I just stumbled onto this recent write up on OGC:
Jay Taylor and I had a meeting with OceanaGold Corporation (OGC.to) chairman Jim Askew and IR VP Darren Klinck on Sunday. It supposed to last for half hour to an hour and turned out to be almost two hours. They are on a tour to Europe and N. America to meet analysts and institution investors. The meeting was quite upbeat. Basically OGC has transformed itself from a 300K producer in NZ to a growth story to 400 and beyond in 2 years. In the Philippines, Didipio is comparable to MLL.to, a low cost gold producer with about 1 billion market cap. At the current gold and copper price they are generating similar cashflow. In addition, if you know OGC for the while, the old Didipio design calls for 120-150K oz of gold per year, the new design dropped it 75K oz for lower capex and longer mine life. As soon as they find more ore in the area, which they believe they will, the Didipio gold output can be easily scale up to over 100K oz/year. They believe this round of raise, a little over 100 million will create over 1 billion in NAV of the company. They have been talking to a lot of analysts lately, and I was told the analysts are starting to put Didipio into the calculation. OGC is going to build the 4th and 5th mines in NZ. They haven’t decided which one and when. It will be either high grade underground mine in Reefton or Black water. The high grade ore can be processed without autocave and increase its production without any mill expansion. I believe in two years, OGC gold production can easily reach 400K or more. The issue facing is not there are not enough gold around, they are the largest land holder in both NZ and Philippines, but to prioritize and decide where to go first. The company was significantly under capitalized for the past years, now they are generating over 50 million cashflow and 30 million free cashflow per quarter, the blue sky potential starts to show up. I was told the company is looking at acquisition targets as well with its cash on hand and incoming cashflow. 11/7 is the deadline for the 55 million bondholders to turn in their bond. Since it is already trading at premium to par value, they don’t expect any redemptions. Then it frees up another 55 million for growth.
ob-research.com |
