Why the OceanaGold (ASX:OGC) share price is slumping 9%

Investors have been quick to dump their OceanaGold Corp (ASX: OGC) shares today. At the time of writing, the OceanaGold share price has tanked nearly 9% in Friday’s trading session after the company released its full-year report.   

What’s impacting the OceanaGold share price?

Earlier today, the OceanaGold share price fell by more than 11% after the company released its full-year financial report for the year ended 31 December 2020.

For the year, OceanaGold reported a loss of US$150.4 million compared to a US$14.5 million profit achieved in the year prior. A 23.2% fall in revenue of US$500.1 million for the year contributed to the loss.

OceanaGold attributed the fall in revenue to limited sales and lower annual production. Overall, the company fell to a loss after revenue was unable to offset the cost of sales and higher depreciation costs.

For the full year, OceanaGold reported consolidated production of 301,675 ounces of gold. The company managed to sell 310,531 ounces at an all-in sustaining cost (ASIC) of US$1,278 an ounce.

Despite the dour full-year performance, OceanaGold highlighted a strong performance in the fourth quarter. The company reported a 57% increase in production for the fourth quarter of 99,155 gold ounces.

Outlook

OceanaGold is a multinational gold producer. Its portfolio of operating assets include the Didipio mine in the Philipines, Macreas and Waihi operations in New Zealand and the Haile gold mine in the United States.

On the back of a strong fourth quarter, OceanaGold touted an optimistic outlook for 2021, upgrading its full-year gold production guidance. It advised expected production for 2021 is in the range of 340,000 to 380,000 ounces at an ASIC of between US$1,050 to US$1,200 an ounce.

The company attributed the increased guidance to production resuming at the Waihi operation and higher gold sales from the Haile gold mine. OceanaGold’s Martha underground project at Waihi recently entered production, whilst its Golden Point project at the Macraes operation and the Haile gold mine are expected to commence production later this year.

OceanaGold President and CEO Michael Holmes attested to the revised guidance. He stated, “These three projects alone are expected to deliver more than a 75 per cent increase in production relative to 2020 at decreasing costs and increasing margins.”.

Based on the current OceanaGold share price of $2.01, the company commands a market capitalisation of around $155 million.