Mr. Mick Wilkes reports
OCEANAGOLD ANNOUNCES ROBUST FINANCIAL RESULTS; DECLARES DIVIDEND
Oceanagold Corp. has released its financial and operational results for the first half and second quarter ended June 30, 2018. Copies of the consolidated financial statements and the management discussion and analysis (MD&A) are available on the company's website.
All currency figures are in U.S. dollars.
Net profit after tax of $89.1-million in the first half, an increase of 45 per cent compared with the same period in 2017;
- Cash balance increase of 45 per cent quarter on quarter to $128.9-million with immediate liquidity of $148.9-million as at June 30, 2018;
- Declared a semi-annual dividend of two cents per common share and CHESS depository interests (CDIs);
- Revenue of $402.4-million in the first half of 2018, an increase of 21 per cent compared with the same period in 2017;
Second quarter revenue of $205.7-million with EBITDA (earnings before interest, taxes, depreciation and amortization) of $109.7-million and net profit after tax of $44.6-million;
First half consolidated all-in sustaining costs of $744 per ounce on sales of 266,421 ounces of gold and 7,172 tonnes of copper;
- Second quarter consolidated all-in sustaining costs of $696 per ounce on sales of 138,948 ounces of gold and 3,979 tonnes of copper;
- First half of 2018 consolidated production of 268,597 ounces of gold and 7,808 tonnes of copper, including 142,950 ounces of gold and 3,919 tonnes of copper in the second quarter;
- Amended revolving credit facility by extending the tenure to 2020, revising financial covenants and reducing average margin.
Mick Wilkes, president and chief executive officer, said: "Oceanagold has delivered robust operating and financial performance in the first half of 2018 with each of our operations delivering impressive results that we expect to continue for the remainder of the year. Over the past 12 months we have increased our cash balance by nearly 60 per cent and cut our net debt by almost half, which reflects the strength of our assets. We continue to deliver one of the highest EBITDA margins in the sector while maintaining consistent, solid returns on invested capital.
"With our operations delivering strong performance, our exploration program achieving significant results and our organic growth opportunities including the Martha project at Waihi and the Haile expansion all progressing well, Oceanagold is well positioned to continue delivering positive results, robust operating margins and profits, and meaningful returns to shareholders.
"As a result of our continued business strength, the board of directors is also pleased to declare a dividend of two cents per share, which also reflects continued confidence in our business going forward."
PRODUCTION AND COST RESULTS SUMMARY
Quarter ended June 30, 2018 Haile Didipio Waihi Macraes Consolidated
Q2 2018 Q2 2017
Gold produced koz 38.6 33.1 20.8 50.4 143.0 124.4
Gold sales koz 42.9 27.9 19.9 48.2 138.9 129.8
Average gold price US$/oz 1,300 1,260 1,301 1,302 1,293 1,262
Copper produced kt - 3.9 - - 3.9 4.3
Copper sales kt - 4.0 - - 4.0 5.8
Average copper price US$/lb - 3.12 - - 3.12 2.45
Cash costs US$/oz 276 214 697 535 414 399
All-in sustaining costs US$/oz 573 365 885 920 696 681
Year to date June 30, 2018 Haile Didipio Waihi Macraes Consolidated
YTD 2018 YTD 2017
Gold produced koz 75.7 58.8 39.3 94.8 268.6 272.4
Gold sales koz 75.5 59.5 40.9 90.5 266.4 256.0
Average gold price US$/oz 1,315 1,317 1,314 1,315 1,315 1,244
Copper produced kt - 7.8 - - 7.8 10.3
Copper sales kt - 7.2 - - 7.2 10.0
Average copper price US$/lb - 3.06 - - 3.06 2.57
Cash costs US$/oz 365 167 680 595 445 351
All-in sustaining costs US$/oz 737 294 854 1,002 744 599
Quarter ended June 30, 2018 (US $m) Q2 June 30, Q1 March 31, Q2 March 31, YTD June 30, YTD June 30,
2018 2018 (1) 2017 (2) 2018 2017
Revenue 205.7 196.7 171.7 402.4 333.5
(Cost) of sales, excluding
amortization (83.8) (84.7) (73.8) (168.0) (130.6)
General and administration --
other (loss) (15.5) (12.3) (14.5) (27.8) (23.5)
Foreign currency exchange
gain/(loss) 1.3 0.6 0.7 1.9 0.4
Gain on sale of
assets - - - - 5.3
Other income/(expense) 1.5 0.6 0.5 2.1 1. 1
and impairment charge) 109.7 100.9 84.6 210.6 186.2
amortization (loss) (47.7) (51.4) (51.2) (99.1) (87.6)
Net interest expense
and finance (costs) (3.6) (3.8) (4.3) (7.3) (8.8)
Earnings before income
tax (excluding gain/(loss)
on undesignated hedges
and impairment charge) 8.4 45.8 29.3 104.2 90.0
earnings (10.7) (7.2) (4.5) (17.9) (5.8)
Earnings after income
tax and before gain/(loss)
on undesignated hedges
and impairment charge 47.7 38.6 24.8 86.3 84.2
Impairment charge (loss) - - - - (17.7)
exploration (expenditure) (2.9) - - (2.9) -
Gain/(loss) on fair value
of undesignated hedges 0.0 6.0 1.1 6.0 (6.8)
Tax (expense)/benefit on
gain/(loss) on undesignated
hedges (0.1) - (0.3) (0.1) 1.9
Share of (loss) from
equity-accounted associates (0.1) (0.1) (0.2) (0.2) (0.3)
Net profit 44.6 44.5 25.4 89.1 61.4
Basic earnings per share $0.07 $0.07 $0.04 $0.14 $0.10
Diluted earnings per share $0.07 $0.07 $0.04 $0.14 $0.10
(1) The company's consolidated financial results for the quarter ended March 31, 2018,
reflected adjustments on adoption of international financial reporting standards 15
effective from Jan. 1, 2018.
(2) For the six months ended June 30, 2017, all revenue and costs reported did not
include the Haile operations as these were capitalized as commercial production was
declared effective from Oct. 1, 2017.
On June 19, 2018, the company announced an increase to its 2018 gold production guidance with stronger operating performance expected at Didipio and Haile. As a result, the company's 2018 gold production guidance range was revised from between 480,000 and 530,000 to a range of 500,000 to 540,000 ounces.
REVISED 2018 PRODUCTION AND COST GUIDANCE
Haile Didipio Waihi Macraes Consolidated
Gold production ounces 140,000-155,000 95,000-105,000 75,000-85,000 190,000-200,000 500,000-540,000
Copper production tonnes - 15,000-16,000 - - 15,000-16,000
Costs (1) US$/ounce $725-$775 $260-$310 $750-$790 $950-$1,000 $725-$775
(1) Current 2018 financial year guidance is based on exchange rates of New Zealand/U.S. dollar 0.72, average
copper price, inclusive of executed hedges of $3.15/pound in average for the full year.
On a consolidated basis during the first half of 2018, the company produced 268,597 ounces of gold and 7,808 tonnes of copper. This is broadly in line with the same period in 2017 with stronger production at Macraes and Haile offsetting lower production from Didipio and Waihi. During the second quarter of 2018, the company achieved consolidated production of 142,950 ounces of gold and 3,919 tonnes of copper, up 15 per cent compared with the same period in 2017 with higher production from Haile and Macraes more than offsetting lower production at Didipio and Waihi.
Consolidated all-in sustaining costs (AISC) for the first half of 2018 were $744 per ounce and cash costs were $445 per ounce on sales of 266,421 ounces of gold and 7,172 tonnes of copper. During the second quarter of 2018, the company recorded consolidated AISC of $696 per ounce and cash costs of $414 per ounce on sales of 138,948 ounces of gold and 3,979 tonnes of copper.
During the first half of 2018, the company recorded revenue of $402.4-million, including revenue of $205.7-million during the second quarter. This is up 21 per cent compared with the first half of 2017 and up 20 per cent compared with the second quarter of 2017 due to a higher average gold price received and increased sales volumes driven by stronger production from Haile and Macraes.
EBITDA for the first half was $210.6-million, including second quarter EBITDA of $109.7-million representing EBITDA margins of 52.3 per cent in the first half and 53.3 per cent in the second quarter. On an annualized basis return on invested capital (ROIC) in the first half of the year was approximately 10.1 per cent, which continues the trend of positive quarterly ROIC results dating back to 2010.
At the end of the first half, the company increased its cash balance by almost 60 per cent to $128.9-million compared with the first half of 2017 and had total immediate available liquidity increased to $148.9-million. The cash balance excludes $61.7-million held in strategic equity investments.
During the second quarter, the company amended its revolving credit facility, extending the tenure one year to 2020 while also revising several financial covenants and reducing facility margins. The company's total credit facilities stood at $220-million of which $200-million remained drawn. As at the end of the first half of 2018, the company's net debt position stood at $103.9-million, nearly 50 per cent less than the same period in 2017.
The company continued to progress the permitting for a targeted 10-year mine life extension at Waihi in New Zealand. At Haile, the company is on track to commence permitting of the Horseshoe underground and expanded open pit early in the third quarter. Expansion of the Haile process plant continues to advance well with the installation and commissioning of the pebble crusher well advanced. At Didipio, ramp-up of underground operations and development of panel 2 continue to progress as planned.
As announced in the second quarter, the company continues to achieve solid exploration results to support a significant expansion of the Waihi resource designed to support the 10-year mine life extension. Additionally, the company reported significant high-grade intercepts at its regional WKP prospect, which has the potential to provide an incremental feed and mine life to the Waihi operation above and beyond the Martha project.
During the quarter, the company also entered an agreement with Tasman Mining for the development of the Blackwater deposit in the South Island of New Zealand.
The company also announces a semi-annual dividend payment of two cents per common share or CDI. Shareholders of record at the close of business in each jurisdiction on Aug. 9, 2018, will be entitled to receive payment of the dividend on Sept. 14, 2018. The dividend payment applies to holders of record of the company's common shares traded on the Toronto Stock Exchange and holders of CDIs on the Australian Securities Exchange.
DIVIDEND KEY DATES
Last date for processing requests to
convert securities between stock
exchanges before the record date Monday, Aug. 6, 2018
Common shares (TSX) trade on an ex dividend basis Tuesday, Aug. 7, 2018
CDIs (ASX) trade on an ex dividend basis Wednesday, Aug. 8, 2018
Record date Thursday, Aug. 9, 2018
Processing recommences for requests to
convert securities between stock exchanges Friday, Aug. 10, 2018
Dividend payment date Friday, Sept. 14, 2018
At the election of the security holder, the company will pay the dividend in U.S. dollars, Australian dollars, New Zealand dollars or British pounds sterling for ASX-listed CDIs, and U.S. dollars, Canadian dollars or British pounds sterling for TSX-listed common shares.
Computershare will mail shareholders the relevant materials, and election of payment currency must be made by Aug. 30, 2018.
Second quarter 2018 results and webcast
The company will host a conference call/webcast to discuss the results at 7:30 a.m. on Friday,
July 27, 2018, Australian Eastern Standard Time/5:30 p.m. on July 26, 2018, Eastern Daylight Time.
Teleconference participants (required for those who wish to ask questions)
Local (toll-free) dial-in numbers are:
New Zealand: 0-800-453-421
Canada and North America: 1-888-390-0546
All other countries (toll): 1-416-764-8688
Playback of webcast
If you are unable to attend the call, a recording will be available for viewing on the company's website.
About Oceanagold Corp.
Oceanagold is a mid-tier, high-margin, multinational gold producer with assets located in the Philippines, New Zealand and the United States. The company's assets encompass the Didipio gold-copper mine located on the island of Luzon in the Philippines. On the North Island of New Zealand, the company operates the high-grade Waihi gold mine, while on the South Island of New Zealand, the company operates the largest gold mine in the country at the Macraes goldfield, which is made up of a series of open-pit mines and the Frasers underground mine. In the United States, the company operates the Haile gold mine, a top-tier, long-life, high-margin asset located in South Carolina.
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