Release Date: July 31, 2024
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
Positive Points
- OceanaGold Corp (OCANF, Financial) achieved free cash flow positivity in the quarter, aided by the sale of the noncore Blackwater asset.
- The company successfully completed the initial public offering of OceanaGold Philippines, listing it on the Philippines Stock Exchange, which contributed to a net cash position.
- Production is expected to be strongly back half weighted, with improvements anticipated at Didipio and Waihi, aligning with the company's 2024 consolidated guidance.
- The company declared a $0.01 per share semi-annual dividend and introduced a share buyback program, reflecting a commitment to returning capital to shareholders.
- OceanaGold Corp (OCANF) reported record average realized gold prices, contributing to $251 million in revenue for the second quarter.
Negative Points
- The company experienced a fatality at the Didipio mine, marking its first since 2016, which led to a temporary suspension of operations.
- Production was weaker than expected at both Didipio and Waihi, impacting the first half performance and resulting in higher all-in sustaining costs.
- The Didipio mine faced operational challenges, including unplanned maintenance shutdowns and lower grade mining, affecting overall production.
- Geotechnical issues at Waihi led to mining stopes out of sequence, impacting production and necessitating external consultation for solutions.
- The company had to redesign and resequence mining plans at Didipio due to challenging ground conditions, which may slow down the mining cycle and affect short-term productivity.
Q & A Highlights
Q: At Didipio, can you clarify the stoping redesign? Have ground conditions changed, and does this affect future underground ramp-up plans?
A: Peter Sharpe, Executive Vice President, Chief Operating Officer Asia-Pacific, explained that there haven't been changes in ground conditions, but the breccia stopes have challenging conditions. The redesign involves smaller stopes to improve recovery and reduce dilution. This will slow the mining cycle but is beneficial long-term. The PFS work incorporates these changes.
Q: Regarding the harder ore at Haile, was it from the Ledbetter pit, and will higher grades offset lower throughput in the second half?
A: David Londono, Executive Vice President, Chief Operating Officer Americas, confirmed the harder ore is from Ledbetter 2. Higher grades are expected to offset lower throughput. They are optimizing blast patterns and blends to maintain throughput.
Q: Given operational challenges, is the cost guidance still achievable with the required cost decline in the second half?
A: Gerard Bond, President and CEO, affirmed that the second half will be stronger, with a step-up in Q3 and Q4. The fixed cost structure will benefit from higher grades and volumes, allowing them to meet cost guidance.
Q: With Didipio and Waihi underperforming, is it realistic to target the lower end of production guidance and the higher end of cost guidance?
A: Gerard Bond stated they are targeting to achieve the guidance, not the lower end. The larger sites, Macraes and Haile, are expected to perform strongly, supporting overall guidance achievement.
Q: For Didipio, will higher-grade breccia stopes be accessed in Q3 or spill over into Q4?
A: Peter Sharpe noted that breccia stopes are being accessed, but smaller stopes mean slower productivity. The redesign will extend mining over a longer period, but higher recovery is expected.
Q: Regarding Haile's underground production, is the 2,000 tonnes per day rate sustainable into Q3 and Q4?
A: David Londono confirmed that they expect to maintain an average of 2,000 tonnes per day for the remainder of the year, with two stopes active and a third in process.
Q: How will smaller stopes at Didipio impact mining costs over the next few years?
A: Peter Sharpe indicated that while smaller stopes may have some cost implications, they will be absorbed as the mining rate increases. The overall mining unit rate is expected to decrease over time.
Q: With new equipment at Didipio, is there any sizing issue with smaller stopes?
A: Peter Sharpe confirmed that the equipment is appropriately sized for the redesigned stopes, with no impact on operations.
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
