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OceanaGold share price on watch this morning following full year results

The OceanaGold Corp (ASX: OGC) share price will be on watch on when trading opens this morning, following the release of its full year earnings for the year ended 31 December 2019 after yesterday’s close.

Declining full year revenues, but quarterly revenues up

OceanaGold recorded overall revenues of $651.2 million for FY19, which was a decrease of 16% on the prior year. This result included 4th quarter revenue of $152.1 million. The gold producer put its lower growth rate down to lower sales volumes, as no sales from its Didipio operations were recorded in the second half of 2019.

OceanaGold explained, however, that this lower revenue was partially offset by a 7% higher average gold price received relative to 2018. The company also witnessed increased sales volumes from its Haile operation, which completed its second full year of commercial production during 2019.

Despite the significant fall in revenues during calendar year 2019, quarter-on-quarter revenue for OceanaGold increased by 14% to $152.1 million. This significant increase in quarterly revenue was driven by increased volume from its New Zealand operations, as well as a higher average gold price received, however this was partially offset by the absence of sales from its operations in Didipio.

Full year 2019 net profit for OceanaGold after income tax was $32.1 million or $0.05 per share on a fully diluted basis. Oceana commented that this result was impacted by the lower earnings before interest, tax, depreciation and amortisation (EBITDA), however the results were partially offset by lower depreciation and amortisation charges as compared to the prior year.

Fourth quarter net loss after income tax was $0.7 million or $0.00 per share on a fully diluted basis. This net loss was primarily due to higher depreciation and amortisation costs quarter-on-quarter. Additionally, there were non-production costs incurred with regards to maintaining operational readiness at its Didipio operations during the last quarter of 2019.

The company’s annual operating cash flows came in at $204.3 million. Fourth quarter operating cash flows were $46.7 million, which was a 41% decrease from the prior year and 44% increase from the previous quarter.

OceanaGold commented that the year-over-year, quarterly decrease in cash flow was primarily caused by an absence of sales from Didipio in the second half of 2019.

The company’s cash balance at the end of 2019 stood at $49.0 million, with this result excluding $37.0 million held in equity investments.

Strong production driven by Haile and Macraes operations

For the full calendar year of 2019, OceanaGold produced 470,601 ounces of gold and 10,255 tonnes of copper, including 108,151 ounces of gold and 68 tonnes of copper in the fourth quarter. This result was driven by strong production from its Haile and Macraes operations.  Pleasingly, the company reported that quarter-on-quarter gold production was nearly 20% higher for the United States and New Zealand operations relative to the previous quarter.

Commenting on the results, Mick Wilkes, president and CEO of OceanaGold, stated:

Our United States and New Zealand operations delivered a strong fourth quarter to close out 2019. Haile continued its improvement throughout the year and we expect this to continue in 2020 with an approximate 25% increase in production and lower AISC relative to the previous year.

In New Zealand, Macraes reported improved production and steady cash flow generation for the year. We expect much of the same from the Macraes as we advance opportunities to extend the mine life of the operation. At Waihi, the Correnso underground operations are winding down with cessation of mining in the main areas this quarter ahead of narrow vein mining for the remainder of the year.

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Motley Fool contributor Phil Harpur 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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