OceanaGold releases 2020 guidance

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OceanaGold Corp. [OGC-TSX, ASX, NZ; OGDCF-OTC] on Monday February 10 released its production guidance for 2020, saying it expects to produce between 360,000 and 380,000 ounces of gold this year at an estimated all-in-sustaining cost (AISC) of US$1,075-US$1,125/oz.

The forecast is better than expected since it does not include any production estimates from a suspended operation in the Philippines, which would have been expected to produce 55,000 ounces of gold in 2020.

OceanaGold is a multinational gold and copper producer with operating assets that include the Didipio Mine on Luzon Island in the Philippines, the Macraes Operations in the South Island of New Zealand, the Waihi Gold Mine on New Zealand’s North Island and the Haile Gold Mine in South Carolina, U.S.A.

It is also a key shareholder of Canadian companies Nulegacy Gold Corp. [NUG-TSXV] and Gold Standard Ventures Corp. [GSV-TSX; GSV-NYSE], which both have gold projects in Nevada.

OceanaGold produced 470,601 ounces of gold as well as 10,255 tonnes of copper in 2019. The copper output was from the Didipio Mine in the Philippines where mining was recently suspended.

“OceanaGold is highly committed to regaining its status as one of the best gold mining companies by focusing on what we do well and controlling what we can,” said OceanaGold President and CEO Mike Wilkes.

The share price advanced on the news, rising 0.2% or $0.005 to $2.47 on volume of 2.47 million. The shares are currently trading in a 52-week range of $2.12 and $4.60.

The company’s 2020 forecasts include 180,000 to 190,000 ounces of gold from the Haile Mine at a cash cost of $650-700/oz at an AISC of US$1,080-US$1,130/oz sold. This represents a 25% increase over the previous year, mainly as a result of expected higher throughput rates and better recoveries.

As previously forecast, approximately two-thirds of Haile’s 2020 production is expected in the second half of the year as production progressively increases each quarter.

At Waihi, production for the full year in 2020 is expected to range between 18,000 and 20,000 ounces with AISC ranging from US$715 to US$765/oz. The Waihi operation will transition from the current mining at Correnso to the Martha Underground which is expected to start producing in the second quarter of 2021.

Macraes is expected to produce between 160,000 and 170,000 ounces of gold in 2020 at AISC of US$1,000 and US$1,050/oz. Production in 2020 is slightly lower than in 2019 due to lower grades from the Coronation stage 5 area and Gay Tan Phase 1.

In the Philippines, the Didipio Mine produced 83,913 ounces of gold and 10,255 tonnes of copper in 2019 before processing was suspended in October. The company says it continues to work constructively with regulatory stakeholders related to the renewal of Didipio’s FTAA, which is currently under review with the Office of the President with no specific timeline on when a decision will be made.

An FTAA, or Financial and Technical Assistance Agreement, is one of two key forms of tenure for mining projects in the Philippines. They are a form of state agreement (entered into by the President of the Philippines on behalf of the Philippines government) for the large-scale exploration and development of gold and other metals.

The company is currently spending US$8 million to US$10 million a quarter on holding costs associated with maintaining the workforce in a state of operational readiness and the underground mine and process plant on care and maintenance.


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