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- OceanaGold announced a small Q2 loss on higher costs and lower production.
- As I predicted the company's production would fall off after an unusually strong Q1 that sent shares higher; production costs exceeded expectations by 11%.
- The stock is risky at the current valuation and investors should be cautious.
- OceanaGold shares have soared nearly 50% since I recommended them in July, and even more since the beginning of the year.
- This is due to an especially strong performance at its Didipio Mine in the Philippines during the first quarter.
- But mining in the Philippines is risky, and the Q1 numbers were above and beyond the company's estimates.
- If we factor these points into an NPV calculation for Didipio it becomes evident that the stock is overvalued.
- The company is executing well, and it should have strong cash-flow going forward, so it is still on my radar, and it is a worthwhile investment on weakness.