OceanaGold Corporation

OGC Details

Decent Cash on Hand of $55.6 Mn as at September 30, 2019:Multinational gold producer, OceanaGold Corporation (ASX: OGC) has assets located in the Philippines, New Zealand and the United States. It also has a significant pipeline of organic growth and exploration opportunities in the Americas and Asia-Pacific regions.

YTD and Q3FY19 Key Highlights for the period ended on September 30, 2019:Gold and copper production for the quarter stood at 107,478 ounces and 2,316 tonnes, respectively.Year-to-date (nine months) gold and copper production stood at 362,450 ounces and 10,187 tonnes, respectively. Year-to-date (YTD) operating cash flow for the period stood at $157.6 Mn, including $32.4 Mn in Q3FY19. Company’s cash on hand at the end of the period stood at $55.6 Mn, with immediate available liquidity reported at $105.6 Mn and net debt at $140.3 Mn.

YTD Revenue, EBITDA and net profit were reported at $499.1 Mn, $169.0 Mn and $5.8 Mn, respectively. All-In Sustaining Costs (AISC) on sales of 341,100 ounces of gold and 6,901 tonnes of copper for the nine months period, were reported at $1,087 per ounce. Revenue, EBITDA and net loss for the third quarter were reported at $133.6 Mn, $33.9 Mn and $21.9 Mn, respectively. Consolidated AISC on third-quarter top-line was reported at $1,122 per ounce.
 

YTD and Q3 FY19 Key Operational & Financial Metrics (Source: Company Reports)

What to Expect:As per the revised guidance, the company now expects gold production in the range of 460,000 and 480,000 ounces, along with 10,000 to 11,000 tonnes of copper. Consolidated AISC is expected to be in the range of US$1,040 and US$1,090 per ounce sold while the cash cost guidance has been revised to US$710 to US$760 per ounce.The revised guidance assumes no further production or sales from Didipio for the remainder of the year. In the fourth quarter, Haile is expected to deliver moderately higher production due to an increase in the average feed grade, combined with progressive throughput and recovery improvements. Waihi is expected to deliver production similar to the third quarter. At Macraes, production is expected to increase significantly due to an improved average mined grade.

Stock Recommendation:OGC’s share generated a negative YTD return of 40.16%. Currently, the stock is trading close to its 52-week low level of $3.00. Its gross margin and EBITDA margin for Q3FY19 stood at 41.3% and 26.0%, better than the industry median of 7.5% and 3.4%, respectively, implying decent fundamental of the company. Its debt to equity multiple for Q3FY19 stood at 0.13x, lower than the industry median of 0.18x. Hence, considering decent YTD gold and copper production, positive top-line and bottom-line for nine months period, decent liquidity position, and current trading levels, we recommend a “Buy” rating on the stock at the current market price of $3.150, up 2.606% on November 7, 2019.

 
OGC Daily Technical Chart (Source: Thomson Reuters)
 
 

Dacian Gold Limited

DCN Details

DCN Reports Revenue Upon Commencement of Commercial Production:Australian mid-tier gold producer, Dacian Gold Limited (ASX: DCN) operates at the Mt Morgans Gold Operation (MMGO) near Laverton, Western Australia. Recently, the company published its 2019 Annual Report, wherein it highlighted that for the full year ended on June 30, 2019, gold production stood at 138,911 ounces of gold, which represents the highest production level since its inception.Group’s cash in hand at the end of FY19 was reported at $35.5 Mn. Debt drawn in 2019 under the syndicated debt facility, was reported at $105.5 Mn. Gold sales revenue for the period was reported at $132.6 Mn as compared to ‘nil’ in FY18, reflecting commencement of commercial production.

September’19 Quarter Key Highlights:Gold production for the period stood at 42,002 ounces, in-line with the guidance. Gold sales for the quarter stood at 38,101 ounces at an average sale price of $1,996/oz, taking the total revenue to $76 Mn.

Operating cash flow for the period was reported at $20 Mn, which enabled the company to increase its cash and equivalents to $54 Mn. Its total debt position at the end of the quarter was reduced by $10.8 Mn to $94.7 Mn.


September’19 Quarter Operating Cash Flow Statement (Source: Company Reports)

What to Expect:FY20 Production at Mt Morgansis expected between 150,000- 170,000 ounces of gold, at an all-in-cost, inclusive of all capital expenditure, in the range of A$1,400-1,500 per ounce.Moreover, the company released an updated Life-of-Mine (LOM) plan over an 8-year period from FY2020 to FY2027 for MMGO, where a total of 1.08 million ounces of gold production has been forecasted with All-in-Cost (AIC) in the range of A$1,280-A$1,380/oz, inclusive of all capital expenditure. The plan demonstrates an average annual production rate of 170,000 oz over the first 5 years through to FY2024, at an average MMGO AIC, inclusive of all capital, of A$1,340 – A$1,440/oz.


Updated MMGO LOM plan annual production and All-in-Cost profile (Source: Company Reports)

Stock Recommendation:DCN’s share generated a negative YTD return of 42.32%. Its current ratio improved from 0.62x in FY18 to 0.74x in FY19. Its cash cycle for FY19 stood at negative 15.8 days, lower than the industry median of 46.2 days, which implies that the company is efficiently managing its asset-liability. Hence, considering the decent FY19 top-line and bottom-line performance, adequate cash position, long-term outlook for next 8 years and current trading levels, we recommend a “Speculative Buy” rating on the stock at the current market price of $1.515, up 3.413% on November 7, 2019.


DCN Daily Technical Chart (Source: Thomson Reuters)

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