Re-opening of Didipio mine still uncertain

Australian-Canadian miner OceanaGold Corporation (OceanaGold) said the renewal of its Financial and Technical Assistance Agreement (FTAA) with the Philippine government for the Didipio gold and copper mine in Nueva Vizcaya has remained uncertain.

And that the company now expects to spend $1.5 million per month, or P72.6 million in holding cost to maintain Didipio mine, one of the largest gold and copper mines in the country.

"Didipio is excluded from 2021 guidance, and holding costs are expected to be in the order of $1.5 million per month as the renewal process of the FTAA continues," OceanaGold said.

"Achieving steady-state production at Didipio will be dependent on the timing of the FTAA renewal and workforce recruitment efforts," it added.

In December 2020, OceanaGold had multiple meetings with the Philippine government officials on the FTAA renewal proposal.

"The Company remains hopeful that the renewal proposal will be re-endorsed and forwarded to the Office of the President (OP) for final approval," OceanaGold said.

In 2020, OceanaGold generated $500 million in revenue including $168 million in the fourth quarter.

Revenue decreased year-over-year primarily due to limited sales from Didipio and lower annual production from another mine site, Waihi.

The company's full-year adjusted EBITDA also fell to $165 million year-over-year primarily due to the significantly reduced sales from Didipio.  

Meanwhile, OceanaGold recorded a net loss (after impairment charge) of $150 million in 2020. The full-year net loss included a pre-tax impairment charge of $80 million in relation to the uncertainty of the timing of the re-start at Didipio.