Photo credit: Bilyonaryo
OceanaGold Corporation reported its financial and operational results for the quarter ended March 31, 2022. Details of the consolidated financial statements and the Management Discussion and Analysis are available on the Company’s website.
Gerard Bond, President and CEO of OceanaGold, said “OceanaGold has started the year strongly with the first quarter safely delivering record quarterly revenue and EBITDA and significant Free Cash Flow. This strong Free Cash Flow generation allowed us to achieve a 29% reduction in net debt and reduce our leverage ratio to 0.40 times. Our stronger balance sheet puts us in a solid financial position from which we can invest in attractive growth projects to create value for our shareholders.”
“This quarter’s performance was underpinned by record quarterly gold production at our Haile operation in the United States and a very strong first quarter of full production at our Didipio operations in the Philippines. At Haile, we are continuing to see the benefits of operational and productivity improvements that began in mid2021. At Didipio, the operation achieved full underground mining rates at the end of the first quarter, ahead of schedule by nearly one quarter.”
“Though there is a lot to celebrate in the quarterly results, we also know that there is a lot of work ahead of us to fully optimise the potential of the business. At Waihi, poor grade reconciliation at Martha underground had an impact on its quarterly performance. A grade control drill programme is currently underway to deliver improved resource definition and allow for more optimal mine planning and stope sequencing, which we expect will improve the performance of this orebody and mining operation overall.”
“We also have a pipeline of organic growth projects that have the potential to create additional value for shareholders. Once we commence development of the underground mine at Haile, we believe we will begin to unlock the true upside potential of this orebody. Looking further ahead, Wharekirauponga (“WKP”) has the potential to be a significant, high-grade mine within our portfolio.”
“We remain focused on safely and responsibly delivering on our production guidance for 2022, maximising Free Cash Flow generation and progressing the attractive growth options in our portfolio.” said Mr Bond.
Operations
The Company produced 134,035 ounces of gold and 3,510 tonnes of copper in the first quarter of 2022, representing a 26% increase in gold production compared to the previous quarter and a 61% increase when compared to the first quarter of 2021. The stronger quarterly production was driven by record quarterly production at Haile and a solid quarter of production at Didipio, partially offset by decreased production at Waihi.
On a consolidated basis, the Company recorded an AISC of $1,084 per ounce on gold sales of 129,191 ounces and copper sales of 3,711 tonnes. AISC was 18% lower quarter-on-quarter with the benefits from a full quarter of operations at Didipio partially offset by increased sustaining capital investments. The Company’s AISC decreased 14% when compared to the first quarter of 2021, also due primarily to the inclusion of a full quarter of operations at Didipio.
Haile delivered 60,249 ounces of gold, representing a record quarter for production. This represents an increase of 42% quarter-on-quarter and was mainly driven by increased mill feed, higher head grade and better gold recoveries. Year-on-year, this represents a 36% increase in production, resulting from higher mill feed, grade, and recovery. The higher grades were driven by ore sourced from Ledbetter Phase 1. First quarter AISC at Haile was $1,070 and cash costs were $567 per ounce sold.
The Company expects the Supplemental Environmental Impact Statement (‘SEIS’) Final Record of Decision and receipt of subsequent operating permits to occur in the second quarter of 2022. The permits are necessary to allow underground mine development and expansion of the operating footprint to accommodate the construction of future PAG waste storage facilities and to allow increased water discharge rates. As previously guided, the ongoing delay in the receipt of the SEIS decision and associated permits continues to impact productivity at Haile, where mining rates are limited by additional material and water re-handling, reducing output and increasing costs. Upon receipt of the necessary permits, the Company expects an improvement in operational efficiencies and lower mining unit costs to be delivered progressively over a two-year period. An updated National Instrument (“NI”) 43-101 Technical Report for Haile was released 31 March 2022. The recently completed technical review assumed receipt of the necessary permits related to the SEIS by the end of the second quarter of 2022.
Didipio produced 29,446 ounces of gold and 3,510 tonnes of copper, reflecting a 98% increase in gold production and 51% increase in copper production quarter-on-quarter. This represents the first full quarter of operations since the restart of production in November 2021. The underground mine achieved full mining rates at the end of the first quarter, ahead of schedule. Didipio’s first quarter AISC and cash costs were $40 per ounce sold and $26 per ounce sold respectively. An updated NI 43-101 Technical Report for Didipio was released 31 March 2022.
Macraes produced 37,588 ounces of gold in the first quarter, a slight increase quarter-on-quarter and a 9% increase from the first quarter of 2021. Relative to the prior quarter, production increased on higher average head grade that was partially offset by lower mill feed and reduced gold recoveries. Macraes’ first quarter AISC and cash costs were $1,394 and $1,005 per ounce sold respectively.
Waihi produced 6,752 ounces of gold in the first quarter, 43% lower quarter-on-quarter and 56% higher than the first quarter of 2021. The quarter-on-quarter decrease in production was attributed to lower ore tonnes and grade mined from Martha Underground, where mining was in areas of the resource with low resource definition and under-reconciled to the resource model in both grade and tonnes of ore. The Company estimates the under reconciliation accounted for approximately half of the negative impact during the quarter, with poor ground conditions in parts of the orebody and reduced workforce availability due to COVID-19 isolations also contributing factors. Results from the accelerated grade control drill program continued to update the resource models currently being used for mine planning. Grade control drilling to support mining for the remainder of 2022 and 2023 is expected to be completed progressively across the second and third quarters of 2022. This program is expected to better inform the detailed mine planning and design process, optimise the stoping sequence, reduce ore loss and deliver improved performance.
Preparation for the lodgement of a consent application for the Waihi North Project, inclusive of WKP, continued to progress with environmental assessments nearing completion. The Company expects to lodge its formal consenting application, inclusive of stakeholder feedback, in the second quarter of 2022. The critical path for first production from the Waihi North Project remains the consenting process.
Financial
The Company reported record quarterly revenue of $285.7 million, reflecting a 37% increase quarter-on-quarter. The Company reported record quarterly EBITDA in the first quarter of $158 million, reflecting a 78% increase quarter-on-quarter on stronger gold sales volumes from Haile, Didipio and Macraes and higher average gold and copper prices received and lower unit costs, partially offset by lower sales at Waihi. First quarter 2022 EBITDA was 155% higher than the first quarter of 2021 related to resumption of operations at Didipio and increased gold prices.
First quarter 2022 adjusted earnings after tax were $81.8 million or $0.11 per share which compared to $29.3 million in the fourth quarter of 2021 and $17.3 million in the first quarter of 2021.
Cash flows from operating activities for the first quarter of $143.8 million exceeded the comparative quarters, driven by stronger EBITDA though partially offset by unfavourable working capital movements. Operating cash flow per share before working capital movements was $0.22 in the first quarter.
The Company generated $63.2 million in free cash flow during the first quarter. As at the end of the first quarter Net Debt including equipment leases was $168.4m, which was $69.5m or 29% lower than at the end of December 2021. The Company had immediately available liquidity of $224.7 million, including $194.7 million in cash.
Article courtesy of Oceanagold Corporation
