Q3 2022 OceanaGold Corp Earnings Call
<unk>, a reflection of the care being taken across the business to keep each other safe.
We will remain focused on this and strive to reduce the severity of any injuries that do occur.
I'm also happy to report that we remain on track to deliver our full year guidance. We produced 351000 ounces of gold year to date, which puts us pretty much bang on 75% of the midpoint of our full year gold production guidance range.
With a strong fourth quarter expected due to high grades at Haile.
We remain well on the way to delivering on this key commitment to the market.
<unk> realized gold and copper prices.
EBITDA was $40 million, reflecting the lower revenue, but also have approximately $17 million of noncash unrealized foreign exchange losses arising on the revaluation of our U S dollar denominated revolving credit facilities.
After adjusting for this noncash charge.
Third quarter adjusted net profit after tax was $6 million.
This equated to an EPS of <unk> <unk> per share fully diluted.
While operating cash flow per share was <unk>.
In line with analysts' consensus.
Looking ahead to the fourth quarter and is that London started the year, we continue to expect stronger gold production relative to the third quarter.
At <unk> gold production in the fourth quarter is expected to increase as mining progresses into higher grade zones.
<unk> all in sustaining cost per ounce is also expected to increase despite the higher gold production.
This reflects higher expected capitalized pre stripping the.
The yearly works underway at the <unk> underground and planned capital expenditure on waste containment facilities.
Okay.
The precise amount of some of these work the precise timing of some of these works is subject to receipt of the final record of decision and related operating payments.
While the approved early works program at Haile underground is underway.
Based on the expected timing to conclude the permitting process as outlined by Jared <unk> 2022 full year capital expenditure is now expected to be approximately 20 million lower with some planned works moving into 2023.
As a result, the group's 2022 full year consolidated capital expenditure is now expected to be towards the lower end of the guidance range.
At <unk> gold production in the fourth quarter is also expected to be higher than the third quarter.
Driven by higher feed grade and recoveries, while mcright all in sustaining cost profile is expected to be lower consistent with the higher expected gold production.
At the DBO in Hawaii coal production and all in sustaining cost per ounce at both operations are expected to remain relatively consistent.
Quarter as compared to the third copper production at the <unk> is also expected to remain relatively consistent in the fourth quarter.
I will now turn the call over to David Londono to discuss <unk> performance during the quarter.
Thank you Scott and good morning, everyone.
The Haile operation continued to maintain a lowering frequency rate with one point of recordable injuries per million our spot at the end of the quarter.
Safely and responsibly delivering production.
Highest priority at Oceana goals I'm very pleased with the airports of the HP KP choice shape.
Mining lower grade.
<unk> this quarter as planned.
Smelting production was $86 from 500 hospitals.
<unk>, a slight decrease when compared to the previous quarter.
From a regional account.
Total material mined in the quarter was $8 2 million pounds.
A decrease from the previous quarter due to lower equipment availability and longer haul.
While below our mine however, what's one 1 million pounds.
That 50% increase quarter on quarter.
This significant increase my side of salt to positive tonnage reconciliation.
Absolutely story co working combined with price bounce right back.
Mining at the highest paid was completed at the end of the quarter and the mine transitioned to a mill zone and have better pace to Ias in line with the mine plan.
Total NIM stayed largely in line with the prior quarter reflected the ongoing benefits of improved our presentation.
Through our blending and much better utilization due to less chip packages.
Average mill.
Gold grade was lower than the previous quarter, mainly due to lower grade ore supply prepaid prepays, one consistent with the mine plan.
Okay NEM made landfall in South Carolina September 30th deliver.
Delivering high winds and heavy rainfall.
Recently actually shrunk of improvement, we're planning better training systems and better rock base from the three plants.
Mine was able to maintain operations with no material disruption either combining our processing during this period.
Mining costs increased compared to the previous quarter.
Ideally to lower total mining movements.
Hi, and planned maintenance work on the worldwide fleet also continues to impact productivity and mining unit costs and some planned maintenance is a primary focus of the high asset management plan and continuous improvement initiatives.
Processing unit costs increased marginally compared to the previous quarter due to higher cost of reagents, and mechanical and electrical pack, which were partially offset by lower reagent consumption.
Third quarter, all in sustaining cost was $15 52 per ounce with cash cost of $11 75 per ounce.
Now for more details on the political process.
During the quarter. The U S Army Corp of engineers published the Hail FCS, which was followed by a scheduled candidate.
<unk> periods.
No material comments what has changed.
The U S. Army Corp of engineers has a very fast that all comments received them to review period have been adequately addressed and that is ready to each board composition and the clean Water Act section four pardon me.
Yes presentation is that it's been a car once the clean water Act.
On a warm water quality certification that was recently issued by the SEC will take effect.
On October 21.
Coalition audience that he has issued a portal wants at deprecation, which will be effective in early November 2022.
Our request for the headquarter reveal its method.
We do not anticipate that anything's going to always be requested.
Given the agreement reached earlier this year with the conservation community in South Carolina to provide financial assurance to the space as part of the <unk> process.
Also engaged with these groups throughout the project permitting process.
Shortly after the record of decision on product penetration ratio, the heck relation with mine permit which will effectively complete the permitting process for <unk>.
Mine expansion.
We expect this all to occur in the fourth quarter.
As Jeremy mentioned.
<unk> also approved an early works program, which allowed the team to became preparation acquainted crown.
Operations, including advancing initial development of the main underground production Oracle on decline.
And drilling that they take an exhaust ventilation part.
All of this is within the current pandemic Italia.
If approval is granted late in the third quarter and as of today.
Decline has advanced approximately 50 meters and they pay connect software installation pork culture have advanced a combined total of approximately 75 meters.
With the early work programs underway.
Spectation surround the issuance of the final crop discussion and remaining permits to be probative Anthony outcome.
We continue to expect <unk> to be delivered from the Haile underground.
In the fourth quarter of 2023.
We remain on track to deliver significant production growth at <unk> over the next couple of years.
I will now turn the call over to Scott <unk> discussed there were small strongly the appeal and our New Zealand operations.
Okay.
Scott are you there.
Okay.
Scott may be having some problems with these audio so I'll take it from here.
I will start with the DP one DP on continues to be one of the safest operating mines in the industry and it reported.
Our recordable injury rate per million hours worth of zero point night.
By the end of the quarter the operation mined at its full 1.6 million tonnes per annum underground.
And produced over 25000 ounces of gold and over three and a half thousand tonnes of copper and that's a slight decrease when compared with the previous quarter due to lower copper and gold grades mined but was in line with the full year mine plan.
Total mined material in the third quarter slightly decreased due to a minor reduction in underground development rights as the operation of advance through areas with wet ground conditions.
Mill feed in the third quarter also slightly decrease when compared to the previous quarter due to variations in planned maintenance, which included a sag mill relaunch.
We're also multiple power interruptions to the mill at the end of the quarter due to impacts to the network during typhoons in cutting.
Underground mining unit costs and processing unit costs, both increased as a result of increased electricity tariffs consumables and other costs while processing costs were also impacted by the planned.
<unk> maintenance shutdown.
To give you a third quarter saw an all in sustaining cost was $930 per ounce, while cash costs were $819 per ounce generating strong minded margins. Despite the decrease in average realized gold and copper prices.
We are moving onto my cries Macquarie had a 23% reduction in its total recordable injury frequency rate quarter over quarter.
And reported $5, one recordable injuries per million hours worked.
The team there is doing a lot of very targeted work to improve the site performance of the site and pursue the elimination of high impact injuries and we're starting to see some early signs of this having the desired effect.
The operation experienced record monthly rainfall in July of 200 millimeters naturally this impacted negatively on open pit mining an underground mining operations is access to the Fraser's underground by the phrases west pit was restricted.
Along with lower grade from Golden point underground loose resulted in lower quarter over quarter gold production of 29400 ounces.
During the third quarter open pit mining occurred in detail phrases west Guyton and in his mills, while underground mining was at Fraser's underground and Golden point underground.
While development rights of Golden point underground continued to be impacted by poor geotechnical conditions around the Golden point fault progress was made and decline development during the quarter opened up access to the round Hill all system with first all drive tune-ups commencing at the end of the quarter.
Mill throughput decreased slightly compared to the previous quarter. Despite a high percentage of hot deep below and the planned stoppage to conduct Sag mill maintenance during the quarter gold recovery was lower compared to the previous quarter due to a high percentage of carbonaceous ore from deep dollface fall this adversely impacted the carbon in leach recover.
Please.
We expect that Optimizes blending strategies and increase underground all volumes in the fourth quarter of the year to improve recoveries.
The third quarter site, all in sustaining cost was 1900 and $24 per ounce with cash cost of <unk>.
Shade under 30 and $100 per ounce.
Both an increase from the previous quarter due to lower mining productivity and gold production and sales.
<unk> was higher costs.
If I'm moving now onto Wahid why he has total recordable injury frequency rate was consistent with the previous quarter. As this team continued to safely deliver production.
And in the quarter why he produced 13690 <unk> ounces of gold an increase of 67% compared to the previous quarter. This is a significant quarter on quarter increase which we did expect because our mining during the third quarter progressing to higher confidence areas of the Martha underground deposit, which improved our results.
The improved stoping performance increased ore tonnes and high grade mined mill feed increased 37% from the previous quarter.
With the benefit of the grade control drilling program data and and as mining has progressed into these areas of high confidence it's expected that mining rates will continue to increase over the coming quarters. However.
However, there remains a risk that annual production rights may not reach levels previously projected on a multiyear basis.
Underground mining rights processing unit rights and saw it G&A all G decreased quarter over quarter.
<unk> as a result of increased mined and milled tons.
Last quarter, we launched the why he north project consent application and the receiving council's formally accepted the application is complete for processing and issued a number of requests for additional information, which we will respond to ahead of public consultation next year.
At the completion of the consultation stage the cancels will determine the formal hearing process of considering the consent applications.
<unk>.
Along with the consent application, we continue to advance various technical studies and exploration that ferric here Palmer to support the why he north pre feasibility study drilling to date and mining optimization studies strongly support further growth of the indicated resource.
As we've mentioned before a targeted indicated resource size of $1 1 million ounces has been determined as optimal for initial development plans.
Which provides improved mine design opportunities in support of a pre feasibility study, which is expected to be completed around the end of 2023.
So moving to the final slide.
After three solid quarters, we are well on our way to safely and responsibly delivering on the production financial expectations set out at the start of this year and we know that to be a key requirement of the market.
We are focused on maximizing production and free cash flow and we have three key new programs addressing the value potential here, namely asset management procurement and continuous improvement.
We have recently recruited proven experts in each of these areas to accelerate the realization of this potential.
We've seen some early stage successes in the procurement space, because our procurement expertise being the longest serving new join us and there's a lot of opportunity for improvement in the other two areas as well.
We've made good progress in that journey of realizing the organic growth in our portfolio and shareholders can can be certain that we remain focused on creating shareholder value and higher returns to shareholders.
I'll now turn the call back to the operator and open up to any questions.
Okay.
Thank you Sir.
Ladies and gentlemen, if you would like to ask a question at this time. Please press star followed by one on your Touchtone phone you will then hear a tone prompt acknowledging your request and if you would like to withdraw from the question queue. Please press star followed by two and if using a speakerphone you will need to lift the handset before pressing any clues.
Please go ahead and press Star one now if you do have a question.
And your first question will be from <unk> Habib Scotia Bank. Please go ahead.
Please on mute your line.
Okay.
Yeah.
Hello, Mr. Habib can you hear Ross your line is open.
Getting no response next question will be from Wayne Lam at RBC.
Yeah.
Yes, thanks, good morning, guys.
Just wondering at the GPO.
You guys have seen that quite a big increase in unit costs with the higher energy rates and labor labor.
Wondering if you are looking for next year.
Much of that is.
Yes.
Great.
Or should we anticipate cost to be relatively similar.
To the implied <unk> guidance, given the cost pressures you're seeing on multiple fronts.
Yes, Thanks Duane.
<unk> energy costs are primarily impacted by coal costs in the Philippines.
And your view on what they are going to lead.
As good as mine.
But the overall year to date I mean, its performance is broadly in line with the guidance that we've given for the year and as we said during the prepared remarks the production volte.
Volumes and certainly there is stability in the relative rate of increase of.
Costs.
We don't expect that the cost performance to be any worse I would note that as it relates to labor costs.
The Philippines.
Pacer a bit like we've experienced in New Zealand, all New Zealand as well and also straight to the extent that we have costs in Australia.
The depreciation of those operating currencies against the U S. Dollar has given us a really good buffer.
In our U S dollar unit cost sense.
Okay got it thanks.
And then just wondering on the increase in the plant capacity there.
The targeted mill feed for the year would imply relatively flat throughput quarter over quarter. So just wanted to confirm whether the mill is already able to achieve the higher Max throughput and then what would you need to see from the optimization study.
Give us a sense of timing on.
When you might be in a position to make a decision on the higher limit.
Yeah well.
For the benefit of all so we guided this year for the.
The mill right to be somewhere between 3.94 million tons for the year, even though as your question implies we got an increase to take the mill to 4.3.
So the studies that we have underway, both relate to both mining and and and the plant in and we're just going to try and find that peak.
Point of value relative to the cost of.
Any downstream works to accommodate that extra.
Milling right and also make sure that the interplay between underground ore feed and the utilization of the above ground stockpile is optimized. So so we're not just going to chase to fill the mill. There's disease. This nice blend of of the underground mine plan and obviously, we'd love to get more.
From the underground given that's where the high grade gold is the ore body. As you know is open at depth and we're trying to again, we want to make sure that that interplay between those two sources underground and open pit.
Is optimized rather than rushing to fill the mill nets necessarily but it's it's nice to have that little bit of headroom as to the timing of the studies I think there'll be finished early next year.
Okay, Perfect and then maybe just last one for me.
Just wondering at Haile how far are you guys able to ramp down before the record of decision as fully and Anne.
Oh ramped down probably about another month, roughly I mean, where we're advancing other good right.
<unk>.
In terms of the permit that we have we got a bit of headroom there to go but better around a month from now.
And we expect.
To get it all done in that period of time.
Perfect. Thanks for taking my questions. Thank you Wayne I appreciate them.
As a reminder, ladies and gentlemen, if you do have a question. Please slowly press star followed by one on your Touchtone phone.
And at this time it appears that we have no further questions. Please prasad.
Sorry was that it was evident as attempted question here.
Oh, yes, sorry, there's actually a question sorry to jump in there is a question on do we got through the webcast and this is from a base.
He would like to know that at Haile the receipt of the Ncis permits seem to be closed clubs and based on D. Heck of proving early works and assuming.
Sei's per FTE.
As permitted in 2023, how are we looking at 2023.
Digital I'll have a go and then you can color it in I mean.
As David said.
Basis, the work that we're doing now and the expected timing of the receipt of.
All associated impairments were on track to get first ore out of.
While on the ground in the third.
Towards the end of 2023, which if you go back to the technical side.
Review that we put out back in February .
<unk> is broadly consistent with that we always knew that there would be the first of all we were targeting to get in towards the end of and be a small sliver of the 2023 all feed.
And as David said earlier, that's that remains the current expectation dividend anything you want to add to that.
No that's very good.
Current advanced with the army are balanced with a target to deliver per store in that fourth quarter is probably the fourth quarter.
Thanks Vivek.
We appreciate your persistence by having a web web related question.
Yes.
One more from him actually.
At Wahid, we saw production coming up nicely due to grade control drilling how far how far is great control drilling ahead of production and are you now confident that production has stabilized.
Great Great question, Yeah, we've grade control drill the remainder of this year and all of next year and naturally you can expect that we're going to be keep.
Keeping well ahead of our going forward.
We expect that the next year's production will be higher than the this year's production.
And as I think I was alluding to in the comments it.
It may not get.
And we do in the middle of that life of mine planning now and we've obviously got the better drilling of data that allows us to inform the right over longer term period, but.
But our expectation is that it may not get up to the circa 90000 ounces at 19 100000 ounces that we had previously.
But it would be.
Certainly much higher on a going forward basis sustainably than the rights and we will achieve in this year.
And pleasingly just to make the point again, we expect.
As we saw the rates of performance in the quarter just gone were achieved.
Achieved.
To be free cash flow positive.
As a result.
We've got another question coming in from the webcast is from micro parking at National Bank.
That's why he has great control drilling outflow through Opex and <unk>.
Total cash costs in APAC.
Yes, It does certainly does Mike.
He is also on the phone I will put them through.
Mr. <unk> your line is open.
Thank you that was good color thanks, guys.
Okay.
Thanks, Mike.
At this operator, we have no other phone questions.
Alright. Thank.
Thank you and thanks, everyone for joining us that concludes the webcast and conference call. A replay will be available on our website later today on behalf of the management team and everyone at Oceana gold. Thanks for joining us and wish you a very pleasant rest of the day off now.
Thank you ladies and gentlemen, this does indeed conclude your conference call for today. Once again, thank you for attending and at this time, we do ask that you. Please disconnect your lines enjoy the rest of your day.
[music].