RE:RE:RE:My minimum Target $3.00/sharechallenger426 wrote: Hey Temple, you may be worried for whatever reasons which you are entitled to, but I'm not and don't share your opinions.
The $42.3M loss was after writing off depreciation and amortization, interest expense/finance costs which is not uncommon in the resource sector. They actually made $54.8M EBITDA before doing so. The second half EBITDA should be much higher and if they don't write off as much depreciation and amortization, the numbers should be great in the second half with expected increased production.
I'm glad OGC got financing at $2.06 instead of $1.06, means less dilution and there is an investor willing to make a $150M investment at $2.06/share. The investor is thinking long term and how the second half should do compared to the first half.
"Michael Holmes, , President and CEO of OceanaGold said, "We look forward to the second half where we continue to expect a material increase in production at both Haile and Macraes at lower AISC plus continued advancement of our key organic growth projects including those recently outlined in the Waihi District Study." The second half should be really good in my opinion. The price of gold has increased considerably so far in the second half (since July 1st) and information from their last earnings report tells me that they should produce 200,000 ounces of gold compared to just under 140,000 ounces in the first half.
Yes, over 40% more production at higher gold prices for the second half ! "First half of 2020 consolidated production of 139,385 ounces of gold at All-In Sustaining Costs ("AISC") of per ounce on sales of 153,343 ounces of gold.
Revised 2020 production guidance from 360,000 to 380,000 to 340,000 to 360,000 ounces. On a gold sold basis AISC is reduced from to to to per ounce sold." So why did they need the money? It is in the details (Organic Growth means more drilling and expansion of existing projects). If you can increase your resources and yearly production, that should increase the value to the shareholders.
"The Company intends to use the net proceeds of the Offering to fund organic growth projects including the Haile underground development, ongoing exploration and development of the Company's mineral properties in New Zealand, as well as for working capital and for general corporate purposes." If the insiders were worried right now, they would be selling but nothing in the last 6 months. Then take a look below for the last 12 months.
Hope this helps anyone sitting on the fence and confused, even you.
Good post Challenger and good info
Some Questions
1) the low end of their second half guidance is 295,000 which is only 15,000 more than the 1st half.
2( They have 48,000 ounces to deliver at 1635 and 59,400 that will be called away at $1,381, all US in second half
3) Why are they issuing equity at 2.06 when they could easily forward sale the same amount of $ into 2021 when production will be booming. I for 1 would have loved 60,000 more ounces forward sold into 2021 at close to 1900 US. vs equity dilution.
4) I do not see any insider buying either in last 6 months.
5( depreciation is generally correlated with units of production so it will be greater.
I am with you on this seems to be a good value stock, if all works ( mostly) out as advised.
I guess that is why we are all still here.
Make no mistake, OGC will probably report losses in both coming quarters. Even without Dipidio writedown, which will be staggering if occurs. That is only accounting as you say and operating cash flow will be positive.
The only thing I can figure for equity dilution vs selling future production for $ today is bank
insistence. More equity is a buffer for banks without giving up the security of the company having full cash for product in the year sold. Hopefully I am wrong and in any case it will
all work out if company performs.
It is a legitimate concern until we see where that money goes exactly and what the actual production will be in the second half. If anyone is not concerned and believes the numbers for 2021 then they should be buying this stock with every dollar they have. I will not be adding and will be quite glad if my current holdings appreciate the way they should.