between $30 million and $41 million.” Of the latter, a percentage of approximately 70% will be included in the calculation of the AISC per ounce of gold sold for 2017 because it is related to near-mine exploration activities.
Last Jan. 20, OceanaGold announced the production of the first 445 ounces of gold in doré bars at Haile Gold Mine and the “development of the Didipio Underground continues to progress to schedule” so that “first underground ore feed to the mill remains on track for the end of 2017 as planned,” the company says.
The commencement of commercial production at Haile Gold Mine plus higher ore grades expected by the company to be processed from the Coronation North deposit at Macraes, have enabled OceanaGold to increase expectations on production and costs for 2017.
The miner expects to produce between 550,000 ounces and 610,000 ounces of gold, approximately a 43.2% increase from 2016 guidance on production, at an AISC of between $600 and $650 per ounce of gold sold, which represents a 13.8% decrease from 2016 guidance on costs. These figures are computed on a consolidated basis.
In 2017, the company plans to allocate funds of between $211 million and $252 million as capex, of which approximately 46.2% is used to upgrade Didipio, Haile and Waihi mines and therefore it is not included in the calculation of the AISC per ounce of gold sold.
An amount ranging between $110 million and $139 million, of which a percentage of approximately 91.6% will be included in the AISC, instead will be used for capitalized mining and preparatory activities for ore mining from open mines at Waihi, Macraes and Haile, for general maintenance of the sites and partly for exploration activities. An amount of between approximately $10 million and $11 million will be used for greenfield exploration activities and not included in the AISC per ounce of gold sold in 2017.
At the moment, OceanaGold is trading at $4.31 Canadian per share on the Toronto Stock Exchange, down 2 cents from the previous trading day.
OceanaGold has a market capitalization of $2.63 billion Canadian ($1.99 billion) and an enterprise value of $2.84 billion Canadian. The number of shares outstanding is 611.02 million, of which 608.15 million is float.
The top institutional holder of the company is Tocqueville Asset Management with 20,735,224 shares as of Sept. 30, 2016.
The company is trading at 1.94 times the book value and 10.39 times the EBITDA. As of today, analysts recommend buying shares of OceanaGold with a recommendation rating of 1.7.
The analysts’ average target price is $4.13 Canadian and ranges between a low target price of $2.87 and a high target price of $4.97.
The company had $88.07 million Canadian in cash on hand and $298.27 million in total debt as of the most recent quarter. Over the 12 trailing months period, the gold producer generated cash flow of $214.75 million from operations.
The price-earnings (P/E) ratio (TTM) is 22.93 and the EPS (TTM) is 19 cents.
Disclosure: I have no positions in any stock mentioned in this article.
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