Ann: OceanaGold Q1 2019 Results Presentation, page-4

UBS Global Research
30 April 2019
OceanaGold Corporation
Weak Quarter as Flagged; 2019 a Transition Year

Disruptive quarter; 2019 a year of transition
The Mar-19 quarter was impacted by well flagged issues such as wet weather at Haile
and Waihi transitioning to newer mining areas. This led to the weakest quarterly
EBITDA result since 2015. But group production and earnings should improve for the
balance of 2019 and costs trend lower. At Waihi production and earnings should
recover once new areas are entered under the Martha pit later in the year. Haile started
2019 still recovering from the wet-weather event of late 2018. But new milling capacity
is being installed in 2019H1. Permitting is then key to enable new mining areas to open
up to drive production growth from ~130koz in 2018 to >200koz in 2021. Production
is guided to be 500-550koz, around flat compared to the 533koz of 2018. Operating
cash flow in 2019 is on our forecasts being consumed in expansion and exploration.
We see Oceana as fairly valued trading marginally below our NPV of $4.55ps.

The quarterly result in more detail
Gold production for the Mar-19 quarter was 126koz, +5% ahead of our forecasts but
costs were +20% higher. Higher costs drove the lowest quarterly EBITDA since 2015 of
$60m which was also 13% lower than UBSe. Haile production and costs was the
biggest driver of the weak result due to wet weather; although management flagged
production had improved markedly with half of production occurring in the month of
March. Net Debt at 31-Mar-19 was US$99m, up from the US$69m at the end of 2018.

Modelling Changes
We have upgraded by our FY19e production forecast by 1% to 526koz, which is still in
the midpoint of guidance of 500-550koz. While this is positive it is more than offset by
higher costs, particularly at Haile. This cuts our EBITDA by 2% for 2019e to US$296m.
Marginally higher costs also see small earnings downgrades to 2020-21e.

Valuation: $4.55ps DCF at a 5% d.r.
Our price target of A$4.50ps (previously A$4.75ps) is set based on our NPV.