OceanaGold Corporation: High-Grade Growth in a Rising Gold Price Environment

OceanaGold Corporation is a mid-tier gold producer with mining operations and development projects spanning three geographic regions. The company generates revenue primarily through the sale of gold doré and concentrate, with copper as a meaningful by-product credit at its Didipio operation.

The company's portfolio consists of four key assets: the Didipio gold-copper mine in the Philippines (the company's highest-margin operation), the Macraes and Waihi operations in New Zealand, and the Haile gold mine in South Carolina, USA. Together, these operations produce approximately 500,000-550,000 ounces of gold annually at industry-competitive costs.

OceanaGold sells its production through standard industry channels — gold doré is sold to refiners at spot prices, while concentrate from Didipio is sold to smelters under long-term offtake arrangements. The company maintains no hedging program, providing full exposure to gold price movements. With approximately 4,000-5,000 employees and contractors, OceanaGold operates with a strong emphasis on environmental stewardship, community relations, and safety performance across all its sites.

Near-term growth is anchored by the Haile mine's expansion project, which is expected to increase throughput and recoveries, contributing an additional 50,000-70,000 ounces annually by 2026. The expansion is largely complete and is currently in ramp-up, positioning Haile to become a cornerstone asset for the company.

The medium-term growth story centers on the Waihi North project in New Zealand, which received final approvals in late 2025. First production from this underground operation is targeted for 2027, adding approximately 100,000 ounces per year at competitive costs. The project extends the life of the Waihi operation well into the 2030s and leverages existing infrastructure, reducing capital intensity.

Beyond these committed projects, OceanaGold maintains a promising exploration pipeline, particularly at Didipio where recent drilling has extended the orebody at depth. The company also holds early-stage exploration properties in Nevada and other prospective jurisdictions, providing optionality for future organic growth. Management has guided to a production range of 700,000+ ounces by 2028, representing a growth rate of over 30% from current levels.

The company's financial trajectory is being driven by two powerful forces: rising gold prices and declining unit costs. As higher-margin ounces from Didipio and the expanded Haile operation replace older, higher-cost production, the company's consolidated AISC has declined from approximately $1,250/oz in 2023 to a projected $1,000/oz by 2026.

This margin expansion, combined with increased production volumes, is expected to drive EPS growth from approximately $0.60 in 2023 to over $3.00 by 2026. Operating cash flow is projected to exceed $700M by 2026, providing ample funding for the company's growth pipeline while supporting ongoing dividend payments and balance sheet strength.

The global gold mining industry produces approximately 3,300 tonnes of gold annually, with the addressable market for mid-tier producers like OceanaGold valued at over $200B in annual revenue. The industry is characterized by declining ore grades, rising development costs, and increasing regulatory complexity, creating advantages for operators with existing infrastructure and social licenses to operate.

OceanaGold occupies a distinctive position as a lower-cost producer with a diversified geographic footprint. Its AISC profile in the lower quartile of the industry cost curve provides resilience across commodity cycles. The company's copper by-product credits at Didipio add a unique diversification element not shared by most pure-play gold producers.

Key comparable companies include:

• Alamos Gold (AGI): Similar mid-tier scale with operations in North America and Turkey, trading at approximately 12-14x forward earnings.
• SSR Mining (SSRM): Multi-asset producer with operations in the Americas and Turkey, typically trading at 8-10x forward earnings.
• Equinox Gold (EQX): Americas-focused producer with a growth pipeline, trading at approximately 7-9x forward earnings.
• Iamgold (IAG): West African and Canadian producer, trading at approximately 10-12x forward earnings.

Our valuation approach combines a discounted cash flow (DCF) analysis with comparable company multiples. The DCF analysis, using a 7% discount rate and conservative long-term gold price assumption of $2,200/oz, yields an intrinsic value of approximately $38-40 per share. This valuation incorporates the company's projected production growth, declining cost profile, and the extension of mine lives across all operations.

On a relative basis, OceanaGold trades at a significant discount to its peer group despite comparable or superior growth prospects:

We believe this discount is unwarranted given the company's cost position, growth pipeline, and jurisdictional diversification. As the market gains confidence in the company's ability to execute on its expansion projects, we expect a re-rating toward the peer average, supporting our 12-month price target.

• Gold Price Volatility: As an unhedged producer, OceanaGold's earnings and cash flow are directly exposed to fluctuations in the gold price. A sustained decline in gold prices below $2,000/oz would meaningfully compress margins and could impair the economics of growth projects.
• Jurisdictional Risk in the Philippines: The Didipio mine operates under a Financial or Technical Assistance Agreement (FTAA) that has historically faced political and regulatory challenges. Any adverse government action, permitting delays, or changes to the fiscal regime could disrupt operations at the company's highest-margin asset.
• Operational Execution Risk: The Haile expansion ramp-up and Waihi North development carry execution risks common to mining projects, including cost overruns, schedule delays, and technical challenges. Failure to achieve production guidance would negatively impact financial performance and investor confidence.
• Concentrate Sales and Smelter Terms: A portion of the company's revenue depends on concentrate sales to smelters, exposing the company to treatment and refining charges, smelter availability, and logistics risks. Adverse changes in concentrate market conditions could reduce realized revenues.
• Currency and Input Cost Inflation: The company operates across multiple jurisdictions with exposure to the New Zealand dollar and Philippine peso. Currency fluctuations and inflationary pressures on labor, energy, and consumables could increase operating costs beyond current guidance.