OceanaGold Corporation (OGC) Earnings Call Transcript & Summary

Good morning, ladies and gentlemen, and welcome to the OceanaGold Corporation Webcast Conference Call. [Operator Instructions] This call is being recorded on Monday August 17, 2026. I would now like to turn the conference over to Brian Martin. Please go ahead.

Hello, and welcome to OceanaGold's conference call and webcast to discuss the exciting acquisition of Ausgold Limited. I'm Brian Martin, Senior Vice President of Business Development and Investor Relations. I'm joined today by Gerard Bond, President and Chief Executive Officer; Bhuvanesh Malhotra, Chief Operating Officer; and Keenan Jennings, Chief Exploration Officer. The presentation we will be referencing is available through the webcast and on our website, and we will take questions following the presentation. As we will be making forward-looking statements during the call, please refer to the cautionary notes included in this presentation. All dollar amounts discussed are in U.S. dollars, unless otherwise stated. I'll now turn the call over to Gerard for opening remarks.

Thank you, Brian. Good morning, everyone, and good evening to those joining us from Australia. Today, we announced some exciting news that OceanaGold has agreed to acquire Ausgold Limited, owner of the Katanning Gold project in Western Australia for $549 million. This transaction will add to our existing growth profile with the addition of a high-quality fifth asset to our portfolio in one of the world's premier mining jurisdictions. In line with our growth strategy, we scan for opportunities at the right point of their life cycle for us to be able to add value and Katanning is exactly the kind of asset we have been looking for. It is a conventional relatively low capital open pit development project with the potential for more than 100,000 ounces of gold production annually over an initial 10-year mine life with first gold expected in 2029. It also comes with district scale exploration upside, providing a growth platform to continue to add value for many years to come. Building, commissioning and operating mines are core OceanaGold capabilities. We believe that we can leverage the substantial expertise of our existing technical and projects team to realize Katanning's full potential. What's also important is that we are doing this transaction from a position of financial strength. We have a strong balance sheet with $655 million in cash. We are debt free, and we have a good equity valuation multiple. That financial strength puts us in a great position to complete the transaction, fund the development of Katanning, continue advancing all of our existing organic growth projects, including the Waihi North Project, and still invest significantly in exploration and still be able to return capital to shareholders. Lastly, Katanning expected to be accretive for OceanaGold shareholders, providing attractive returns across a number of key per share metrics in line with our strategy of creating value. Katanning is a natural addition to OceanaGold's portfolio. This slide shows our assets with Katanning included a diversified portfolio of 5 assets all in top mining jurisdictions. We already have a substantial office in Brisbane with a team that has deep Australian technical project development, planning, permitting and exploration expertise, which is a real advantage as we will be leveraging to seek to a real advantage as we seek to leverage that to advanced Katanning. Both Bhuvanesh and Keenan, along with our existing technical team are based here in Brisbane. I'd also stress that Western Australia sits inside OceanaGold's existing operating day. Turning to the next slide, the transaction summary. This is a lower-risk transaction for OceanaGold with a total transaction equity value of $549 million and Ausgold shareholders owning approximately 6% to 8% of OceanaGold post closing. OceanaGold is acquiring 100% of the issued and outstanding shares of Ausgold by way of a court-approved scheme of arrangement. Ausgold shareholders will receive shares in OceanaGold with an option to receive the transaction consideration in cash, subject to a cash cap of $137 million. The scheme is unanimously recommended by the Ausgold Board who, together with major Ausgold shareholder Dundee Corporation, own approximately 9.1% and intend to vote all shares held by them in favor of the scheme. Finally, the scheme is subject to customary conditions, and we expect it to complete in December 2026. To further demonstrate our financial strength, this slide shows our current cash balance at the halfway point of the year, consensus free cash flow estimates over the remainder of this year and in the coming 3 years, and our current buyback commitments and current dividend levels. Together, this provides total projected cash holdings of approximately $2.1 billion at the end of 2029, which has provides us substantial capital to fund the potential cash component of the transaction and the Katanning capital expenditures whilst being able to continue to invest in growth and exploration projects across our business. and continue to return capital to shareholders. I will now hand over to Bhuvanesh, who will provide a brief overview of the project.

Thank you, Gerard, and hello, everyone. As you have heard, Katanning is a well-advanced technically straightforward and relatively low capital open pit project in a Tier 1 region, which is what makes it so compelling. Katanning is located around 275 kilometers southeast of Perth in a region with well-established infrastructure, power and road access and a skilled workforce. A deep labor contractor and services market exists in Western Australia, which will support the construction and operation of the mine. Work done by Ausgold to date indicates the potential for more than 100,000 ounces of gold produced annually over an initial 10-year mine life. The processing plant, which needs to be built is designed with a conventional carbon indeed circuit. Other site-based infrastructure required includes an accommodation village in the town of Katanning which is under construction now, offices, workshops, stores, water treatment and tailings. Katanning project is very well advanced and OceanaGold has made real progress on 3 fronts: One, permitting, which is currently under public review following authorization by the Western Australian Environmental Protection Authority, a key step in the overall permitting process. Mining leases are already in place over the entire development footprint; two, predevelopment activities where early works agreement have been executed. Detailed engineering and long-lead procurement is advancing and the 250-room accommodation village is currently under construction; and three, significant drilling is underway through a multi-rig drill campaign, which is focused on infill drilling and resource conversion in areas planned for initial stages of mining. OceanaGold aims to keep up the momentum across all 3 of these fronts while incorporating learnings from our due diligence process and our team's operating and development experience. This slide sets out the OceanaGold's indicative work plan for Katanning. The key to highlight here is that we are acquiring the project ahead of development, allowing us some time to optimize the project and derisk the operational ramp-up. We will provide a more fulsome project update following close of the transaction expected in December this year. OceanaGold will conduct further development activities throughout 2027 and look to publish an NI 43-101 technical report in 2028. We are targeting a final investment decision and construction to commence in 2028, ahead of the first gold in 2029. Thank you, and I'll now pass the call over to Keenan.

Thank you, Bhuvanesh and hello, everyone. As mentioned by both Gerard and Bhuvanesh, what's attractive about Katanning is the asset's multifaceted growth potential. Success through exploration remains core to how we create value at OceanaGold, and our track record speaks for itself. Our teams have consistently delivered exceptional returns through exploration across our existing asset base, and we believe we can deliver tremendous value through the drill bit at Katanning as well. Mineralization at Katanning appears over a 17-kilometer strike trend with significant potential to both convert and grow resources. Drilling in the central zone shown here is focused on areas planned for initial stages of mining. The 54,000 meter drill campaign is currently underway with near-term exploration focused on conversion and infill drilling, which will support mine planning and derisk the production profile. As shown, the deposits remain open down dip below the current pit shell, which points to further optionality and exploration upside. Recent drilling has returned good gold incepts beyond the current resource areas. Finally, the acquisition of Ausgold brings with it significant greenfields potential via its large land holding of more than 3,000 square kilometers in a rather underexplored Greenstone Belt. The work Ausgold has done to date in identifying exploration targets signals exciting potential for future regional satellite deposits within 100-kilometer radius from the proposed plant. These are 3 regional trends shown here on the map running parallel to the known Katanning Shear. The Stanley Shear is a 20-kilometer long structural corridor, approximately 30 kilometers from Katanning where initial drilling includes 8.5 meters at 33 grams per tonne gold. The Nanicup Zinger Belt, 40 kilometers from Katanning has shown gold mineralization over a 4-kilometer strike length. And finally, at Kraken Yandina some 90 kilometers from Katanning results have shown strong soil geochemistry anomalies and results from initial drilling are pending. These 3 areas of growth potential together make Katanning an incredibly exciting project from a prospectivity perspective. Back to you, Gerard.

Thanks, Keenan. So as you've heard, Katanning is a fabulous fit for OceanaGold. It strengthens our growth pipeline in a Tier 1 jurisdiction where we can leverage our expertise to create significant value. We're excited to build on the great work done by the Ausgold team to date, and we're excited for what lies ahead. We look forward to sharing further updates as the transaction progresses providing a detailed update on our plans for Katanning closing and welcoming Ausgold employees and shareholders later in the year. Operator, we can now open the line for questions.

[Operator Instructions] Your first question comes from Wayne Lam from TD Securities.

Guys, congratulations on the transaction. I was just wondering, as you've built up the balance sheet, were there other chunkier assets out there that you evaluated bringing in? Or did this size of transaction makes sense given the time line to production and ongoing advancements of WKP? I was just curious, maybe some color on the evaluation criteria if you're kind of looking at more of a tuck-in acquisition here versus the larger given the existing growth pipeline? And maybe just with the acquisition, do you expect a little bit of a slowdown here on the share repurchase program that's been executed over the past year?

Thanks, Wayne. Look, I mean, if I widen the lens on how we were approaching growth, which we've said for a long time now. We were looking at projects where we can add value in areas that we currently operate, U.S.A., New Zealand, Philippines or Australia or Canada. And so this was a development project, which, as you can see from how developers trade in the market sit at a discount, and we were able to acquire this at a [ PNAV ] in the order of 0.4, which is entirely consistent with developer discounts. We're paying a market clearing premium to get it into the portfolio. And we think by getting something at this price, at this stage of its development, we are able to add the most amount of value to OceanaGold shareholders. When we buy something that's an operating asset, as you know only too well, it's very competitive, and you can find yourself having to pay top dollars. So at this stage of a project's life cycle, we think we can add the most value, whether that be through the drill bit, through the execution thereof the development project, which is why we were attracted to it. In terms of what this means, I mean, it is -- as you said, it's relatively small for us to acquire given the financial strength that we have, but it's meaningful as well. I mean it's a 100,000-ounce-plus, producer, that's anywhere between 15% to 20% of our annual production in terms of what it represents to our total portfolio. And it comes online at a really nice time for us. 3 years earlier than what we're currently scheduled, the great kicker to our production profile that will come from the Waihi North Project. So it gives us growth earlier, gives us growth of a low capital cost, and to your -- the final part of your question, we think we can still maintain investing in our business in the sustaining capital. We can still develop all of our other growth options we can still pay dividends who can still return capital to shareholders via our buyback program.

Okay. Awesome. And maybe just wondering if you can walk us through the outstanding items on the path to permitting in the construction time line here?

Well, I mean, they're well advanced in the permitting. We've got all the mining leases are being granted. As Bhuvanesh said in his comments that the EPA process is well advanced. We're out in the public review period. And then the big ones that would remain. In terms of the construction contracts, again, as Bhuvanesh said, they're well advanced in procuring some long lead items, we've been through our due diligence process to get comfort with the good work that's been done by the Ausgold team, and we'll look to build on that in due course. The -- I think if you look at their DFS, they had first production was in 2028 sometime and we're saying in 2029. So we're giving ourselves time to optimize at the margin and do more drilling. But yes, fundamentally, this thing is sufficiently well progressed for us to be confident in acquiring it.

Okay. Great. And then maybe just last one. I was just wondering if there's any read-through to the time line for the first gold that Katanning coincide with the decline in production at Macraes as outlined in the most recent tech report. Just wondering if you kind of saw the need to offset that decline or if those 2 things are completely independent?

Quite independent, Wayne. I mean, it's always nice to have an asset that's going to arrest the decline. But our view on Macraes is that there's plenty of life in Macraes yet. We just have to unlock it through the technical work that we're doing, the exploration work that we're doing and watch this space. We think, as we said before, we see a pathway to take the production of Macraes into the 2040s. And that's what we're very much focused on right now.

Okay. Great. Congratulations on the transaction, and best of luck in the months ahead.

Thank you, Wayne.

Your next question comes from Ovais Habib from Scotiabank.

Congrats on the transaction. A couple of questions from me. Actually, this is a question starting off with -- coming from a lot of investors this morning. And maybe a follow-up to Wayne's question as well. I mean the question that comes up is, does the build and time line of Katanning delay the Waihi North build or time to [ force cooper ] in any way?

Sorry, if it's a bit fuzzy on the line, does this time line impact? Waihi North. Not in the slightest. I mean Waihi North is we're in execution mode of that project. We're 200 meters into the decline, the progress of the surface work, so I'll go back to what we said at our Q2 results. We -- that is progressing wonderfully, and it's well covered by our balance sheet. It's well covered by our free cash flow. Actually, we're funding it out of free cash flow. So there is nothing mutually exclusive about doing -- or progressing with the Waihi North Project, Palomino underground, any of our exploration activity. As you would have seen over the last year as we saw in the first half of this year, we are able to invest in growth still return capital to shareholders in dividends and buybacks, and we're still adding cash to the balance sheet. So no, there's nothing that's mutually exclusive here at all. This is genuinely in line with our strategy of scanning in the areas of focus that we had, an asset or an opportunity early enough that comes to us at a point that allows us to add value in terms of getting these commission and built and operated in a way that gives a good return to OceanaGold shareholders.