Oceanagold Reports Third Quarter 2021 Financial Results
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MEDIA RELEASE
28 October 2021
OCEANAGOLD REPORTS THIRD QUARTER 2021 FINANCIAL RESULTS
(All financial figures in US Dollars unless otherwise stated)
(BRISBANE) OceanaGold Corporation (TSX: OGC ) (ASX: OGC ) (the “Company”) reported its financial and
operational results for the quarter ended September 30, 2021. 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
• Didipio’s Financial or Technical Assistance Agreement (“FTAA”) renewed for 25 years.
• Total Recordable Injury Frequency Rate (“TRIFR”) increased from 3. 7 to 3.9 per million hours
worked.
• Year-to-date (‘YTD’) consolidated gold production of 256,216 ounces at All -In Sustaining Costs
(“AISC”) of $1,218 per ounce on gold sales of 276,226 ounces.
• Consolidated third quarter gold production of 79,177 ounces at AISC of $1,200 per ounce on gold
sales of 97,445 ounces, including 19,151 ounces of gold sold at Didipio.
• YTD revenue of $536.1 million with adjusted Earnings before Interest, Depreciation and
Amortisation (“EBITDA”) of $2 59.2 million and adjusted net profit of $ 111.7 million or $0.16 per
share
• Third quarter revenue of $204.6 million with adjusted EBITDA of $ 97.3 million and adjusted net
profit of $53.0 million or $0.07 per share.
• Total immediate available liquidity of $143.2 million, including $113.2 million in cash and $30.0
million in available undrawn credit facilities as at September 30, 2021.
• Successfully completed transport of Didipio gold -copper concentrate in inventory early in the
fourth quarter.
• Commenced underground mining at Didipio, one month ahead of schedule and delivery of
underground ore underway.
• Paul Benson appointed Chairman of the Board effective from 1 October 2021.
• Full year 2021 production guidance of 350,000 to 370,000 gold ounces at AISC of $1,200 to
$1,250 per ounce sold reaffirmed.
Scott Sullivan, Chief Operating Officer & Acting CEO of OceanaGold said, “ I am very pleased with the financial
performance of the business driven by strong EBITDA and profits. The main drivers of this financial performance
relate to a strong quarter at Haile and Didipio, where we are pleased to announce the completion of gold-copper
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concentrate transportation. Despite this strong performance, we have much work ahead of us to progress the
safe restart of Didipio processing and mining operations, complete the Haile Technical Review and get the New
Zealand operations back on-track while continuing to manage the ongoing risks associated with the pandemic.”
“The Didipio restart activities continue to exceed our expectations with recruiting and training activities
progressing to plan despite the ongoing risks associated with COVID -19. We are pleased to announce the
resumption of underground m ining and the delivery of underground ore to the ROM pad early in October, one
month ahead of schedule. Stope development is expected to commence in the coming weeks and we will
continue to ramp-up underground operations to full mining production rates over the course of the next eight to
nine months. Processing activities are tracking ahead of plan with recommissioning of the primary crusher
completed in the third quarter. We expect milling at Didipio to recommence in mid -November with ore sourced
primarily from stockpiles and supplemented progressively with higher-grade underground ore.”
“At Haile, the operation achieved a better-than-expected quarter of production with costs in-line with expectations.
Although the fourth quarter is expected to deliver softer production from mining and processing of lower grades,
we are well positioned to finish the year strong ly. We are pleased to increase Haile’s 2021 production range to
175,000 to 180,000 ounces of gold reflecting the better-than-expected operating performance over the first nine
months of the year. The Haile Technical Review continues to advance well, and we are expecting to complete a
new mine plan within the first half of 2022.”
“In New Zealand, both operations were adversely impacted by the two-week nationwide lockdown. At Waihi, the
impact related to the shutdown and subsequent regional lockdowns was greater than first expected with carry
over impacts in our supply chain beyond the two-week closure. Additionally, recent updates to the resource
models impact material p lanned for the fourth quarter. As a result, Waihi is now expected to deliver 30,000 to
35,000 ounces of gold for the full year. Despite the challenges Waihi has had recently, ramp-up of Martha
Underground mining rates continue to advance and the Company expects a stronger fourth quarter and 2022.
At Macraes, we are focused on delivering a strong fourth quarter of production to achieve the narrowed guidance
range of 138,000 to 143,000 ounces.”
“Looking ahead, the Company reaffirms its full year guidance range of 350,000 and 370,000 ounces of gold at
an AISC of $1,200 to $1,250 per ounce sold.”
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Table 1 – Production and Cost Results Summary
Quarter ended 30 Sep 2021 Haile Didipio Waihi Macraes
Consolidated
Q3 2021 Q3 2020
Production, Sales & Costs
Gold Produced koz 45.9 - 7.5 25.7 79.2 63.1
Gold Sales koz 44.0 19.2 8.3 26.0 97.4 60.8
Average Gold Price US$/oz 1,789 1,746 1,766 1,857 1,797 1,601 (1)
Copper Produced kt - - - - - -
Copper Sales kt - 3.4 - - 3.4 -
Average Copper Price US$/lb - 4.19 - - 4.19 -
Cash Costs US$/oz 581 (47) 1,395 990 636 1,015
Site AISC (2) US$/oz 1,208 (47) 2,072 1,573 1,200 1,695
Operating Physicals
Material Mined kt 11,306 0.6 166.2 10,550 22,023 22,489
Waste Mined kt 10,598 - 99.6 9,731 20,429 20,050
Ore Mined kt 708 0.6 66.6 819 1,595 2,438
Mill Feed kt 792 - 81.1 1,377 2,250 2,248
Mill Feed Grade g/t 2.10 - 3.19 0.73 1.30 1.01
Gold Recovery % 85.6 - 90.8 79.6 82.1 82.5
Capital Expenditures
General Operations US$m 3.4 0.5 - 2.6 6.5 7.7
Pre-strip & Capitalised
Mining US$m 22.8 - 6.0 10.3 39.1 22.4
Growth US$m 28.4 - 6.6 3.4 39.9(3) 43.7
Exploration US$m 0.9 - 3.1 1.7 5.8 7.9
Total Capital Expenditures US$m 55.5 0.5 15.7 18.1 91.2 81.7
(1) Realised gains and losses on gold hedging are included in the consolidated average gold price. Realised gains and losses on g old hedging are
not included in the site average gold prices.
(2) Site AISC are exclusive of Corporate general and administrative expe nses and have been restated in prior periods; accordingly, Consolidated
AISC is inclusive of Corporate general and administrative expenses.
(3) Capital expenditure is presented on an accruals basis and excludes third quarter rehabilitation and closure costs of $1.0 million at Reefton. Capital
and exploration expenditure by location includes related regional greenfield exploration where applicable. Corporate capital projects not related
to a specific operating region are excluded; these totaled $0.4 million in the third quarter.
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Table 2 – Financial Summary
Quarter ended 30 Sep 2021
(US$m)
Q3
30 Sep 2021
Q2
30 Jun 2021
Q3
30 Sep 2020
YTD
30 Sep 2021
YTD
30 Sep 2020
Revenue 204.6 182.6 97.9 536.1 331.9
Cost of sales, excluding depreciation and amortization (87.4) (71.3) (60.9) (225.4) (196.7)
General and administration – indirect taxes (2) (4.1) - (1.0) (4.2) (3.1)
General and administration – idle capacity charges (1) (16.0) (5.5) (10.4) (27.4) (26.7)
General and administration – other (9.7) (12.7) (11.7) (33.6) (35.4)
Foreign currency exchange gain/(loss) (0.9) (1.0) (0.8) (5.3) (6.3)
Other income/(expense) 2.7 (2.2) 0.4 0.9 4.6
EBITDA (excluding gain/(loss) on undesignated hedges and
impairment charge) 89.2 89.9 13.5 241.1 68.3
Depreciation and amortization (49.9) (40.0) (36.1) (126.2) (125.6)
Net interest expense and finance costs (2.9) (2.6) (2.7) (8.3) (8.6)
Earnings/(loss) before income tax (excluding gain/(loss) on
undesignated hedges and impairment charge) 36.4 47.3 (25.4) 106.6 (66.0)
Income tax benefit/(expense) on earnings 8.5 (15.8) 0.5 (13.0) (1.2)
Earnings/(loss) after income tax and before gain/(loss) on
undesignated hedges and impairment charge 44.9 31.4 (24.9) 93.6 (67.2)
Impairment charge - - (80.0) - (80.0)
Write off exploration/property expenditure / investment (3) - - (0.1) (1.3) (6.9)
Gain/(loss) on fair value of undesignated hedges - - 11.4 - (0.3)
Tax (expense) / benefit on gain/loss on undesignated hedges - - (3.2) - 0.1
Net Profit/(loss) 44.9 31.4 (96.8) 92.3 (154.2)
Basic earnings/(loss) per share $0.06 $0.04 $(0.16) $0.13 $(0.25)
Diluted earnings/(loss) per share $0.06 $0.04 $(0.16) $0.13 $(0.25)
(1) The Company did not record any revenue or cost of sales from the Didipio mine during the fifteen months ended 30 June 2021. I n addition,
General and Administration – idle capacity charges reflect the non-production costs related to maintaining Didipio’s operational readiness and
related to the two-week shutdown of the New Zealand operations required under COVID -19 restrictions
(2) Represents production-based taxes in the Philippines, specifically excise tax, local business and property taxes.
(3) Represents write-off of projects due to formal withdrawal from the Highland, Spring Peak and Bravada joint venture activities.
Table 3 – Cash Flow Summary
Quarter ended 30 Sep 2021
(US$m)
Q3
30 Sep 2021
Q2
30 Jun 2021
Q3
30 Sep 2020
YTD
30 Sep 2021
YTD
30 Sep 2020
Cash flows from Operating Activities 69.0 35.8 63.1 152.4 200.4
Cash flows used in Investing Activities (83.2) (80.9) (78.4) (236.0) (163.1)
Cash flows from / (used) in Financing Activities 43.5 (5.4) (6.0) 31.4 42.3
Operations
Consolidated gold production for the YTD 2021 was 256,216 ounces, including 79,177 ounces in the third quarter.
YTD gold production increased 27% above the prior YTD driven by higher production from Haile partially offset
by lower production at Macraes. Third quarter gold production decreased 16% due to softer production from the
New Zealand operations , principally related to the two -week nationwide COVID-19 lockdown and lower
production at Haile from lower grades as expected.
YTD and third quarter consolidated AISC were $1,218 per ounce and $1,200 per ounce on gold sales of 276,226
ounces and 97,445 ounces, respectively. AISC was flat quarter -on-quarter and YTD, attributable to higher gold
sales that are largely offset by higher sustaining capital investments.
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In the Philippines, the Government renewed the Didipio FTAA for an additional 25-years effective June 19, 2019.
The renewal in mid-July paved the way for the resumption of operations and commencement of restart activities
including the recruitment and training of the workforce, delivery of equipment and supplies, the transportation
and sale of gold and copper inventory (both doré and concentrate ), process plant maintenance and
recommissioning and underground inspections and upgrades.
The Didipio restart activities continue to advance well with recruitment tracking to plan. The Company expects
90% of the workforce to be in place by the end of the year subject to continued management of COVID -19.
Process plant restart activities continue to progress ahead of expectations with recommissioning of the primary
crusher completed prior to the end of the quarter, completion of upgrades to the Ball and SAG mills and delivery
of supplies ahead of first ore feed in mid -November. Underground mine inspections were completed in the third
quarter along with upgrades and delivery of new Sandvik equipment. In the third quarter, the Company began
ore mining, one month ahead of schedule while stope development is expected in November. First underground
ore was delivered successfully to the ROM pad at the end of the third quarter.
During the third quarter, the Company sold 19,151 gold ounces and 3,356 tonnes of copper from inventory on
hand at Didipio. All gold-copper concentrate has been de livered successfully to the San Fernando port and the
Company has received $38 million of cash as at the end of the third quarter. The Company expects to
progressively receive all payments associated with the sale of gold -copper concentrate prior to the en d of the
year.
In the United States, Haile produced 147,491 ounces of gold YTD, including 45,910 ounces in the third quarter.
Haile’s YTD production was 67% higher than the corresponding period in 2020 due to increased head grade as
expected and operational improvements. Third quarter production was slightly lower than the previous quarter ;
however, a positive reconciliation led to better than planned production for the quarter. Haile’s YTD AISC was
$1,028 per ounce and cash costs of $ 653 per ounce on gold sales of 148,529 ounces. Third quarter AISC and
cash costs were $1,208 per ounce and $581 per ounce on gold sales of 44,013 ounces.
In New Zealand, Macraes delivered YTD gold production of 92,902 ounces, with lower -than-expected gold
production of 25,720 ounces in the third quarter. YTD 2021 gold production was approximately 9% lower than
YTD 2020 due to geotechnical challenges at Coronation North leading to reduced mining rates in higher grade
ore zones and extended downtime related to planned and unplann ed process plant maintenance leading to
decreased throughputs. Third quarter production was 21% lower than in the second quarter mainly related to the
two-week nationwide lockdown and subsequent slower than expected ramp -up of operations. Macraes’ YTD
AISC was $1,468 per ounce sold while third quarter AISC was $1,573 per ounce sold.
The Waihi operation produced 7,547 ounces of gold in the third quarter, and 15,823 ounces YTD. The YTD
production was approximately 30% higher due to ongoing ramp -up of Martha Underground. Third quarter
production increased quarter-on-quarter following the completion of plant upgrade works in the second quarter.
The quarter -on-quarter increase was partially offset by the two -week nationwide lockdown and slower than
expected subsequent ramp-up of operations. Waihi’s YTD AISC was $1,589 per ounce while third quarter AISC
was $2,072 per ounce sold.
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Financial
YTD 2021 revenue was $536.1 million, a 62% increase over the corresponding period in 2020 related to higher
sales from Haile and Waihi and sales related to Didipio following the renewal of the FTAA in mid -July and a
higher average gold price received. Third quarter revenue of $204.6 million was 12% higher quarter -on-quarter
related to Didipio gold and copper sales, part ially offset by decreased sales from Haile and Macraes and lower
average gold price received.
Adjusted EBITDA (excluding idle capacity costs related to Didipio carrying costs) for YTD 2021 was $2 59.2
million, reflecting a 1 73% increase year -on-year. Third quarter adjusted EBITDA was $ 97.3 million, 2% above
the previous quarter in line with higher gold and copper sales.
YTD 2021 adjusted net profit was $1 11.7 million or $0.1 6 per share, compared with an adjusted loss of $40.5
million over YTD 2020 related to higher revenue from increased sales at Didipio and Haile and a higher average
gold price received. Third quarter adjusted net profit was $53.0 million, or $0.07 per share, which was significantly
above the comparative quarters.
Cash flows from operating activities were $152.4 million for the YTD including $6 9.0 million in the third quarter ,
which was 9% and 9 2% above the prior September and June quarters respectively. Relative to EBITDA,
operating cash flow offset by physical settlements of the gold prepayment arrangement whereby 8,889 ounces
valued at $17.1 million were delivered in the third quarter. A total of 40,000 ounces valued at $76.7 million were
physically delivered for the YTD. The Company has no further physical deliveries due or other hedging
arrangement in place.
Cash flows used in investing activities totalled $236.0 million in the YTD , which was 45% above the prior year
driven by higher growth capital investments at Haile related to the expan sion of waste storage facilities, the
Golden Point Underground development at Macraes , and the ongoing development of Martha Underground at
Waihi.
Fully diluted cash flow per share before working capital movements and exclusive of gold prepayments was
$0.12 in the third quarter and $0.34 for the YTD.
During the third quarter the Company drew down $50 million of debt under its revolving credit facilities and
established an additional short -term working capital facility of $30 million. As at September 30, 202 1 the
Company’s revolving credit facilities remained drawn to $250 million with $30 million undrawn . At the end of the
third quarter, the Company had available liquidity of $143.2 million including $113.2 million in cash. The
Company’s net debt position wa s $256.5 million, an increase from the previous quarter of $224.8 million as
increased capital expenditures were partially offset by higher sales.
Consolidated capital expenditure in the third quarter of 2021 was $91.2 million, a slight decrease quarter -on-
quarter, primarily lower growth capital invested partially offset by higher pre -stripping capital. YTD capital
expenditures of $255.4 million incr eased 30% over the prior year, reflecting capital investments related to
increased pre-stripping capital at Haile and Macraes, and growth capital associated with the Haile expansion,
Golden Point Underground at Macraes and the ongoing development of Martha Underground at Waihi.
Third quarter capital expenditure of $55.5 million at Haile was primarily related to the ongoing expansion of mining
operations, including construction of the third tailings storage facility wall lift and heavy earthworks related to the
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construction of potentially acid generating (“PAG”) waste storage facilities. Pre -stripping capital at Haile is
tracking higher than originally guided, reflecting a higher allocation of mining costs to capital expenditure than
previously forecast. Haile pre-stripping capital for 2021 is now expected to range between $65 and $70 million.
As this is a reclassification from cash costs, there is no change in total mining costs or AISC as a result.
Outlook
On a consolidated basis , the Company expects to achieve its full year gold production guidance of 350,000 to
370,000 ounces at an AISC of $1,200 to $1,250 per ounce sold and cash costs of $725 to $775 per ounce sold.
The consolidated guidance reflects the changes to the Haile and Waihi guidan ce ranges and is inclusive of
Didipio’s fourth quarter guidance.
In the United States at Haile, the stronger than expected production YTD has a resulted in the Company
increasing Haile’s full year outlook , whereby production is expected to range between 175,000 and 180,000
ounces of gold compared to 160,000 and 170,000 ounces of gold previously guided. Haile’s 2021 AISC guidance
range remains unchanged at $1,100 to $1,150 per gold ounce sold and at a lower cash cost of $650 to $750 per
ounce sold.
The Hail e Technical Review continues to progress with a comprehensive review of mining and processing
operations, costs, capital investments and water and waste management including open -pit/underground trade-
off studies. This review is expected to reflect histori cal and forecast operational data and cost inputs and
resequencing of mining activities, with an aim to maximise cash flows over life of mine while incorporating more
effective capital allocation. The Company expects an updated mine plan in the first half of 2022, with ongoing
implementation of operational changes and value realisation over the next 18 months.
The timing of a new mine plan is also dependent on receipt of the SEIS final Record of Decision and associated
permits. Based on feedback from regul ators, the Company now expects the Record of Decision and related
permits to be completed within the first quarter of 2022. These permits relate to the expansion of the operating
footprint to accommodate waste stockpiles, increased capacity through the wat er treatment plant, as well as
development of the Haile Underground. Engagement with the US Army Corps of Engineers and South Carolina
Department of Health and Environment Control is ongoing as the Company responds to inquiries received post
release of the Draft SEIS.
The Company expects Macraes’ gold production for the full year to range between 138,000 to 143,000 ounces
of gold from 135,000 to 145,000 ounces previously, with higher throughput and stronger grades expected in the
fourth quarter. Following the two-week New Zealand national lockdown, the ramp-up of operations in September
was slower than initially expected. Now into the fourth quarter, Macraes operations are ramping -up to
expectations. The Macraes AISC guidance range remains unchanged at 1,300 to 1,350 per ounce sold.
The Waihi operation is expected to produce between 30,000 and 35,000 ounces of gold compared to its original
2021 guidance range of 35,000 to 45,000 ounces of gold. The decrease in forecast output is due to resource
model updates affecting material planned for the fourth quarter related to grade reconciliation. The Company
does not expect this to have a long -term impact on the operation, with resource definition and grade control
programmes well advanced. The COVID -19 two-week lockdown compounded the impact by deferring a lternate
high-grade panels to 2022. The Waihi AISC guidance has been revised to $1,525 to $1,575 per ounce sold.
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Preparation for the lodgement of a consent application for the Waihi North Project, inclusive of Wharekirauponga
(“WKP”) Underground Mine , continued to progress with environmental assessments nearing completion. The
Company expects to lodge its formal consenting application inclusive of stakeholder feedback with the regulator
in the first half of 2022.
The Company continues to advance the techni cal studies as part of the consenting and Pre -feasibility Study
(“PFS”) workstreams. This work is ongoing and supported by resource conversion drilling at WKP. Although the
PFS is contemplated for completion in the first half of 2022, the Company may incre ase the scope of the work
and expand drilling efforts to further enhance the project value proposition. The impact on the timing of such work
is being considered and could result in extending the date of completion of the study.
In the Philippines, the Com pany will continue to advance restart and ramp -up activities while managing the
ongoing risks associated with COVID -19. For the fourth quarter, Didipio is now expected to produce between
7,000 and 12,000 ounces of gold (previously 5,000 to 10,000 ounces of gold) and 1,000 tonnes of copper with
the range reflecting the ongoing risks noted. For the full year, Didipio gold sales are expected to range between
25,000 and 30,000 ounces while copper sales are expected to range between 4,500 and 5,000 tonnes. 2021
AISC is now expected to be between $ 100 and $150 per ounce sold while by-product cash costs are expected
to range between $25 and $75 per ounce sold with higher copper pricing increasing by-product credits. Full year
2021 sales are expected to range betwee n 25,000 and 30,000 ounces of gold and 4,500 and 5,000 tonnes of
copper.
Looking ahead to the fourth quarter, the Company expects milling at Didipio to commence in mid-November, with
ore feed sourced primarily from lower grade stockpiles and supplemented with higher grade underground ore as
the underground mining operations ramp-up. Underground mining activities have commenced, one month ahead
of schedule and the Company expects first stoping in November, also ahead of schedule.
Conference Call
The Company will also host a conference call / webcast to discuss the results at 7:30 am on Friday October 29,
2021 (Brisbane, Australian Eastern Standard Time) / 5:30 pm on Thursday October 28, 2021 ( 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=1502452&tp_key=79ada57b6 5
Teleconference Participants
Local (toll free) dial in numbers are:
Canada & North America: 1 888 390 0546
Australia: 1 800 076 068
New Zealand: 0 800 453 421
United Kingdom: 0 800 652 2435