DD questions for the boardStumbled across this company and I am very amazed by its value
However still doing my DD – and would appreciate if someone from the board could shine some light on the following:
I’m struggling to understand how a company that is producing 200k+ oz a year at cash cost of roughly $400 – is actually not making much of a profit – where is all the money going? Earning have been negative– how is this so? There appears to be loads of fat left over but where has it all gone
I know this is pretty vague but if they can’t make a profit now then that concerns me.
OceanaGold Corporation Financial Summary
| | Full year 2008
US$’000 | Full year 2007
US$’000 | Full year 2006
US$’000 |
| Gold sales | 217,214 | 104,395 | 94,750 |
| Release from other comprehensive income deferred unrealized loss on designated hedges | 279 | (16,407) | (27,684) |
| | 217,493 | 87,988 | 67,066 |
| Cost of sales, excluding depreciation and Amortisation | (138,154) | (81,669) | (72,684) |
| Depreciation and amortisation | (50,547) | (28,790) | (14,031) |
| Other expenses | | | |
| Interest expense | (20,992) | (19,414) | (6,594) |
| General and administration | (15,338) | (11,632) | (5,906) |
| Foreign exchange gain/(loss) | 2,254 | (2,661) | (306) |
| Total other expenses | (18,738) | (22,075) | (6,900) |
| | | | |
| Gain/(loss) on fair value of undesignated hedges | (73,408) | (45,847) | (5,079) |
| Other income | 3,069 | 7,003 | 2,766 |
| Earnings / (loss) before income taxes | (75,623) | (95,022) | (34,768) |
| Income tax (expense)/benefit | 20,888 | 25,983 | 11,341 |
| Net earnings / (loss) | (54,735) | (69,039) | (23,427) |
| Net earnings /(loss) excluding hedges | (3,545) | (25,461) | (1,476) |
| Net (loss) per share | ($0.34) | ($0.47) | ($0.29) |