MB investor month: Oceanagold Philippines

MB Investor Month gave us the opportunity to ask questions directly to a company's management team, just like you're at one of those exclusive briefings!

OGP got over 30 questions from 25 different readers, and they've provided some very detailed answers to some of those questions below. Check your inbox for a Grab Food Voucher if your question was one of the eight that got answered.

Thank you to OGP for being a part of the MB Investor Month event!

Note: I did not edit the questions (or answers) for spelling or brevity to preserve the tone of the exchange and uphold the spirit of candid access between corporations and retail investors. 
 

Question (Jeflao):  Hello, I love the concept of OGP as a stock and of it being a literal gold mine of a stock... my question is, how much assurance can we get from management that OGP will continue this level of payout since it is not a REIT and thereby not required to continue such a large percentage of its income in the future? Thanks po 

OGP: Yes, so do we! Feels great that we have been able to pay dividends to our shareholders for the last 2 quarters. The Company has a Board-approved dividend policy which targets the payment of a dividend equivalent to at least 90% of the company’s Free Cash Flow generated during the period with such dividends to be paid either quarterly or semi-annually at the discretion of the Board based on the previous year’s unrestricted retained earnings. While we expect to pay quarterly dividends, dividend payments for future periods will depend on a number of factors including our operational performance, financial performance, cash flow and market conditions.
 

Question (@mokongboy):  How low will the annualized 20.6% dividend yield drop if the additional government share is taken into account? Controlling for metal output and prices, what are the cash outflows, similar to the additional government share, that we need to consider when appreciating OGP's annualized dividend yield?

OGP:  The 20.6% annualized yield as at 30 September already considered the YTD accrual of $15.5M in relation to the AGS payable in respect of YTD performance. The AGS is payable annually by 30 April, and whilst we expect the timing of this payment will result in an impact to the cash flow in Q2 each year, it will also be dependent on prices and operational / production performance. As evidenced in Q2 of 2024 we were able to pay a dividend in respect of the 6-week period post public listing equating to a 13% yield over that period.
 

Question (@vncgrrd):  Given the 21% increase in gold and copper production this quarter, how sustainable is this growth trend in the coming quarters?
 

OGP: For mining operations, it is difficult to compare quarter over quarter and even less so, year over year numbers. For us, we are simply following our mine plan which is generally updated on annual basis, and our most recent mine plan is included in our prospectus and technical report. So a more appropriate measure for us is performance vs. guidance or the technical report There are several factors to consider for production. Given the non-contiguous nature of orebodies, items like underground development and grade can have impacts on production quarter-to-quarter or year-over-year. So, for example, if you are mining a lower grade area, naturally, you will produce lower ounces. The 21% increase in both gold and copper production in Q3 was mainly because we were able to access the high-grade stopes which was in-line with our plan. We also had a number of processing plant downtime events in Q2 which resulted in less milled tonnes in the quarter. These downtime events did not occur in Q3.
 

Question (Charles):  Can you give some rough estimate of the odds of extending the mine life beyond the 2035 projection? Although OGP's mine life is still long(around 2035), what other areas in the Philippines are you exploring for natural resources?

OGP: The focus for exploration is both near mine and regionally. We are currently mining Panel 1 and 2 of our UG mine and that is our mine life until 2035 based on reserves only (refer to figure below). We had at December 31, 2023 approximately ?300Koz of inferred resources in our underground mine. The goal of drilling in Panel 3 at depth in the UG mine is to convert the inferred ounces into reserves which has the potential to add to the mine life. We also plan to do more exploration work in panel 4 in 2025 targeting the addition of new resources that don’t currently exist in our resources. We expect to release the results of our optimization study and drilling near mine in our updated Technical Report which we hope to publish by end Q2 2025. Our orebody remains open at depth, meaning we haven’t found the bottom of our orebody yet.

We also recently had our FTAA exploration permit renewed for 5 additional years enabling us to do more regional exploration within our FTAA area, particularly in Napartan. To date, we have completed 4 holes of a 2500m program in Napartan and are currently running geophysical surveys over the area. This will help us determine the next phase of drilling for Napartan in 2025.
 

Question (Neil Franklin):  What are the company’s long-term goals in the Philippines, particularly in terms of expansion or new project developments? Are there new mines planned for acquisition?

OGP:  We just got listed this year and we are in the process of learning how it is to be a new publicly listed company in the Philippines. Our near-term focus is to run the mine well, optimize our mining rate, generate as much cash given current gold prices and pay out dividends to shareholders. For the medium term, focus will be exploration near mine and regionally. Long-term, if opportunities arise outside of our gates, we will assess how to best move forward with this vehicle we have.
 

QUESTION (pat3ck):  Were you affected by Super Typhoon Pepito? The eye of the storm seemed to pass Nueva Vizcaya.

OGP:  We experienced a wave of 6 typhoons in less than a month in the Philippines. 4 of those affected the Cagayan Valley Region where the Didipio Mine is located and according to the Japan Meteorological Agency, these 4 typhoons were clustered simultaneously in the Pacific basin which they said was the first time such an occurrence had been observed since its records began in 1951. Two these typhoons, namely, typhoon Nika (with storm signal number 3) and super typhoon Pepito (with storm signal no. 5) directly passed through the Didipio mine area. During Typhoon Pepito, we temporarily stopped our mining and milling activities to ensure the safety of our workers. With the extreme weather conditions we experienced with Pepito, we did a thorough assessment of our mine and our facilities first before restarting our mining and milling activities safely. The site did experience a significant amount of rainfall during this period.
 

QUESTION (Gracia):  What specific challenges do you foresee in maintaining your mining rate goal of 2mtpa by year-end, especially in light of recent rain events impacting access?

OGP: Our goal is to increase mining rates from the underground to 2.0mtpa by the end of 2025, and 2.5Mtpa by the end of 2027. Any weather-related downtime that occurs in the mine generally only has short-term impacts on the site given it may cause mining to be suspended for a period of time. The underground optimization works remain on-going with a new technical report expected to be released in mid-2025.
 

Question (@ampapricot):  With the company’s commitment to safe and responsible mining, as well as its focus on growing reserves and increasing production, how does the leadership reconcile potential conflicts between maximizing short-term shareholder returns and ensuring long-term sustainability—both in terms of environmental impact and the social license to operate within local communities?

OGP: We do not see any potential conflict between maximizing short term shareholder returns and ensuring long-term sustainability. In fact, we view both as essential to the way we do business.At OceanaGold our approach to sustainability is driven by our Purpose to mine gold for a better future. This focus on the value we strive to create for our stakeholders (our people, the communities that host us, our business partners, and shareholders) informs our strategic and day-to-day decision-making. It is reflected in our Vision and is also brought to life by our shared Values of Care, Respect, Integrity, Performance, and Teamwork. We seek to embed sustainability in our daily practices, with a particular focus on keeping our people safe and healthy, reducing our environmental impacts, and creating benefits and opportunities for our communities beyond our mines. Responsible business practices are integral for us to create value as it is only through listening to our stakeholders, minimizing our impacts and delivering on our promises that we can continue to be a preferred and trusted partner of the community in which we operate. Our business objectives are achieved not only by what we do but also how we do it.

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