OceanaGold Corporation (OGC) Earnings Call Transcript & Summary

Hello, and welcome to the Annual General and Special Meeting of Shareholders of OceanaGold Corporation. [Operator Instructions] It is now my pleasure to turn today's meeting over to Paul Benson, Chair of OceanaGold Corporation. Mr. Benson, the floor is yours.

Thank you. Good morning, ladies and gentlemen. My name is Paul Benson. And as Chair of the Board of OceanaGold Corporation, I'd like to welcome you to today's Annual General and Special Meeting of Shareholders. In accordance with the articles of the company, I will act as Chair for this meeting. Please be advised that today's webcast is being recorded. Some of the statements made at this meeting may be considered forward-looking. We caution you that the results of future operations may differ from those anticipated. We urge you to review the cautionary statements and other information contained in our filings on SEDAR, which identifies a number of factors that could cause actual results to differ materially from those mentioned in any forward-looking statements made at the meeting. As it is now past 9 a.m., Canadian Eastern Daylight Time and a quorum is present, I declare the meeting open. To begin, I will introduce my fellow directors on the call today. Mr. Ian Reid joined the company in April 2018 and was Chair of the Board between June 2019 and September 2021. Ian brings more than 30 years of experience in managing the successful growth and operations of major multinational companies. Ian chairs the Sustainability Committee and is a member of the Governance and Nominations Committee and the Technical Committee. Mr. Craig Nelsen joined the company in February 2019. Craig brings extensive exploration, management and capital markets experience. He chairs our Remuneration, People and Culture Committee and is a member of our Sustainability Committee and Technical Committee. Ms. Catherine Gignac joined the company in August 2019 with more than 30 years of capital markets experience, including an extensive career as a Mining Equity Research Analyst with leading global brokerage firms. Catherine chairs our Governance and Nomination Committee and is a member of our Audit and Financial Risk Management Committee and Remuneration People and Culture Committee. Sandra Dodds was appointed a Non-Executive Director of the company in November 2020. She has over 25 years of operational and financial experience as an executive responsible for the strategy, operations and performance across Australia, New Zealand and Asia. Ms. Dodds is the Chair of the Audit and Financial Risk Management Committee and is a member of the Remuneration People and Culture Committee as well as the Governance and Nominations Committee. Mr. Alan Pangbourne, was appointed Non-Executive Director in October 2022. Mr. Pangbourne has over 35 years of experience in global mining operations. Alan is Chair of the Technical Committee and is a member of the Audit and Financial Risk Management Committee as well as the Sustainability Committee. Ms. Linda Broughton was appointed Non-Executive Director on 24th of April 2023. Ms. Broughton is an experienced and highly successful Mining Executive with over 35 years of experience in both corporate and operational roles in a variety of environmental and mining related fields throughout North and South America. Linda is a member of the Sustainability Committee and the Technical Committee. And finally, Mr. Gerard Bond, President and CEO of OceanaGold since April 2022. Mr. Bond is a seasoned Mining Executive with an extensive background in corporate finance, mergers and acquisitions, treasury and human resources and has held numerous senior roles across North America, Europe and Australia. For today's meetings, all of the current directors of OceanaGold, including myself, will be seeking election or reelection to the Board. I will also introduce members of our executive leadership team. Marius van Niekerk, Chief Operating Officer; Peter Sharpe, Chief Operating Officer, Asia Pacific; David Londono, Chief Operating Officer, Americas; Scott Sullivan, Chief Technical and Projects Officer; Michelle Du Plessis, Chief Operating People and Technology Officer; Craig Feebrey, Chief Exploration Officer; Megan Saussey, Chief Sustainability Officer; and Liang Tang, General Counsel and Company Secretary. OceanaGold's most recent Chief Financial Officer, Scott McQueen is also on the call with us today, as is Ben Gargett, signing partner of OceanaGold's audit -- annual audit from our -- auditor, PricewaterhouseCoopers in Australia. At this point, I advise that for governance purposes, particularly considering the various locations from which attendees are joining us and as provided for in the company's articles, voting on all matters will be conducted by electronic ballot. Registered shareholders and duly appointed proxy holders who are properly logged in with their control numbers or user name, will be able to vote. When you were invited to vote, click on the option to vote on the Computershare virtual interface, and you can register your vote for each item of business. If you are a registered shareholder or a duly appointed proxy holder and have already voted by submitting your proxy form in advance of the meeting, it is not necessary for you to vote again today. Today, we will be using Computershare virtual interface to allow attendees to view the webcast, submit questions and for registered shareholders and proxy holders to cast votes on the items of business. Pressing the Q&A icon will open the messaging facility. From here, you can send in questions and comments. Please note that due to the time available, we may not address all questions sent through. When we arrive at the formal business of the meeting, I'll call for a poll to be opened on all items. For the registered shareholders and proxy holders, the resolutions will appear on the Computershare virtual interface, along with for and withhold or for and against voting options depending on the resolution. Simply select one of these options to cast your vote. You can change your vote as many times as you wish up to the close of the polls. When voting is closed, the final voting selection entered into your app will be recorded. These votes will be added to the proxy votes received prior to the meeting. The results of the meeting will be tabulated and announced on the Toronto Stock Exchange after the conclusion of the meeting. If you're logged in with Computershare, you can switch between screens of the presentation, voting resolutions and messages and questions from attendees. If there is a pertinent question from the shareholders through Computershare dashboard, I will voice this at the meeting as appropriate and respond to that. We'll now move to the formal business of the meeting. I've requested Liang Tang, Company Secretary, to serve as recording Secretary for the meeting. Jenny Karim of Computershare Investor Services, the registrar and transfer agent for the company, is present and will act as a scrutineer for the meeting. As noted, our attendance records indicate that the required quorum is present. Computershare has provided a declaration that the notice calling this meeting of shareholders and a form of proxy or voting instruction form were mailed to all the shareholders on the record as of 1 May 2023 on the 8th of May 2023, and the other meeting materials, including the management information circular were made available to shareholders per the notice and access provisions under the applicable securities laws. Notice having been properly given and a quorum present, I now declare the meeting to be regularly called and properly constituted for the transaction of business. Unless there is an objection, I'll dispense with the reading of the notice of meeting. As specified in the notice of meeting, the items of business for the meeting being receiving the financial statements of the company, the election or reelection of 8 directors of the company, the appointment of PricewaterhouseCoopers as the auditor of the company and the approval of a nonbinding advisory resolution regarding executive compensation, must be approved by a simple majority of votes cast, either in person or by proxy. In order to ensure this meeting covers the required business in an efficient manner, I'll move all motions that are identified in the notice of meeting, and we'll dispense with the seconding of such motions. This procedure is merely a way to expedite proceedings. We'll first consider the financial statements for the company for the fiscal year ended 31 December 2022 and the auditor's report. Copies of the financial statements and the auditor's report have been delivered to shareholders as requested and they have also been filed under the company's SEDAR profile. This is an item for discussion and does not require a vote. Are there any questions? If there is no discussion, I now declare that OceanaGold's audited consolidated financial statements for fiscal year ended 31 December 2022, and the accompanying auditor's report have been received by the shareholders as submitted to this meeting. We will move to the next order of business. We will now open the voting on the 3 resolutions specified in the AGM notice of meeting and management information circular. You can only vote for or withhold on the first 2 resolutions. The app will now display the resolutions and your voting options. Voting will remain open during the discussion of the resolutions. I will also provide you with notice that the polls are about to close. Resolution 1, election of directors. The first item of business is to consider, and if thought fit, pass the following 8 items as ordinary resolutions to elect or reelect directors. The Board has set the number of directors at 8. Details of the person seeking election and reelection are set out in the notice of meeting and management information circular. I hereby propose the following 8 motions to nominate the proposed directors whose names appear in the meeting materials to be elected or reelected as directors to hold office until the next Annual Meeting of Shareholders. Item 1, I, Paul Benson, be reelected as a director. I note that management holds 457,612,057 proxy votes in favor, 3,157,081 withholding votes. Are there any questions in relation to the resolution? Item 2, that Mr. Ian Reid be reelected as a director. I note that management holds 457,171,270 proxy votes in favor and 3,597,868 withholding votes. Are there any questions in relation to the resolution? Item 3, that Mr. Craig Nelsen be reelected as a director. I note that management holds 457,588,604 proxy votes in favor and 3,180,534 withholding votes. Are there any questions in relation to the resolution? Item 4, that Ms. Catherine Gignac be reelected as a director. I note that management holds 448,061,865 proxy votes in favor and 12,707,272 withholding votes. Are there any questions in relation to the resolution? Item 5, the Ms. Sandra Dodds be reelected as a director. I know that management holds 457,598,565 proxy votes in favor, 3,170,572 withholding votes. Are there any questions in relation to this resolution? Item 6, that Mr. Alan Pangbourne be elected as a director. I note that management holds 459,700 -- 459,790,497 proxy votes in favor and 978,640 withholding votes. Are there any questions in relation to the resolution? Item 7, that Ms. Linda Broughton be elected as a director. I know that management has 460,139,907 proxy votes in favor and 629,232 withholding votes. Are there any questions in relation to this resolution? Item 8, that Mr. Gerard Bond be reelected as a director. I note that management holds 458,531,344 proxy votes in favor and 2,237,794 withholding votes. Are there any questions in relation to this resolution? These 8 nominees are the only persons who have been nominated to stand for election or reelection as director of the company in accordance with the procedures set out in the advanced notice policy of the company. Accordingly, no further nominations will be accepted, and I declare the nominations closed. Because the poll is being demanded, I now direct that we proceed to take a vote by ballot. Please vote now. [Voting]

Resolution 2, appointment of auditor. The next item of business is to consider, and if thought fit, pass the following resolution as an ordinary resolution, and I hereby propose that the following resolution be approved and adopted. To appoint PricewaterhouseCoopers as auditor of the company for the ensuing year and authorize the directors to fix their remuneration. I know that management hold 473,761,545 votes -- proxy votes in favor and 9,072,725 withholding votes. Are there any questions in relation to the resolution? As there is no discussion because a poll has been demanded, I now direct that we proceed to take a vote by ballot. Please vote now. [Voting]

Resolution 3, advisory vote on executive compensation. We now move to the final resolution. You can only vote for or against on the final resolution. Voting will remain open during the discussion of this resolution. I will also provide you with notice that the polls are about to close. The final item of business is to consider, and if thought fit, pass the following resolution as an ordinary resolution, and I hereby propose that the following resolution be approved and adopted. Be it resolved on an advisory basis and not to diminish the role and responsibility of the Board of Directors, that shareholders accept the approach to executive compensation disclosed in the company's management information circular, delivered in advance of the 2023 Annual General and Special Meeting of Shareholders. I note that management holds 453,262,935 proxy votes in favor and 7,506,204 votes against. Are there any questions in relation to the resolution? As there is no further discussion because the poll has been demanded, I now direct that we proceed to take a vote by ballot. Please vote now, and I'll close the poll -- I will close the poll on each of the resolutions in the next 30 seconds. [Voting]

Ladies and gentlemen, I now declare the polls closed. We are pleased to announce that all resolutions have been passed. Detailed results of the meeting will be announced to the Toronto Stock Exchange later today. Finally, I'd like to take this opportunity to thank all shareholders for your continued support of the company. Thank you once again for attending the meeting. I now declare this Annual General Meeting closed. I'll now invite Mr. Gerard Bond, President and CEO, to provide an update on the company.

Thank you, Paul, and hello to everyone on the call. Thank you for joining us today. As I'll be making forward-looking statements during the presentation, please refer to these cautionary notes as well as the risk factors set out in our annual information form. I'd like to start with sustainability and highlight that 2022 was another successful year for OceanaGold. Our purpose is mining gold for a better future, and I'm happy to report that we made good progress in 2022. Our annual sustainability report was released last month and highlight some of the fantastic work we did and continue to do in relation to health and safety of our workforce, engaging with and supporting our host communities, human rights, our people and culture and the environment, a number of which are highlighted on this slide. I'm very pleased to be able to report that in 2022, we once again had no fatalities and our total recordable injury frequency rate was 2.3 per million hours worked, making it the safest year on record for the company. At a community level, we were once again a very significant contributor to local economies, with over $194 million spent with around 2,200 local suppliers, plus another $4.2 million spent delivering social investment projects to address local community identified needs in 2022. As part of our commitment to the World Gold Council's responsible gold mining principles, we obtained independent assurance of our conformance to these principles. During the 2022 year, we finalized and launched our new company vision and values. Our vision is to be a company that people trust, want to work for and partner with, supply and invest in to create value. Delivering this vision will be underpinned by our values of care, respect, integrity, performance and teamwork. And finally, we remain committed to reducing our carbon emissions across all operations and have action plans in place which strive to help us reach our goal of a 30% reduction by 2030 and net zero operational carbon emissions by 2015. Our corporate objective is to increase and sustain a higher value of OceanaGold shares. And this slide provides some highlights from 2022 against each of the 5 pillars of our corporate strategy. I'm pleased to say that we safely delivered on our 2022 production guidance. This was driven by Didipio, successfully achieving its full target mining and processing rates ahead of schedule and Haile delivering another strong year, beating its increased production guidance. In New Zealand, we had a challenging first half of the year at Waihi, but we had a stronger second half and are guiding to improved performance in 2023. At Macraes, we had some weather-related downtime midyear, but rebounded with a very strong fourth quarter result. The first quarter of this year 2023, showed we remain on track to deliver on our 2023 guidance, and we remain ever vigilant in delivering on our commitments in a safe and responsible manner. Our second pillar is about making sure we have the right culture for us to deliver on our potential, and we've made some important steps forward here. In addition to the revised company vision and values, as I mentioned earlier, we also made measurable improvement in regards to employee turnover and community relations. There have also been some excellent additions to our management team, as Paul highlighted, and at other levels in the company. From a growth perspective, we successfully progressed our organic growth projects. In December 2022, we obtained all the permits necessary for the Haile expansion, and the team there are well underway with the underground development, water treatment plant commissioning, expansion of the tailings storage facility and waste facility construction. At the end of 2022, we released some exciting exploration results, highlighting the fabulous new mine potential we have at Haile, Didipio and [indiscernible]. From a financial perspective, we had a very good 2022. We were able to progress our growth options and still generated meaningful free cash flow, which allowed us to further strengthen our balance sheet by reducing debt and to return to paying a dividend in early 2023. This financial strength underlines our ability to grow the business in the near term by enabling the execution of our organic growth options which powers our compelling outlook of near-term production growth, unit cost and CapEx reduction and free cash flow generation. Finally, from a market rating perspective, we enacted a number of tactical changes, which have improved senior management's proximity to investors and concentrated our share register in North America, including the ASX [indiscernible] listing and relocation of our corporate office including myself to Vancouver, Canada. Again, all of this is in service of our objective of increasing and sustaining the higher value of OceanaGold shares and the share price appreciation enjoyed by shareholders in 2022 was a pleasing reflection of this strategy being executed. As you can see from the bar graph on this slide, it's clear that our business is trending in a direction with year-on-year increases in revenue, EBITDA and profitability. This included record full year revenue of $967 million in 2022, which was a 30% increase relative to the prior year. The record revenue reflects underlying operational performance, with higher production and sales as the driver. Full year EBITDA of $382 million was 16% above the prior year, driven by the higher revenue partially offset by an increase in cost of sales, which again was mainly attributable to a full year of operations at Didipio as well as inflation. Adjusted net profit for the year was $148 million. This equated to earnings per share of $0.21 for the full year, $0.03 above analyst consensus estimates of $0.18. Pleasingly, we generated $58 million in free cash flow for the year. Strong free cash flow generation allowed us to decrease our net debt to $117 million at the end of the year, whilst at the same time, allowing us to reinstate a $0.01 per share semiannual dividend, which was paid in April this year. I'm happy to observe that our strong operational and financial performance in 2022 also resulted in strong share price performance with our share price increasing 17% over the year and well ahead of the average returns of the peer group. Going forward, shareholders can be certain, we remain focused on creating value in a safe and responsible manner, maximizing free cash flow generation and delivering on the full operational and growth potential of the business. We believe this to be the best way to generate strong returns for shareholders in the future. Moving forward to 2023. The slide here shows some highlights from the first quarter. We produced 118,000 ounces of gold and 3,500 tonnes of copper in Q1, both in line with full year guidance. Our all-in sustaining costs for the quarter were $1,567 per ounce on 112,000 ounces of gold sold. From a financial perspective, we reported an adjusted net profit after tax of $40 million which equates to an adjusted EPS of $0.06 per share fully diluted. We reported negative free cash flow of $16 million, reflecting the impacts of the timing of gold sales and working capital movements, both of which are expected to normalize across the balance of the year. Working capital movements in the quarter included planned Philippines annual tax payments and annual employee incentive payments for the whole of 2022. At the end of Q1, we remained in a strong financial position with $191 million net debt, a leverage ratio of 0.3x and liquidity of $158 million, giving us the financial flexibility to continue investing in the exciting growth projects across our business. Looking further ahead, OceanaGold is one of the few mid-tier gold producers that has a significant near-term organic growth profile. We project a production growth rate of 9% per annum over the next 3 years, which gets us to over 600,000 ounces of gold by 2025. In addition, we have a projected decline in both unit costs and capital spending over the 3-year period. Haile is the primary growth engine, though Waihi's production growth is also projected to contribute, sourcing higher-grade ore from underground and lowering material handling at Haile is a key driver of the unit cost reduction over the next 3 years. Growth CapEx expenditures are also expected to decrease over the next 3 years as expenditure on the Haile underground and surface expansion winds down. Together with higher gold production at lower unit costs, this should in turn lead to significant free cash flow generation at current oil prices over our 3-year outlook period. In summary, we're proud of our 2022 accomplishments and remain committed to our goal of safely and responsibly delivering on the production of financial expectations set at the beginning of the year, which we know to be a key requirement of the market. We are focused on safely and responsibly maximizing the free cash flow generation of the company and have made good progress in our journey of realizing the organic growth potential in our portfolio. Thank you, everyone, for joining us today. I'll now turn the call over to the operator for any questions that shareholders may have.

Ladies and gentlemen, this concludes the meeting. You may now disconnect.