- 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.
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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 decreased in the first quarter of 2020 quarter over quarter, with a stronger performance from Haile but offset by lower production from Macreas operations in New Zealand and Waihi. The Didipio mine is still close but should resume operations soon. It will take up to 12 months to achieve full operational capacity with 110-120K Au Oz and 10-14K metric tons of Copper.
CEO Michael Holmes said in the conference call:
The outlook does not include Didipio and restarting Didipio is a key catalyst and priority for us. We expect that once the FTAA renewal is finalized, the operation can contribute up to 120,000 ounces of gold and approximately 12,000 tons of copper annually. At first-quartile all-in sustaining costs, Didipio will be a significant source of free cash flow moving forward.
The company indicated that it remains in dialogue with appropriate representatives at national and local levels on Didipio's FTAA renewal status. Currently, the renewal is with the Department of Environment and Natural Resources for re-endorsement to the president's Office.
COVID-19 risks remain elevated in the Philippines and could impact the timeline associated with returning to full operations
The investment strategy that I suggest here is to trade the stock short term and keep only a medium long-term position with a year or two horizon. I believe that OCANF will profit from the restart of the Didipio Mines, and I recommend accumulating the stock below $1.55.
OceanaGold - Financial Snapshot 1Q'21 - The Raw Numbers
|Total Revenues in $ Million||138.2||95.8||97.9||168.2||148.9|
|Net Income in $ Million||-26.0||-31.4||-96.8||3.9||16.0|
|EBITDA from company $ Million||42.4||12.4||13.5||61.3||62.0|
|EPS diluted in $/share||-0.04||-0.05||-0.16||0.01||0.02|
|Operating Cash flow in $ Million||120.6||16.7||63.1||-1.6||47.6|
|Capital Expenditure in $ Million||57.5||53.6||78.5||62.7||67.2|
|Free Cash Flow in $ Million||63.1||-36.9||-15.4||-64.3||-19.6|
|Total Cash $ Million||177.4||147.7||127.0||179.0||145.5|
|Long term Debt (incl. lease) In $ Million||200.0||209.1||207.4||312.9||302.0|
|Shares outstanding (diluted) in Million||622.3||637.5||637.2||702.0||704.0|
|Gold production in K Au Oz||80.7||58.7||63.1||99.2||83.2|
|Gold production sold||91.4||62.0||60.8||96.4||82.8|
|Copper Production in K tonne||0.0||0.0||0.0||0.0||0.0|
|Gold price realized||1,509||1,523||1,601||1,726||1,786|
Data Source: Company release
Gold Production And Balance Sheet Details
1 - Revenues were $148.9 million in 1Q'21
OceanaGold reported first quarter revenue of $145.5 million with Earnings before Interest, Depreciation, and Amortization of $62.0 million. The company posted a net profit of $16.0 million in the first quarter, or $0.02 per share.
2 - Free cash flow was a loss estimated at $21.7 million in 1Q'21
Trailing yearly free cash flow is a loss of $139.7 million, with a loss estimated at $21.7 million for the first quarter of 2021. The free cash flow is showing that the company is investing too much in CapEx now.
3 - Gold production details. Total production was 83,191 Au Oz in 1Q'21. (Sold 82,847 Au Oz).
First quarter gold production decreased 16.1% quarter-on-quarter with 83,191 ounces produced.
Revenue increased slightly year-over-year. Note: The Didipio Mine in the Philippines did not make any sales in the second half of 2019 nor in the year ended 31 March 2021 due to the suspension of operations. In the press release:
We continue to advance our organic growth pipeline of three new underground mines over the next two years in favourable jurisdictions.
In New Zealand, Martha Underground is on-track to begin continuous production late in the second quarter and underpins the greater Waihi District.
We plan on drilling at Waihi for years to come and adding to the already robust mine life.
At Macraes, main access and ventilation declines for the Golden Point Underground are underway, and the project is on-track for first production by year-end.
Haile Underground preparation continues in anticipation for portal development later this year.
Below is shown the production history, including Waihi and Didipio sites.
The AISC has gone up this quarter due mainly to the Macreas mine. The company indicated $1,229 per ounce.
4 - Debt and liquidity
Cash on hand is going down for the last three quarters and is now $145.5 million. The chart indicated the total debt, including leases. The net debt is now $163.4 million.
Total liquidity is now at $195.5 million.
5 - Full-year 2021 guidance reaffirmed.
The Company anticipates producing 340K to 380K gold ounces at AISC of $1,050 to $1,200 per ounce sold and cash costs of $750 to $850 per ounce sold.
CapEx for the full year 2021 is expected to be $280 million to $310 million, including $165 to $185 million for growth capital and $85 to $110 million for sustaining capital.
Technical Analysis (Short Term)
The old support is now the new resistance, and the partial selling range is between $1.80 and $1.95 with a buying range between $1.65 and $1.60. The RSI suggests that the stock needs to go a little lower, potentially below $1.50.
The new support will depend on the price of gold. If the gold price turns bullish next week, OCANF could eventually retest $1.80. Conversely, if the gold price continues to weaken, I see a retest of $1.37.
Warning: Those numbers cannot be precise, and the TA chart must be updated often to be helpful in your search for the best path strategy.
I am offering here a quick interpretation only. I regularly update the TA chart for my subscribers through my over 80-stock tracker.
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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
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