Oceanagold Reports Second Quarter 2020 Financial Results
MEDIA RELEASE
30 July 2020
OCEANAGOLD REPORTS SECOND QUARTER 2020 FINANCIAL RESULTS
(All financial figures in US Dollars unless otherwise stated)
(MELBOURNE) OceanaGold Corporation (TSX: OGC) (ASX: OGC) (the “Company”) reported its financial and
operational results for the quarter ended June 30, 2020. 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
• Total Recordable Injury Frequency Rate (“TRIFR”) of 2.7 per million hours worked compared to 3.0
per million hours worked at the end of the first quarter of 2020.
• First half of 2020 consolidated production of 139,385 ounces of gold at All-In Sustaining Costs (“AISC”)
of $1,237 per ounce on sales of 153,343 ounces of gold.
• Consolidated second quarter gold production of 58,678 ounces at AISC of $1,265 per ounce on sales
of 61,955 ounces of gold.
• First half revenue of $234.0 million with Earnings before Interest, Depreciation and Amortisation
(“EBITDA”) of $54.8 million.
• Second quarter revenue of $95.8 million with EBITDA of $12.4 million.
• Cash balance and total immediately available liquidity of $147.7 million; net debt of $169.6 million.
• Subsequent to quarter -end, the Company delivered the Waihi District Study Preliminary Economic
Assessment (“PEA”) with after -tax IRR of 51%, net present value (“NPV”) of $665 mi llion and 2.2
million gold ounces produced over 16 years.1
• Advanced Martha Underground development with 1,342 metres completed in the second quarter and
2,855 metres year-to-date (“YTD”).
• Revised 2020 production guidance from 360,000 to 380,000 to 340,000 to 360,000 ounces. On a gold
sold basis AISC is reduced from $1,075 to $1,125 to $1,050 to $1,100 per ounce sold.
• Guidance reduction due to lower Macraes production primarily related to the impact of the 5-week
New Zealand COVID-19 restrictions which were lifted on April 27.
1 The PEA is a preliminary technical and economic study of the potential viability for the Waihi District project. The production target and
financial forecast referred to in the PEA are comprised of 51% Indicated Mineral Resources and 49% Inferred Mineral Resources. Inferred
Mineral Resources are considered too geologically speculative to have economic considerations applied to them in order to be categorized
as Mineral Reserves. There is no certainty that further drilling will convert Inferred Resources to Indicated Mineral Resources or that the
PEA will be realised. Further drilling, evaluation and studies are required to provide any assurance of an economic developme nt case.
Mineral resources that are not mineral reserves do not have a demonstrated economic viability.
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Michael Holmes , President and CEO of OceanaGold said, “ We look forward to the second half where we
continue to expect a material increase in production at both Haile and Macraes at lower AISC plus continued
advancement of our key organic growth projects including those recently outlined in the Waihi District Study.
The second quarter was expected to be our weakest in terms of production, but the results also demonstrate
the impact the global COVID-19 pandemic has had on our business. We have worked hard to safeguard the
health and safety of our employees through the implementation of rigorous protocols including health
screening, physical distancing and disinfecting throughout our operations. These protocols include the
mandatory self -isolation of those exhibiting COVID -like symptoms , plus anyone with exposure to those
exhibiting symptoms. This resulted in approximately 170 workers at Haile having to self-isolate at some point
since the beginning of March. Despite this, Haile continues to increase mining rates at reduced unit costs.”
“In New Zealand, the Government mandated lock-down extended to five weeks during which time operations
at Macraes included only limited processing with all mining suspended. This resulted in weaker than expected
production for the quarter. Although the operation has recovered well, delivering near record mining rates in
the month of May, the resulting shortfall in mining progress will impact the planned access to higher grades
later in the year. As a result of this timing change, combined with the impact of the second quarter restrictions,
the full -year guidance for the operation will be impacted and we are now expecting Macraes to produce
between 140,000 and 150,000 ounces of gold at correspondingly higher cash cost and AISC.”
“Progressing our organic growth projects is a key deliverable this year. We completed 2,855 metres of
development at Martha Underground in the first half, and first gold production remains on-track for the second
quarter of 2021. We were pleased to release the strong results from the Preliminary Economic Assessmenti of
the Waihi District subsequent to quarter end. The study highlighted the district’s potential, including production
of 2.2 million gold ounces over 16 years of additional mine life at sub-$650 AISC per ounce sold. At Macraes,
we expect to release results of the Golden Point Underground in the second half of the year.”
“Given the year-to-date impact at Macraes we are revising our consolidated full year 2020 production guidance
to 340,000 and 360,000 ounces of gold (excluding Didipio). Lower operating costs and sustaining capital are
expected to offset the production revision with consolidated AISC revised downward slightly to $1,050
to $1,100 per ounce sold. Consolidated cash costs remain unchanged at $675 to $725 per ounce sold. Haile’s
gold production remains unchanged and w e continue to expect increased production at lower A ISC in the
second half from both Haile and Macraes with the fourth quarter expected to be the strongest quarter of the
year.”
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Table 1 – Production and Cost Results Summary
Quarter ended 30 Jun 2020 Haile Didipio Waihi Macraes
Consolidated
Q2 2020 Q1 2020
Gold Produced koz 30.7 - - 27.9 58.7 80.7
Gold Sales koz 31.7 - - 30.2 61.9 91.4
Average Gold Price US$/oz 1,712 - - 1,729 1,523 (1) 1,509(1)
Copper Produced kt - - - - - -
Copper Sales kt - - - - - -
Average Copper
Price US$/lb - - - - - -
Material Mined kt 10,155 - 3.8 10,495 20,654 21,185
Waste Mined Kt 9,416 - 0.7 9,218 18,635 18,839
Ore Mined Kt 738 - 3.1 1,277 2,019 2,346
Mill Feed Kt 934 - - 1,247 2,181 2,264
Mill Feed Grade g/t 1.33 - - 0.88 1.07 1.37
Gold Recovery % 77.1 - - 79.2 78.3 80.9
Cash Costs US$/oz 994 - - 896 946 802
Site AISC(2) US$/oz 1,410 - - 965 1,265 1,218
Year to date 30 Jun 2020 Haile Didipio Waihi Macraes
Consolidated
YTD 2020 YTD 2019
Gold Produced koz 60.1 - 12.2 67.1 139.4 255.0
Gold Sales koz 65.0 6.8 13.5 68.0 153.3 246.8
Average Gold Price US$/oz 1,645 1,652 1,572 1,654 1,515 (1) 1,320
Copper Produced kt - - - - - 7.9
Copper Sales kt - - - - - 6.9
Average Copper
Price US$/lb - - - - - 2.85
Material Mined kt 18,757 - 57 23,028 41,842 37,618
Waste Mined kt 17,357 - 1 20,117 37,475 31,701
Ore Mined kt 1,399 - 56 2,911 4,366 5,917
Mill Feed kt 1,803 - 57 2,585 4,446 6,738
Mill Feed Grade g/t 1.34 - 7.21 1.00 1.22 1.40
Gold Recovery % 77.2 - 87.9 80.4 79.2 83.6
Cash Costs US$/oz 1,073 443 432 784 860 686
Site AISC(2) US$/oz 1,482 444 376 1,106 1,237 1,073
(1) Realised gains and losses on gold hedging are included in the consolidated average gold price.
(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.
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Table 2 – Financial Summary
(1) The Company did not record any revenue or cost of sales from the Didipio mine during the second half of 2019. In addition, General and Administration - other,
includes non-production costs related to maintaining Didipio’s operational readiness of $7.9 million in the second quarter of 2020 compare d to $8.4 million in
the first quarter of 2020.
(2) Represents production based taxes in the Philippines specifically excise tax, local business and property taxes.
(3) Impairment expense in relation to land at Haile of $4.1 million and write-off of deferred exploration related costs/investment in Locrian Resources Inc.
Table 3 – Cash Flow Summary
Operations
In the first half of the year, the Company produced 139,385 ounces of gold, including 58,678 ounces of gold
in the second quarter. Gold production in the first half of 2020 was 45% lower than the same period in 2019
primarily due to the temporary suspension of operations at Didipio. Quarter-on-quarter gold production
decreased 27% with the completion of mining at the Correnso orebody at Waihi in the first quarter and lower
than planned production at Macraes due mainly to COVID-19 restrictions in place during the second quarter.
Increasing consolidated AISC of $1,237 per ounce sold YTD and $1,265 per ounce sold in the second quarter
reflected the lower sales. Cash costs for the first half of the year were $860 per ounce while second quarter
cash costs were $946 per ounce, higher than the previous quarter and prior year due to mine sequencing and
corresponding lower grades, partially offset by lower total operating costs.
During the second quarter, restrictions related to the COVID-19 pandemic impacted operations in New Zealand
and Haile. In New Zealand, the government imposed a mandatory five-week shutdown at the end of March
that restricted non-essential business operations, including gold mining. As a result, development of the Martha
Quarter ended 30 Jun 2020
(US$m)
Q2
30 Jun 2020
Q1
31 Mar 2020
Q2
30 Jun 2019
YTD
30 Jun 2020
YTD
30 Jun 2019
Revenue 95.8 138.2 186.0 234.0 365.5
Cost of sales, excluding depreciation and amortization (61.8) (74.0) (99.7) (135.8) (200.7)
General and administration – other(1) (20.6) (19.4) (11.9) (40.0) (23.5)
General and administration – indirect taxes (2) (0.9) (1.2) (4.5) (2.1) (7.3)
Foreign currency exchange gain/(loss) (4.3) (1.3) 0.2 (5.5) 0.0
Other income/(expense) 4.1 0.1 0.6 4.2 1.1
EBITDA (excluding gain/(loss) on undesignated hedges
and impairment charge) 12.4 42.4 70.7 54.8 135.1
Depreciation and amortization (39.4) (50.1) (41.7) (89.5) (82.1)
Net interest expense and finance costs (3.1) (2.8) (3.5) (5.9) (7.1)
Earnings/(loss) before income tax (excluding gain/(loss)
on undesignated hedges and impairment charge) (30.1) (10.5) 25.5 (40.6) 45.9
Income tax (expense)/ benefit on earnings (1.5) (0.2) (3.4) (1.7) (7.8)
Earnings/(loss) after income tax and before gain/(loss) on
undesignated hedges and impairment charge (31.5) (10.7) 22.1 (42.3) 38.1
Write off exploration/property expenditure / investment (3) (6.8) - - (6.8) (4.6)
Gain/(loss) on fair value of undesignated hedges 9.6 (21.2) (9.5) (11.6) (8.1)
Tax (expense) / benefit on gain/loss on undesignated hedges (2.7) 5.9 2.7 3.3 2.3
Net Profit/(loss) (31.4) (26.0) 15.3 (57.4) 27.7
Basic earnings/(loss) per share $(0.05) $(0.04) $0.02 $(0.09) $0.04
Diluted earnings/(loss) per share $(0.05) $(0.04) $0.02 $(0.09) $0.04
Quarter ended 30 Jun 2020
(US$m)
Q2
30 Jun 2020
Q1
31 Mar 2020
Q2
30 Jun 2019
YTD
30 Jun 2020
YTD
30 Jun 2019
Cash flows from Operating Activities 16.7 120.6 86.2 137.3 125.2
Cash flows used in Investing Activities (50.9) (33.8) (71.6) (84.7) (134.0)
Cash flows from / (used) in Financing Activities 3.5 44.8 (10.1) 48.3 (12.7)
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Underground at Waihi was temporarily suspended then resumed after lifting of the restrictions on April 27.
2,855 metres of underground development ha ve been completed year to date, including 1,342 metres in the
second quarter despite the development hiatus. Martha Underground remains on -track for first production in
the second quarter of 2021.
At Macraes, mining was suspended and processing was restricted to remaining broken stocks and low-grade
stockpiles during the five week COVID-19 lockdown. This, combined with an inability to effectively assay feed
stocks during the suspension, resulted in lower than expected recoveries and production in the second quarter.
Despite mining a record 5.2 million tonnes in May and 4.5 million tonnes in June, the five -week cessation in
mining has adversely impacted our full year outlook at Macraes by delaying access to higher-grade ore from
Coronation North in the fourth quarter. This material is now expected to be mined in the first half of 2021 and
as a result some production will be deferred . The full year production for Macraes is now expected to be
140,000 to 150,000 gold ounces at an AISC of $1,100 to $1,150 per ounce sold.
At Haile, additional health and safety protocols were put into place, including health screenings for workers
entering and exiting site, staggered shifts, social distancing, and where applicable mandatory self-isolation for
members of the workforce. Though t hese additional measures impacted mine productivity and equipment
utilisation rates, the Haile operation doubled mining movements and increased mill feed year-over-year while
decreasing unit costs. Production from Haile increased slightly quarter-on-quarter, benefitting from higher mill
throughputs despite record average monthly rainfall in May that, along with COVID-19 productivity impacts,
limited access to higher grade ore zones in the open pits. The operation will deploy a further four Komatsu
730E haul trucks in the third quarter. The Company continues to expect Haile production of 180,000 to 190,000
gold ounces at lower site AISC of $1,020 and $1,070 per ounce sold with cash costs unchanged.
The Didipio mine remained suspended during the quarter due to ongoing restraints placed on the operations
by local government uni ts and anti -mining blockade of the access road. The Company has
maintained Didipio in a state of operational readiness for rapid re-start on the expectation that a resumption of
normal operations could be achieved in 2020, either through lifting of restrictions imposed on access, or
completion of a renewal of the Financial or Technical Assistance Agreement (FTAA). In the second quarter, a
working team created by the President completed a review of the FTAA renewal which included engagement
with the C ompany before re -endorsing the renewal to the Office of the President where it remains for a
decision. The Company is unable to provide timing on when a decision will be made, however by mid-October
the Company is required to decide on the on-going status of the Didipio workforce as temporary lay -offs
commenced in mid-April.
Financial
In the first half of the year, the Company generated $234.0 million in revenue, a decrease from the prior year
period mainly due to limited sales from Didipio and reduced sales from Waihi. Quarter-on-quarter revenue
decreased 31% with no sales recorded at Didipio, the completion of mining at the Correnso orebody at Waihi,
and lower sales from Macraes where production was impacted by the New Zealand Government’s COVID-19
lock-down.
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First half EBITDA of $54.8 million decreased 59% year on year, primarily reflecting limited sales from Didipio
and lower production from New Zealand partly offset by steady production from Haile at improved cash costs.
The quarter-on-quarter decrease in EBITDA reflects reduced revenue from lower sales in New Zealand.
Net loss before unrealised losses on undesignated hedges was $31.5 million or $(0.05) per share on a fully
diluted basis in the second quarter and $42.3 million or $(0.07) per share on a fully diluted basis YTD. The
quarter-on-quarter and year -over-year decrease w as mainly a function of the lower revenue from reduced
sales volumes. Total net loss was also impacted by an income tax expense of $4.1 million compared to a tax
benefit of $5.7 million in the previous quarter. The second quarter tax expense was higher despite a larger
overall net loss primarily due to the operational profits in New Zealand and unrealised foreign exchange gains
on non-New Zealand currency denominated loans. Additionally, there were no potential tax benefits recognised
associated with the costs incurred to maintain Didipio in a state of operational readiness.
Operating cash flows YTD were $137.3 million, an increase year-over-year, mainly attributable to $78.5 million
received from the gold presale in the first quarter, partly offset by lower operating cash flow from Waihi and
Didipio. YTD fully diluted cash flow per share before working capital was $ 0.09, excluding the impact of the
gold presales, and $0.02 for the second quarter.
First half investing cash flows of $84.7 million were 37% lower than the prior year period, primarily due to lower
capital expenditure at D idipio, reduced capitalised pre-stripping activities at Haile and Macraes , lower
exploration, and proceeds from the sale of a non-core equity interest.
As at June 30, 2020, the Company’s cash balance stood at $147.7 million, and net debt increased quarter-on-
quarter to $169.6 million, reflecting the decrease in cash and increase in equipment finance associated with
the progressive upgrade of the mining fleet at Haile and the refinance of recently acquired mining equipment
in New Zealand. The Company has fully drawn down its $200.0 million revolving credit facility, which currently
matures on December 31, 2021.
Growth
The Company continues to advance its organic growth pipeline including the Waihi District opportunities. On
July 16, the Company announced the results of the Waihi District Study Preliminary Economic Assessment
which demonstrated positive results with an after-tax IRR of 51% and NPV of $665 million over a 16-year mine
life. Readers are cautioned that the PEA is preliminary i n nature. It includes Inferred Resources that are
considered too geologically speculative to have economic considerations applied to them in order to be
categorized as Mineral Reserves , and there’s no certainty that the PEA will be realised. Mineral resou rces
that are not mineral reserves do not have a demonstrated economic viability.
The results were based on four distinct opportunities that included the Martha Underground, WKP, Martha
Open Pit and Gladstone, each with different points of entry, capital r equirements, production levels, cost
structures and mine life.
The Martha Underground is fully permitted and in development with first production expected in the second
quarter of 2021. The other opportunities are not permitted and will have permit applic ations lodged in 2020.
The Company continues to drill mainly at Martha Underground and WKP with a focus on resource conversion
and expansion.
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The Macraes Golden Point Underground study continues to advance with expected completion in the second
half of the year. While at Haile, the Company is further optimising the Horseshoe Underground mine sequence
and expects to complete this work by the end of the year.
Conference Call
The Company will host a conference call / webcast to discuss the results at 7:30 am on Friday July 31, 2020
(Melbourne, Australian Eastern Standard Time) / 5:30 pm on Thursday July 30, 2020 ( 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=1341360&tp_key=2f24cc1848
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
If you are unable to attend the call, a recording will be available for viewing on the Company’s website.
- ENDS -
Authorised for release to market by OceanaGold Corporate Company Secretary, Liang Tang.
For further information please contact:
Investor Relations Media Relations
Sam Pazuki
Tel: +1 720 602 4880
Melissa Bowerman
Tel: +61 407 783 270
www.oceanagold.com | Twitter: @OceanaGold
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
8
Mine located on the island of Luzon in the Phil ippines. 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 op en 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 work s
collaboratively with its valued stakeholders to identify and invest in social programs that are designed to build
capacity and not dependency.
For 2020, and subject to the cautionary statement below, the Company expects to produce between 3 40,000
and 360,000 ounces of gold from Haile, Waihi and Macraes combined at a consolidated All-In Sustaining Costs
ranging from $1,050 to $1,100 per ounce sold.
Technical Disclosure
Mine Designs, schedules and economic analysis for Waihi District Study have been verified and approved by,
or are based upon information prepared by or under the supervision of, T. Maton. T. Maton is a Member and
Chartered professional with the Australasian Institute of Mining and Metallurgy. Mr Maton have sufficient
experience, which is re levant to the style of mineralisation and type of deposits under consideration, and to
the activities which they are undertaking, to qualify as Competent Persons as defined in the 2012 Edition of
the “Australasian Code for Reporting of Exploration Results, Mineral Resources and Ore Reserves” (“JORC
Code”) and all are Qualified Persons for the purposes of the NI 43 -101. Mr Maton is an employee of
OceanaGold and they consent to the inclusion in this release of the matters based on their information in the
form and context in which it appears. For further scientific and technical information (including disclosure
regarding Mineral Resources and Mineral Reserves) relating to the Waihi PEA and Operation, please refer to
the PEA which will be filed on SEDAR on or before 30 August 2020, and NI 43-101 compliant technical reports
available at sedar.com under the Company’s name.
Cautionary Statement for Public Release
Certain information contained in this public release may be deemed “forward -looking” within the meani ng 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 gro wth, 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