OceanaGold ((OGC)) endured softer production in the March quarter but brokers remain upbeat about the outlook. 2018 guidance for 480-530,000 ozs of gold, 15-16,000t copper and all-in cash costs of US$725-775/oz are maintained.
OceanaGold (OGC) has fulfilled hopes that Didipio will provide the cornerstone to value creation going forward. The mine in the Philippines was the star performer in the September quarter, delivering stronger production in the face of a weaker outcome in the other assets in New Zealand. The production increase at Didipio occurred as stage 3 of the open pit accessed higher grade ore and lifted mill grades, supported by higher throughput. Further improvements are expected in the December quarter and management expects full year guidance will be exceeded.
OceanaGold’s (OGC) core mining operations are centred in New Zealand, but the company’s exciting prospect for expansion comes in the form of its Didipio project in the Philippines. OGC has recently been revising its mine plan for Didipio, and brokers are enthusiastic about the changes.
Following an absence of a few years, RBS Australia has re-initated coverage on OceanaGold (OGC) with a Buy rating. The view reflects a number of positives associated with the stock, including strong cash flows and growth options.
UBS found the cost performance in the June quarter worse than forecast, with all-in sustainable costs up 27%. Some of this was from heavy pre-stripping, so there will be a benefit in the future from greater access to ore and lower stripping costs.
The Didipio operation in the Philippines appears to be at risk of disruption as a contingent of locals are blockading access roads and prohibiting supply trucks reaching the mine. Light vehicles, personnel and food supply continue to access the site unimpeded.
Despite the weakness at Haile the company achieved upgraded production guidance in the December quarter. 2019/20 earnings estimates are reduced on the implications of the grade depletion over 2018, ahead of further guidance and details in the February results.