Indictment The base case scenario for OGC now is that Didipio remains closed. It can‘t be expected any more, that the FTAA - reneval, after one year and 8 months duration up to now, suddenly ends with approval. OGC‘s management has proved not to be capable to resolve the issue. I guess OGC‘s management thinks they have submitted their FTAA application in March 2018, and have no notion that it was sent back as „incomplete“ (as mentioned in the media)- I have heard nothing of a second attempt to submit the FTAA-application. „The position of the president’s office was...It returned the renewal application and mandated the company to comply with the process of obtaining FPIC from the community, a requirement by the National Commission on Indigenous People (NCIP)“... Have you ever heard OGC seeks to get the FPIC?
So, as the things go bad for OGC, and the management seems to be disoriented about what it ought to do now, the question is, what is OGC worth in the future without Didipio. It seems to be another management failure to finance „care and maintainance“ without any timeline. In the recent earnings call transcript an amount of 7 Million US$ is mentioned quarter on quarter, what it costs. This will erade any small gain OGC can work out with the remaining low profit and below average managed mines. At the present gold price the best case for the remaining business is „no loss“. They can hope for another advance in the goldprice, which I think is not safe. Maybe the goldprice sees a setback to 1250 $, and the hedges in Macraes turn out profitable, but the company has to struggle further, until the goldprice goes up again. However these are too many „ifs“ and „hopes“ for the future.
1090 $ AISC for 450000 ounces means Zero profit or a loss as long as Didipio costs 7 Million care and maintainance every quarter. I therefore recommend to drop Didipio, shut it down and never come back, do what the local people want - or get their „FPIC“ which seems to be impossible, and if they do not, there’s no hope that the things get better. But continue opposing the local people make the things even worse. In the „earnings call transcript“ not a single word mentioned the critical issue FPIC, reflecting that the head of management is obviously disoriented about the facts. Otherwise the management would consider one quarter‘s amount of maintenance costs to invest in receiving the FPIC (free, prior and informed consent „FPIC“ of the affected indigenous peoples).
The present management of OGC should resign - they don’t have the right ideas what to do right now. The new manager who came from Barrick (an indictment for the people working before at Haile) may be a candidate as the new CEO, if he succeeds making Haile more profitable, a matter in which Mick Wilkes has failed completely. The main strategic decisions the present management has drawn have turned out as flops and failures (hedges, El Salvador, Argentina, strategic investments). At some time the game is over.
As an investor you should ask yourself to get out of OGC right now, otherwise a further ongoing crash in the shareprice has to be taken into account. 140,3 Mio Debt with no profits, but only losses in the future, due to some idiocy of the management, may bring the company again in severe trouble as in 2008, when they almost got bankrupt.