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OceanaGold Corp.: Worth A Bet On Didipio Re-Opening

May 03, 2021 5:04 AM ETOceanaGold Corporation (OCANF), OGC:CA27 Comments
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Fun Trading
21.64K Followers

Summary

  • OceanaGold reported first quarter revenue of $145.5 million with an EBITDA of $62.0 million. The company posted a net profit of $16.0 million in the first quarter, or $0.02 per share.
  • First quarter gold production of 83,191 ounces at All-In Sustaining Costs of $1,229 per ounce on sales of 82,847 ounces of gold.
  • I believe that OCANF will profit from the restart of the Didipio mine, and I recommend accumulating the stock below $1.55.
  • Looking for a helping hand in the market? Members of The Gold And Oil Corner get exclusive ideas and guidance to navigate any climate. Learn More »

The historic Peak Hill open cut Gold Mine near Parkes in regional New South Wales in Australia
Photo by Phillip Wittke/iStock via Getty Images

Investment Thesis

The Melbourne Australian-based OceanaGold Corp. (OTCPK: OCANF) reported its first quarter 2021 earnings results on April 29, 2021.

OceanaGold posted lower sale revenues quarter over quarter. The company said that gold production

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This article was written by

Fun Trading profile picture
21.64K Followers
Fun Trading is a retired engineer and independent investor. In addition to writing on investing in all aspects of gold, oil, and gas, he runs his own portfolio..

Analyst’s Disclosure: I/we have no positions in any stocks mentioned, but may initiate a long position in OCNF over the next 72 hours. I wrote this article myself, and it expresses my own opinions. I am not receiving compensation for it (other than from Seeking Alpha). I have no business relationship with any company whose stock is mentioned in this article.

I may open a position at or below $1.55

Seeking Alpha's Disclosure: Past performance is no guarantee of future results. No recommendation or advice is being given as to whether any investment is suitable for a particular investor. Any views or opinions expressed above may not reflect those of Seeking Alpha as a whole. Seeking Alpha is not a licensed securities dealer, broker or US investment adviser or investment bank. Our analysts are third party authors that include both professional investors and individual investors who may not be licensed or certified by any institute or regulatory body.

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Comments (27)

D
Anyone understand why the shareprice barely moved even though FTAA was renewed? Is it because of status on Haile mine?
t
@Damien draco can only assume that the news didn’t register in Canada or US as yet..ivebought today at $2.55A$ and believe that with Didipio back online producing over 120,000 ounces per annum, the free cash flow should be over 400m per year…assuming a modest X Ten and the mkt cap should be 4bn within the next yr assuming current Gold price….I.e. 2.5 times higher than it is today,cheers,tony
D
@tonyconnolly Well the volume traded yesterday was very high so it must have registered. How did you interpret the news about Haile?
t
@Damien draco recent news?? Haile has been a problem child that’s starting to come good. Lower AISCs and decent production levels…feels like they’ve just got to grips with how to manage/ balance the production. What are u hearing?
t
Didipio gets a 25 yr licence renewal…here we go!
D
Without Didipio Oceanagold is projecting annual production of 500.000 ounces at AISC of 1000 USD per ounce in exclusively Tier1 jurisdiction in 3 years. What is fair value for that type of company?

With Didipio Oceanagold is projecting annual production of 620.000 ounces at AISC of 800 USD per ounce. What is fair value for that type of company?
D
@Fun Trading If either of these two scenarios becomes a reality in 3 years what do you think is the fair value? Surely you have an opinion on this?
Fun Trading profile picture
@Damien draco

Damien, I do not really have such a long-term outlook when it comes to gold miners. It is the perfect trap that pushes you to overbuy. As I said, the stock is a great trading tool and deserves a bet long term. What I see is a huge free cash flow loss piling here, and it concerns me.

Best regards,
Simont profile picture
I agree that IF Didipio will restart in the near future Oceana is significantly undervalued. But what is the probability of that happening? The regime in the Philippines has not changed.
Fun Trading profile picture
@Simont

Yes, it is a gamble that deserves only a bet. No guarantee whatsoever, but I believe it will happen. The question is when?
t
@Simont just happened..25 yr licence granted
Simont profile picture
@tonyconnolly : Thanks Tony, based on your post I went to read the press release on their web site. This is good news for Oceana, balanced against the bad news in the press release about ongoing problems at Haile. All-in-all I will probably start a small position tomorrow, unless the price jumps significantly. I used to own a mid size position, sold when the Didipio problem started.
t
Hi FT, happy to of traded into and out of Oceana at great levels in the past few years..thankfully flat at the time Didipio closed and the stock dumped. I see it as a bit of a coin flip from here, as to whether or not Didipio reopens. Some of the upside is now built in as the mkt knows that there are talks underway. The cost and time to get get fully operational may well make it a very short spike in share price appreciation. The issues at Haile seem to be ongoing and consistent, making a strong team look at best, unlucky. I wish them well but see much cleaner looking prospects elsewhere that have all their ducks lined up and in a row. t
Fun Trading profile picture
@tonyconnolly

Totally agree Tony.
t
@Fun Trading back in at aud2.55…Didipio licence for 25 yrs granted
Fun Trading profile picture
@tonyconnolly

Good luck Tony!
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