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OceanaGold Reports Second Quarter 2020 Financial Results

MELBOURNE, Australia, July 30, 2020 /CNW/ - OceanaGold Corporation (TSX: OGC) (ASX: OGC) (the "Company") reported its financial and operational results for the quarter ended June 30, 2020. Details of the consolidated financial statements and the Management Discussion and Analysis ("MD&A") are available on the Company's website at www.oceanagold.com.

Highlights

  • Total Recordable Injury Frequency Rate ("TRIFR") of 2.7 per million hours worked compared to 3.0 per million hours worked at the end of the first quarter of 2020.
  • First half of 2020 consolidated production of 139,385 ounces of gold at All-In Sustaining Costs ("AISC") of $1,237 per ounce on sales of 153,343 ounces of gold.
  • Consolidated second quarter gold production of 58,678 ounces at AISC of $1,265 per ounce on sales of 61,955 ounces of gold.
  • First half revenue of $234.0 million with Earnings before Interest, Depreciation and Amortisation ("EBITDA") of $54.8 million.
  • Second quarter revenue of $95.8 million with EBITDA of $12.4 million.
  • Cash balance and total immediately available liquidity of $147.7 million; net debt of $169.6 million.
  • Subsequent to quarter-end, the Company delivered the Waihi District Study Preliminary Economic Assessment ("PEA") with after-tax IRR of 51%, net present value ("NPV") of $665 million and 2.2 million gold ounces produced over 16 years.*
  • Advanced Martha Underground development with 1,342 metres completed in the second quarter and 2,855 metres year-to-date ("YTD").
  • Revised 2020 production guidance from 360,000 to 380,000 to 340,000 to 360,000 ounces. On a gold sold basis AISC is reduced from $1,075 to $1,125 to $1,050 to $1,100 per ounce sold.
  • Guidance reduction due to lower Macraes production primarily related to the impact of the 5-week New Zealand COVID-19 restrictions which were lifted on April 27.

*The PEA is a preliminary technical and economic study of the potential viability for the Waihi District project. The production target and financial forecast referred to in the PEA are comprised of 51% Indicated Mineral Resources and 49% Inferred Mineral Resources. Inferred Mineral Resources are considered too geologically speculative to have economic considerations applied to them in order to be categorized as Mineral Reserves. There is no certainty that further drilling will convert Inferred Resources to Indicated Mineral Resources or that the PEA will be realised. Further drilling, evaluation and studies are required to provide any assurance of an economic development case. Mineral resources that are not mineral reserves do not have a demonstrated economic viability.

Michael Holmes, President and CEO of OceanaGold said, "We look forward to the second half where we continue to expect a material increase in production at both Haile and Macraes at lower AISC plus continued advancement of our key organic growth projects including those recently outlined in the Waihi District Study.

The second quarter was expected to be our weakest in terms of production, but the results also demonstrate the impact the global COVID-19 pandemic has had on our business. We have worked hard to safeguard the health and safety of our employees through the implementation of rigorous protocols including health screening, physical distancing and disinfecting throughout our operations. These protocols include the mandatory self-isolation of those exhibiting COVID-like symptoms, plus anyone with exposure to those exhibiting symptoms. This resulted in approximately 170 workers at Haile having to self-isolate at some point since the beginning of March. Despite this, Haile continues to increase mining rates at reduced unit costs."

"In New Zealand, the Government mandated lock-down extended to five weeks during which time operations at Macraes included only limited processing with all mining suspended. This resulted in weaker than expected production for the quarter. Although the operation has recovered well, delivering near record mining rates in the month of May, the resulting shortfall in mining progress will impact the planned access to higher grades later in the year. As a result of this timing change, combined with the impact of the second quarter restrictions, the full-year guidance for the operation will be impacted and we are now expecting Macraes to produce between 140,000 and 150,000 ounces of gold at correspondingly higher cash cost and AISC."

"Progressing our organic growth projects is a key deliverable this year. We completed 2,855 metres of development at Martha Underground in the first half, and first gold production remains on-track for the second quarter of 2021. We were pleased to release the strong results from the Preliminary Economic Assessment[i] of the Waihi District subsequent to quarter end. The study highlighted the district's potential, including production of 2.2 million gold ounces over 16 years of additional mine life at sub-$650 AISC per ounce sold. At Macraes, we expect to release results of the Golden Point Underground in the second half of the year."

"Given the year-to-date impact at Macraes we are revising our consolidated full year 2020 production guidance to 340,000 and 360,000 ounces of gold (excluding Didipio). Lower operating costs and sustaining capital are expected to offset the production revision with consolidated AISC revised downward slightly to $1,050 to $1,100 per ounce sold. Consolidated cash costs remain unchanged at $675 to $725 per ounce sold. Haile's gold production remains unchanged and we continue to expect increased production at lower AISC in the second half from both Haile and Macraes with the fourth quarter expected to be the strongest quarter of the year."

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