Oceanagold,in a press release,on July 16 announced that the Phillipine government which had closed the Didipio mine to study the effect on the local environment had now given a new 25 year arrangement (FTAA) to continue operating the gold and copper mine.No date was given on the new startup date nor when normal operations would resume.However OGC said ,in it's press release,that milling would begin "as soon as possible".The staged restart will begin over the next several weeks.And in full operations it will produce 10,000 ounces of gold and 1000 tonnes of copper in a month.This will have an immediate impact on OGC earnings and stockprice as the Didipio mine contains a stockpile of 19 million tonnes of ore.The total value of the stockpile of copper and gold is estimated by this blog at $17 million or $.025 per share.
Past Blogs
This event has been covered by several other of my blogs including Workathon dated May2 and January 25,2021.There was some speculation that the Phillipine government might be asserting that it intended to take an ownership position in the Didipio mine.This blog suggested that OGC might ask the Australian government to intervene on it's behalf to sign a new FTAA agreement.But none of that took place and OGC has remedied the problem by returning 1 - 1.5% of it's gross revenue to the Phillipine government in order to assuage the environment problems that might occur from the mine.And according to the OGC managerment Didipio will be sarting up again in several weeks.Furthermore Oceanagold management has increased it's production guidance by about 20,000 ounces for 2021 because of the startup.
Q2 Highlights
Oceanagold had a good second quarter aside fron signing a new FTAA agreement. Revenues were $183 million versus $149 million in Q2 2020 while adjusted EBITDA was $95 million and e.p.s. was $.05 per share compared to $.02 in Q2 2020.First half production was at $177,000 ounces and as a result management revised annual guidance to 350,000-370,000 ounces excluding production from Didipio.While Didipio is expected to produce 18,500 ounces of gold and 3500 tonnes of copper in the fourth quarter.
Back to Work
Oceanagold had a setback when the Phillipine government shut down the mine almost 2 years ago.But it was not dormant during this period as it developped the Martha Underground Project and the Waihi mine.Also it bought a lot of property surrounding the Waihi mine.So production has not fallen during this period;it has actually increased.And, in addition,it has a stockpile of gold and copper ore on the Didipio mine worth about $17 million.It has been suggested that OGC pay 1-1.5% to the provincial government but this may only last for 1-2 years.But the new production is expected will add up to 18,500 ounces and 3500 tonnes of copper in the last quarter.As a consequence this blog sees that e.p.s. may hit $.16 -$.20 per share in 2021.This should be enough to gradually push Oceanagold shares back to 2019 levels when it was trading around $3.50.Right now the price of gold has fallen but should not stay down with all the government liquidity still pouring in to the economy.
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