OceanaGold Corporation

Good morning and welcome to Oceana Gold's first quarter 2025 operating and financial results webcast and conference call. I'm Haley Mayers, Vice President of Investor Relations. I will be in this role for the coming year as Rebecca Hanare is on maternity leave. We are joined today by Jared Bond, President and Chief Executive Officer, Marius Van Niekerk, Chief Financial Officer, Bhuvanesh Malhotra, Chief Technical and Projects Officer, and Peter Sharpe, Chief Operating Officer, Asia Pacific. The presentation that we'll be referencing during the conference call is available through the webcast and on our website. I would also like to remind everyone that our presentation will be followed by a Q&A session. As we'll be making forward-looking statements during the call, please refer to the cautionary notes included in the presentation, news release, and MD&A, as well as the risk factors set out in our annual information form. All dollar amounts discussed in this conference call are in U.S. dollars. I'll now turn the call over to Jared for open remarks.

Thank you, Hayley, and good morning, everyone. I'm really pleased with our strong start to the year, with our first quarter production, cost, and CapEx performance putting us well on the way to delivering four-year guidance. Our profit and free cash flow this quarter were both well ahead of market expectations based on solid production and good cost control. As a fully unhedged gold producer, we also fully benefited from the increase in gold prices. Most importantly, the first quarter was a safe quarter. Our continued focus on our key programs and lifting our time in the field has helped keep our people safe and we remain very focused on this. Open pit waste stripping programs at both Hale and McRae's are progressing and are expected to deliver access to the next higher grade oil phase of both open pit mines later this year. And this is what powers our production growth in the fourth quarter of this year and in 2026. We delivered yet another quarter of strong free cash flow of almost $70 million, supported by record quarterly average realized gold prices. Our strong production and effective cost management allowed us to convert most of these high prices to the bottom line. Our free cash flow per ounce of $585 for the first quarter was better than the average of our industry. If I just widen the lens a bit, I'd just like to highlight that over the last 12 months, we have delivered $312 million of free cash flow, which represents a yield of around 16% on our average market cap over the same period. We have a strong balance sheet with zero debt, and we increased our cash holdings by nearly 20% by the end of the quarter. During the quarter, we also made significant progress on our exciting organic growth opportunities. Our fast track application for the transformational Waihi North project in New Zealand was submitted and we continue to expect approval of it by the end of the year. Additionally, we announced the new Pisces discovery at Hale, which currently has three drill rigs further defining this attractive opportunity. We look forward to sharing the results of all of our elevated exploration activity over the course of this year. In line with our disciplined capital allocation framework, we were able to fund our growth projects, maintain a strong balance sheet, pay a dividend and continue our share repurchases during the quarter. Looking forward, we are well on track to meeting our 2025 full year guidance. We continue to expect planned waste stripping at Hale and Macraes to deliver high grade ore in the fourth quarter. which is expected to be the strongest production quarter of the year, particularly at McCrae's. This is what underpins our unchanged guidance for the full year for each of production, costs and capex. I'll now turn the call over to Maurice to discuss our financial results in more detail.

Thank you, Gerard, and good morning, everyone. We delivered a strong first quarter with significantly improved financial performance as compared with the first quarter of 2024. We generated revenue of $360 million, supported by a record average realized gold price of $28.58 per ounce. I'm really pleased to report that we had some notable achievements this quarter, including EBITDA of $192 million, an EBITDA margin of 53%, and an operating cash flow per share of $0.28, which were all second highest on record. This really highlights our keen focus on cost control and improving our margins. We're also pleased to repeat our quarterly record of earnings per share at 14 cents. Supported by a strong gold price and our disciplined approach to cost control, we generated $69 million of free cash flow. And that is after investing in growth and exploration. We have zero debt. and have increased our cash balance by 18% to $228 million. With this robust financial position, we have flexibility to fund our growth and continue to return capital to our shareholders via our share buyback program. Looking at our balance sheet from a broader perspective, you can see we've improved our position significantly from a few years ago. systematically applying our stronger free cash flow to reduce our debt and strengthen our balance sheet. In addition to maintaining our quarterly dividends, we also brought back $20 million worth of shares in the first quarter at an average price of $4.03 Canadian per share, with $100 million of buybacks approved under the current program for 2025. Importantly, The rising gold price provides significant upside to our already strong free cash flow. We have no gold price edges and no gold prepays with a free cash flow sensitivity of roughly $35 million per annum for every $100 change in the gold price. And just to underscore this, the current gold price is roughly $500 higher than the average price achieved in Q1. So as Jared pointed out, We are well positioned to achieve our annual guidance and to deliver attractive growth in 2026 and beyond. I'll now pass it over to Bhuvanesh to discuss HAIL's performance.

Thank you, Marius. And hello, everyone. HAIL has had a strong start to the year with the gold production in the first quarter of nearly 52,000 ounces assisted by the high-grade ore from Leadbetter Phase II, which has now been completed. Plant-based stripping for Leadbetter Phase 3 is underway and is on track for a high-grade ore contribution in the fourth quarter and beyond. First quarter all-in sustaining capital was $1,551 per ounce, which was below the annual guidance. We have maintained our all-in sustaining capital outlook for the year, but expect it to follow the production profile quarterly cadence decreasing by the fourth quarter. We're excited about the exploration opportunities it had. In February, we reported the discovery of the high-grade mineralization at Pisces and will continue to explore this and other promising targets throughout the remainder of 2025. Lead-Bidder Phase 4 trade-off work continues. Our path forward will be defined by the results of the technical report expected to come out in the first half of 2026. Overall, we expect HAIL to continue to deliver strong performance with several catalysts ahead. I'll now turn the call over to Peter to discuss the Asia-Pacific operations.

Thank you, Bhuvanesh, and good morning, everyone. During the quarter, the DPA delivered increased gold production of approximately 21,000 ounces and copper production of 3,400 tons. Underground ore tons mined also increased versus the prior quarter. and is expected to continue to increase over the year as we access lower levels of the mine and deliver the ongoing underground optimisation work. First quarter oil and sustain costs was strong at $1,130 per ounce, which is below our annual guidance. Capital investments are expected to increase in the second half of the year as we invest to support our growth with planned investment in underground pumping infrastructure and our underground optimisation plan. We are excited about our exploration opportunities both near the mine and also regionally, with drilling planned at multiple targets throughout the remainder of the year. Looking ahead, we remain confident in DDPO's underground performance and long-term value. Our progress towards reaching our targeted underground mining rate of 2.5 million tonne per annum by end of 2026 remains on track, and we will release an updated technical report in the first half of 2026 to outline this plan. This quarter, McRae's delivered gold production of 28,000 ounces, which was a great result given they were impacted by a planned six-day shutdown of the processing plant during the quarter, as well as having lower open pit ore mined as per the mine schedule. Additionally, lower grade ore was intentionally fed into the mill during the quarter to manage concentrate storage levels during a planned major re-brick of the autoclave, which only occurs once every four to five years. This rebrick was undertaken over a 29-day period through the quarter and led to an incremental 5,000 ounces remaining in circuit at the end of March, which has now been subsequently sold. As we move through the year, we expect waste stripping at Innes Mills 8 to be completed during the third quarter, unlocking access to higher grade ore and driving a strong finish to the year for production and costs, both of which remain on track for full year guidance. We remain excited about our potential opportunities to unlock value at McRae's. We are continuing to elevate and evaluate the many options we have to extend the mine life, leveraging the value of its industry-leading low mining unit costs and expect to share more with the market in due course on this potential. Waihi delivers strong production with around 17,000 ounces of gold in the quarter, maintaining the progress achieved with the underground improvement plan initiated in the second half of 2024. Additionally, our costs remained well controlled and in line with our plan. Our fast track application for the Waihi North project was submitted in the quarter and now has been deemed complete. Our expectation remains that we will be permitted by year end 2025 and we'll be able to start decline construction toward Farrakhan or Ponga Underground in 2026. As previously mentioned, We expect to spend $45 million on early works this year so that the project is ready to start in earnest when we receive that approval. Also during the quarter, we announced further high-grade mineralization at Farrakura Ponga, which continues to demonstrate its upside potential. Further exploration drilling at Waihi is focused on resource definition, expansion of the Martha underground, and expansion of the Farrakura Ponga deposits. With strong execution and exploration success, we remain very excited about Waihi's significant upside potential. I will now turn the call back to Jarrod.

Thanks Peter. In summary, Oceana Gold had a very strong start to the year, with production on track with guidance, costs well controlled, and the higher gold prices contributing to our profitability and free cash flow generation. Reiterating what we've said earlier, we have a strong debt-free balance sheet and plenty of cash. We have no gold hedges or prepays in place, allowing us to benefit from the higher gold prices today than existed in the first quarter. And we've been able to internally fund our growth projects and exploration, declare a quarterly dividend, add cash to the balance sheet, and continue our share repurchases. Looking ahead, we expect 2025 to be another year of significant free cash flow generation, and we remain focused on safely driving growth and shareholder values. Before I conclude, I'd just like to take the opportunity to note that during our upcoming annual general and special meeting in June, we will be seeking shareholder approval for a three to one share consolidation. The rationale is to comply with minimum trading requirements of major US exchange as the company explores the potential benefits of a dual listing, which we believe could lead to increased liquidity and enhanced value for shareholders. I now return the call to the operator who will open up the lines and we're happy to take any questions.

Thank you. Ladies and gentlemen, we'll now begin the question and answer session. Should you have a question, please press the star followed by the one on your touchtone phone. You will hear a prompt that your hand has been raised. If you wish to decline from the polling process, please press the star followed by the two. If you are using a speakerphone, please lift the handset before pressing any keys. One moment, please, for your first question. And your first question comes from Ovasis from Scotiabank. Please go ahead.

Thanks, operator. Hi, Gerard and Oceana Gold team. Really congrats to the team on a good quarter and a great start to the year. Gerard, a couple of questions for me. Number one, starting off at Hale, Hale had a good quarter despite all the stripping you're doing at Ledbetter. Is the stripping still on track or maybe ahead of schedule and how should we be looking at Q2? And also is the ore hardness at Leadbetter that you discovered at the end of 2025 creating any sort of delays or is that kind of now behind us?

Thanks, Ovaeus. I'll take the first one and Bhuvanesh can take the second about ore hardness. Yeah, the stripping is on track, Ovaeus. We had good access to ore, particularly at the bottom of Leadbetter 2 in the first period. But during the period and this quarter and the next quarter, we will be stripping phase three, and as I said in the call, by the end of the third, start of the fourth quarter, we'll have good access to phase three fresh ore, which, as we've said, powers that final quarter, the whole production guidance for hail generally and hail's growth in 2026, which is really exciting. Bhuvanesh, I'll leave you to answer the ore hardness question.

Thank you. Yes, the current over hardness is as expected and has been incorporated in our mine plans and the full year guidance. We've done a lot of work now in the past few months to address this, including optimization of our blast patterns to achieve a better fragmentation, and some optimized feed recipes to We're also looking at some secondary crushing options, if required. It's not needed at this point in time. We've also revised our plan mill throughput for bore 25 and 26, and it's reflected as to what hardness we are expecting. And it has actually already resulted in the 300 kilotons per annum of pure tons, which is enough for your guidance.

Thanks, Bhavanesh, for that. And just wanted to move on to McCrae's. I guess, Peter, you were talking about... you know, the completion of the rebrick of the autoclub at the end of Q1. Just any sort of color on how the autoclub is ramping up going into Q2?

Yeah, hi, Vice. Yeah, the autoclub rebrick went well. 29 days, it was fully complete. So it's back to full production, no issue at all. So, I mean, the ramp up is really just a reheat. It does take a couple of days to get the temperature up before we can feed the concentrate, but that's all been done and, you know, it's running as per normal.

Awesome. Thank you. And just moving on to WKP, you talked about, you know, the permits were submitted in March. And from what I understand, the application was accepted just earlier this week. You know, is the decision on the permit, does the decision on the permit have to be given on a certain timeline? What I'm just asking over here is this, what's your confidence in receiving the permit by the end of 2025?

Yeah, thanks, Hervé. I mean, the government has an announced timetable, and the basis of that timetable, and given our status in the process as it has been outlined, you know, we remain of the view that, you know, subject to appeals, we will be permitted by the end of this year. Now, the point worth making, though, of course, is a new process. We are only the four or six, one of the two, projects that have been deemed complete and are in the process for... such projects, and what that means is we'll be one of the first going through it. So again, based on the schedule that the government has outlined and what it intends to achieve, we believe we should be approved by the end of the year. We've got an enormous amount of material that we submitted as part of the application. So there is a lot to work through. So the risk is that that material just being worked through could take longer. but we're mitigating the risk of any delays and if it was a delay you know it would just slip into early 2026. um we're mitigating the risk of those delays by uh investing as we said about 45 million dollars in the early stage works to kind of keep us on the critical path yeah we're getting that that services trench uh from the um uh the existing plant to the portal so that we can get power water and other stuff ready uh to power activity there we're ready in the portal for the decline and so forth. So yes, the risk of delay we consider to be small. It is possible, but we're doing our best to make sure it has zero impact on the overall schedule of the project.

Thanks for the comment on that, Jorog. And that's it for me, guys. And congrats again on a great quarter. And thanks for taking my questions.

Thank you, Aves. Thank you for the questions.

Thank you. And just as a reminder, if you wish to ask a question, please press star one. Your next question comes from Cosmo from CIDC. Please go ahead.

Thanks. Hi, Gerard and team, and thanks for taking my questions. Maybe following up on my buddy Ovaise's questions on Hale. As you mentioned, waste stripping, Gerard, as you mentioned, it's on track. But I seem to remember at some point in time in the past we had talked about I think tons moved being behind planned in terms of to the magnitude of 5 million tons. So I guess in your comment, are you all caught up on the 5 million tons or have things changed? Could you maybe elaborate a little bit more on the tonnage moved uphill?

Yeah. Thanks, Carlos, and thanks for the question. The delay that you're referring to occurred last year. That's when we fell behind. We slipped a quarter. But the stripping that we have, the campaign we have in respect to 2025 is on track and our guidance reflects the stripping that we intend to do this year. So the slippage that your question refers to occurred last year.

Okay. So that's in the past. Did you catch up on that, or do we need to catch up on that slippage?

No, all it meant was that we had to use stockpiles for a quarter longer than we had planned. If I go back two years ago, we thought we'd be into phase three clean oil by the middle of this year. Now it's towards the end of the third quarter this year. That was the slippage, but it's been reflected in guidance for this year already.

I got you. Great. And then maybe moving on, actually, at Hale once again, could you remind us in terms of, you know, what's going through the mill at Hale as you transition from Leadbetter Phase 2 into Leadbetter Phase 3, specifically in Q2 and Q3? Is it really going to be stockpile ore plus... underground ore that's feeding into the mill. Could you maybe remind me once again what's being said through the mill in Q2 and Q3?

Yeah, sure. I mean, in short, yes, underground ore, stockpile, and progressively, you know, anything that comes out of the open pits. But Bhuvanesh, do you want to give any color on the ore feed mix?

I think you're right. That's exactly what we'll be feeding as well. So some underground fresh stock ores, followed by some low-grade stockpiles. And some of the material from lead bedder 2 that we have stockpiled over the last quarter as well. So it's a combination of all those three in the next two quarters. Towards the end of the quarter three, we start to then get access to the lead bedder ores, the fresh ore, and that's what will then get fed through in quarter four.

Great. And then on that, I noticed that the underground grade was 3.74 gram per ton in the quarter, lower than last quarter, which is north of five gram per ton. You do mention that ore tonnage will increase, but I don't seem to have recalled a comment on grade in the MD&A. Could you maybe comment on that in terms of the underground grade?

Yeah, the underground grades, The underground rates are in line with our expectation. And as you can imagine, as new stops comes online and as we are basically getting deeper into the old body as well, it will always be variable as well. So it's in line with our mine plan, mine schedule that has been put together as well. You know, some of those high-grade stoves that we basically saw was initial and start of that hail piece as well. And as we have now been getting deeper into the ore body as well, some of them will come online, offline kind of a piece as well. So, yeah, no, we are on track with our grades as expected. Great.

And maybe bigger picture, as you disclosed, and congratulations on achieving a very good cost number in Q1. 1796. But could you maybe talk about that in the context of your full year guidance? Clearly that's below your 1900 to 2050 announced for the year. Could you maybe talk about Q1 in that context of full year guidance? And then maybe touch on CapEx as well. As you mentioned, Q1 was 97.7 million in terms of CapEx, less than 25% of the 485 to 530 million that you budgeted for the full year. Could you, you talk about that increasing, but could you maybe comment on the, you know, kind of velocity of that increase, what we can expect in Q2 and Q3?

Yeah, thanks, Coles. I mean, look, as we covered in the preso, we've got more stripping to do at Hale and McRae's. Peter mentioned that we've got some planned capex at the Dipio as it relates to the underground activity there. And And as we have more ore from stockpiles feeding the mills that hail in particular, production also goes down relative to the first quarter. So you've got a strong first quarter, a strong fourth quarter, a bit of a dip in production. That also, in combination with that higher level of capex in the period than what exists in the first quarter, is why we hold the guidance in the range that we currently do. Now, obviously, as you can expect, we're going to strive to get towards the low end of that cost range.

And so, Jared, I guess to ask more directly, the 1796, was it better than what you had internally budgeted?

Could you ask the question again? Because you just broke up at the end.

Yeah. The 1796, was it better than what your internal budgets had dictated?

It was powered by a very strong performance at Hale, and yes, we were pleased with the outcome relative to expectations.

Got it. Great. Thanks, Jarrett and team, and thanks for answering all my questions.

Thank you, Klaus. Appreciate it.

Thank you. And your final question comes from Don from National Bank Financial. Please go ahead.

Thank you, Operator, and good morning, team. I'm just joining late. previous analysts no doubt asked some excellent questions. Apologies if I'm repeating anything. But first question, can you provide an update on the flooding issues in the lower levels of the Dipio? Are they mostly resolved now?

Peter, do you want that?

Yeah, no, I'll take that. Thanks, Don. No, it's still working. Can you see that? So we expect by early first half, sorry, early second half of We'll have done all of the work, our access, but there is a little bit more work to go. We have got some equipment that's being delivered, underground infrastructure that's planned to be installed in the second quarter, but we expect by early in the second half of the year that we'll be through that. And that's why we're in the first two quarters, probably more of a ramp up and strong second half of the year.

Okay, good to hear. And then just shifting to tariffs, are you expecting any impacts, maybe potential labor pressures at Hale? Would there be any potential change to guidance given that guidance preceded the tariff announcements?

Don, not really. I mean, we got this question in the first quarter. I mean, half of our costs at Hale are labor-related, and we don't see at the moment an impact of tariffs on labor. Probably makes it potentially easier to retain and attract people in our industry, perhaps because gold prices are good and the business is performing very well. So in short, no.

Okay, thank you for that. And then finally, on capital allocation, you've got a sizable NCIB program planned. Do you expect continued repurchases similar to the pace in Q1 over the rest of the year? Do you expect to continue to favor the NCIB over dividends?

Yes and yes. So, I mean, we said at the start of the year in February, we said we'd do $100 million. We did 20 in the first quarter. We continue to see that view that our shares are undervalued relative to peers and it's NAB. And our shareholders have indicated a strong preference for buybacks over dividends. And just a reminder, we actually doubled our dividend for this year. So we are paying higher dividends. So we think we've got this nice balance of increase or doubling of dividends plus a value accretive share buyback program. And as Murray said, we bought back shares in the period for an average price of $4 Canadian a share, which is giving a great return. to date on those purchases. And I add to the purchase that we did last year, which I think we're in the $3 a share.

Okay, great. Thank you. That's helpful. And well, that's all from me. So good luck with Q2. Thanks again.

Thank you, Don.

Thank you.

Thank you. And there are no further questions on the phone lines at this time. I will turn the call back over to Hayley Mayers. Please continue.

Yes, thank you. We did have a few questions from the webcast that may be worth discussing. Can you give some color on the exploration at each of the sites?

Oh, wow. Well, look, I mean, firstly, we're exploring, we're spending more dollars at each site than we have done in the past. So, you know, given the prospectivity of the land we have and the targets our team sees and our capacity to so apply money to exploration, we're excited about exploration programs at each site. But on a by-site basis, at Hale, we announced the discovery of Pisces. We'll continue to drill it. We're still excited about what exists at Horseshoe Underground. We're drilling it. Leadbetter Underground, or Leadbetter generally, we're drilling it to help inform the study as to whether we go underground or open pit there. So we're really excited about the potential at Hale. Dedipio, we are open at depth. We are drilling near mine, True Blue. We're scoping the Fox. We have Napatan as a more regional target. So we've got lots of prospective ground in and around Dedipio that we're active in. McRae's, I mean, what a fabulous asset. You're 35 years old this year or 35 years young, I should say. And we've got a large land package there and we're putting more money into it because that optionality that exists around McRae's is fabulous. So we're looking to define it. And then obviously at Waihi and Farrakhiroponga. Waihi Underground, as Peter said, we're drilling Martha. We're looking to add both ounces to its resource and convert its resource to reserve through drilling at Martha Underground. And then Farrakhiroponga, probably one of the most exciting exploration prospects globally in our industry. It's It's high grade. It's large presently. We think it can be larger, which is why we're putting a lot of money into it. So we're really excited about what the team delivered in exploration last year. We're equally excited about what it might be able to do this year.

Thank you. And following on from your comments on McRae's, can you talk a little bit more about the mine life extension options with the current gold price?

Sure. I mean, our reserve life at McRae's is around three years at a reserve price of $1,700 an ounce. Obviously, when gold is $3,400 an ounce, that gives us tremendous optionality to convert resources, which are booked at $1,900 an ounce, to put those into the mine plan. And that's an extra, I think, 3 million ounces or so. So we see and we are doing plans at a price much higher than our reserve price, much higher than our resource price, given where the gold prices are, but while still leaving plenty of buffer to make money from that activity that we're highly confident of, but you get to do the work and you will see it reflected in a tech study that we release early next year that will extend the mine life of McRae's.

Thank you. Shifting gears, would you expect shareholder returns to increase with the gold price being roughly $500 per ounce higher than in Q1?

Look, I mean, surely a gold company that is unhedged that gets the benefit of higher prices, all other things being equal, if it can hold its costs, which we believe we've done well, should increase in value. You know, I think Warren Buffett said, you know, what is it, weighing machine and voting machine? In time, the weight of money, and as I mentioned in my presentation, we've had a free cash flow yield. That's after-tax money that's available to the providers of capital of 16% in the last 12 months rolling. That's a fantastic yield. And we believe, relative to other gold companies, that we are relatively undervalued, and we're hoping that with continued performance and results like today, that should translate into higher prices. But that's for the market to decide.

Thank you. And last question from the webcast. We have somebody asking a little bit more color on the motivation for the U.S. listing.

Yeah, well, I also like a lot of our peers. Sorry, unlike a lot of our peers, we're not on a U.S. exchange. And the U.S. capital markets are large. And we have had some feedback from some shareholders that they'd love, sorry, some prospective shareholders that they'd love to invest in Oceana Gold, but because of their mandates, they're required to stay on US exchange primary listings. And so we believe that if we were to get on to a US exchange like our peers, we would open up a wider pool of capital that would be interested in buying Oceana Gold. And if that was to happen, we think that extra buying support should help us realize the full value of the company.

That's it from the webcast. Over to you, Operator.

Well, thanks, Hayley. I think I do this bit, which is to say that that's the end of the call. I appreciate everyone dialing, listening in. A replay will be available on our website later today. On behalf of everyone at Oceana Gold, I appreciate you joining us and wish you a pleasant rest of the day. Bye.

Thank you. Ladies and gentlemen, this does conclude your conference call for today. We thank you very much for your participation and ask that you please do disconnect. Have a great day.