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OceanaGold share price crashes lower on Didipio concerns

The OceanaGold Corp (ASX: OGC) share price has come under pressure in morning trade after providing an update on its Philippines operations.

At the time of writing the gold miner’s shares are down 7% to $3.95.

What did OceanaGold announce?

This morning OceanaGold responded to reports alleging that production at its Didipio mine in the Philippines has been halted.

According to the release, the company advised that these reports are untrue and the Didipio mine continues to operate as normal.

The release also confirms that the company lodged its application for renewal of its Financial or Technical Assistance Agreement (FTAA) with the Philippine Government in March 2018.

And on June 20 it received confirmation from the regulatory authority, the Mines and Geosciences Bureau (MGB), that the Didipio operation is permitted to continue operations pending the confirmation of the FTAA renewal by the government.

Management advised that the company is committed to operating in accordance with the law and will always comply with its responsibilities under its contract with the Philippine government.

The Didipio operation.

OceanaGold’s Didipio operation has been in the news several times in recent years.

In 2017 it was named as one of six mines that were threatened with suspension by the Duterte government due to allegedly causing a decline in agricultural production. There were also allegations of damage to houses caused by the blasting operation.

However, the company believes the mine has significant socio-economic benefits for the Barangay of Didipio, neighbouring communities, the provinces of Nueva Vizcaya and Quirino and the Philippines.

It notes that it directly employs 1,500 workers of which approximately 95% are Philippine nationals. The operation also provides several thousand additional indirect jobs through partnerships with cooperatives and social development organisations.

This appears to give it a strong case for having its FTAA renewed, though it seems that some investors are not convinced judging by the share price weakness.

Elsewhere in the industry today, the Newcrest Mining Limited (ASX: NCM) share price and the Northern Star Resources Ltd (ASX: NST) share price have dropped ~2% lower after the gold price declined overnight.

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Motley Fool contributor James Mickleboro has no position in any of the stocks mentioned. The Motley Fool Australia has no position in any of the stocks mentioned. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Scott Phillips.

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