OceanaGold Corporation
OGC Details
Update on Wharekirauponga (WKP) Prospect: OceanaGold Corporation (ASX: OGC) is a mid-tier gold mining company with significant global operating, development and exploration experience. Recently, the company announced that it continued resource conversion drilling, which includes multiple intersections of high-grade gold and silver mineralisation at its Wharekirauponga (WKP) prospect in New Zealand.
Insights of FY21: During FY21, the company experienced dent growth in financials, evident by the growth in production and revenue. OGC returned to positive net cash flow generation with $20 million in Q4FY21.
Financial Summary (Source: Analysis by Kalkine Group)
Key Risks: OGC’s performance could be impacted by the adverse movement in the prices of gold. In addition, the business could be affected by a change in the climate.
Outlook: For 2022, the company expects to produce gold in the range of 350koz – 370koz at an AISC of $1,200 – $1,250 per ounce.
Valuation Methodology: P/E Multiple Based Relative Valuation (Illustrative)
Source: Analysis by Kalkine Group
*% Premium/(Discount) is based on our assessment of the company’s NTM trading multiple after considering its key growth drivers, economic moat, stock's historical trading multiples versus peer average/median, and investment risks.
Stock Recommendation: The stock of OGC is trading near to its 52-week high level of $3.040. The stock has provided returns of ~29.82% in the past three months. The stock has been valued using the P/E multiple-based illustrative relative valuation and arrived at a target price with a correction of high-single-digit (in % terms). The company can trade at a slight discount to its peers’ average P/E multiple, considering the macroeconomic uncertainties and negative net margin. For this purpose of valuation, peers such as Evolution Mining Ltd (ASX: EVN), St Barbara Ltd (ASX: SBM), and Regis Resources Ltd (ASX: RRL) have been considered. Considering the expected correction, solid rally in the past months, current trading levels, current volatility due to Russia-Ukraine Tension, and key risks associated with the business, we advise investors to book profit and give a ‘Sell’ rating on the stock at the current market price of $2.980 as on 16 March 2022, 1:30 PM (GMT+10), Sydney, Eastern Australia.
OGC Daily Technical Chart, Data Source: REFINITIV
Note 1: The reference data in this report has been partly sourced from REFINITIV.
Note 2: Investment decisions should be made depending on the investors’ appetite on upside potential, risks, holding duration, and any previous holdings. Investors can consider exiting from the stock if the Target Price mentioned as per the Valuation has been achieved and is subject to the factors discussed above.
Disclaimer - This report has been issued by Kalkine Pty Limited (ABN 34 154 808 312) (Australian financial services licence number 425376) (“Kalkine”) and prepared by Kalkine and its related bodies corporate authorised to provide general financial product advice. Kalkine.com.au and associated pages are published by Kalkine.
Any advice provided in this report is general advice only and does not take into account your objectives, financial situation or needs. You should therefore consider whether the advice is appropriate to your objectives, financial situation and needs before acting upon it.
There may be a Product Disclosure Statement, Information Statement or other offer document for the securities or other financial products referred to in Kalkine reports. You should obtain a copy of the relevant Product Disclosure Statement, Information Statement or offer document and consider the statement or document before making any decision about whether to acquire the security or product.
You should also seek advice from a financial adviser, stockbroker or other professional (including taxation and legal advice) as necessary before acting on any advice in this report or on the Kalkine website. Not all investments are appropriate for all people.
The information in this report and on the Kalkine website has been prepared from a wide variety of sources, which Kalkine, to the best of its knowledge and belief, considers accurate. Kalkine has made every effort to ensure the reliability of information contained in its reports, newsletters and websites. All information represents our views at the date of publication and may change without notice.
Kalkine does not guarantee the performance of, or returns on, any investment. To the extent permitted by law, Kalkine excludes all liability for any loss or damage arising from the use of this report, the Kalkine website and any information published on the Kalkine website (including any indirect or consequential loss, any data loss or data corruption). If the law prohibits this exclusion, Kalkine hereby limits its liability, to the extent permitted by law, to the resupply of services.
Please also read our Terms & Conditions and Financial Services Guide for further information.
On the date of publishing this report (referred to on the Kalkine website), employees and/or associates of Kalkine and its related entities do not hold interests in any of the securities or other financial products covered on the Kalkine website unless those persons comply with certain safeguards, procedures, and disclosures.
Kalkine Media Pty Ltd, an affiliate of Kalkine Pty Ltd, may have received, or be entitled to receive, financial consideration in connection with providing information about certain entity(s) covered on its website.