Latest / Kitco MINING / OceanaGold Targets 12% Production Growth in 2026 | Gerard Bond

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OceanaGold Targets 12% Production Growth in 2026 | Gerard Bond · Kitco MINING

• 0:08
  SPEAKER_00: Hello and welcome to Kitco Mining with me, Paul Harris, here at the 2026 Prospectors and Developers Association conference in Toronto.
• 0:15
  SPEAKER_00: Gold miners are having record days.
• 0:17
  SPEAKER_00: Joining me to discuss this is Gerald Bond, CEO of Oceana Gold, which trades on the TSX under OGC.
• 0:24
  SPEAKER_00: Gerard, welcome to Kitco.
• 0:26
  SPEAKER_00: Thank you, Paul.
• 0:26
  SPEAKER_00: Great to be here.
• 0:28
  SPEAKER_00: Welcome to the show.
• 0:29
  SPEAKER_00: A record 2025 for the company, including record revenue, record EBITAR, record net profit, record free cash flow.
• 0:36
  SPEAKER_00: With so many records, what were you most pleased about?
• 0:40
  SPEAKER_01: Well, all those records, and I think we had a few more, but we did it safely.
• 1:21
  SPEAKER_00: Well, let's talk a little bit about sort of capital allocation going forward.
• 1:24
  SPEAKER_00: Your gold production is forecast or projected to increase by about 12% this year.
• 1:28
  SPEAKER_00: How will you achieve that?
• 1:30
  SPEAKER_01: Well, it was largely de-risked in the final or the third quarter of last year when we completed the waste removal program in the Hale Open Pit.
• 1:40
  SPEAKER_01: That has liberated a larger amount of higher grade ore to feed to the mill at Hale this year.
• 1:47
  SPEAKER_01: So Hale is the primary driver of our growth in 2026.
• 1:50
  SPEAKER_01: Hale's joint to produce 35% more gold at a 25% lower all-in sustaining cost.
• 1:57
  SPEAKER_01: Our other sites, our other three sites, are producing around the same amount of gold production as they did last year.
• 2:03
  SPEAKER_01: So this is very near-term growth in 2026 that's been largely de-risked as a result of the uh overburden removal program of last year.
• 2:12
  SPEAKER_00: Now Hale is in South Carolina in the United States, and with that sort of growth trajectory at Hale, um, is is this why you're now thinking of listing on the New York Stock Exchange?
• 2:24
  SPEAKER_00: You've you've got that that that that in process, and that's going to happen a bit later on this year.
• 2:29
  SPEAKER_00: Um is that looking to sort of benefit and really leverage the fact you've got a US gold production asset?
• 2:36
  SPEAKER_01: Well, um on it's on the 7th of April that we do list on the New York Stock Exchange.
• 2:40
  SPEAKER_01: The primary driver, Paul, was that unlike a lot of our um uh peers of a company of our size listed on the Toronto Stock Exchange, we didn't have a US listing.
• 2:50
  SPEAKER_01: And what we see when we look at those other uh peer companies of similar size that their trading volumes are much higher.
• 2:56
  SPEAKER_01: By listing on a US exchange, we hope to get much more liquidity in the form of higher trading volume.
• 3:02
  SPEAKER_01: Uh, we believe we'll attract a new suite of institutional and retail buyers for whom it will be easier to transact and invest in no shine of gold.
• 3:10
  SPEAKER_01: And your the last point is uh, yeah, you're right.
• 3:13
  SPEAKER_01: I mean, hail next year will be 45% of our gold production, and not many people know that there's a gold mine in South Carolina, and and we think that that that is a unique flag to fly under as part of that US listing.
• 3:25
  SPEAKER_00: Now you've got a market capitalization of around$13 billion at the moment.
• 3:29
  SPEAKER_00: You mentioned uh with the New York Stock Exchange listing, that should improve your liquidity, various other things.
• 3:34
  SPEAKER_00: Do you have a sense for what kind of boost that could give the company?
• 3:39
  SPEAKER_01: Look, I don't really.
• 3:40
  SPEAKER_01: All I know is that if it's easier for people to buy and sell your shares, um uh that can have the effect of attracting more uh buyers.
• 3:50
  SPEAKER_01: I have met institutional shareholders who said that they love the Oceana Gold story, but their mandates don't allow them to invest on anything other than a US exchange.
• 3:59
  SPEAKER_01: And US retail uh is uh a deep, large market.
• 4:04
  SPEAKER_01: Um we do have a lot of US retail shareholders already, but having a US listen will make it easier for that them uh to invest in.
• 4:11
  SPEAKER_01: And so we'll see what benefit it does have, but I think with increased liquidity increased by universe, uh we can only hope that it translates into higher demand.
• 4:20
  SPEAKER_00: Okay.
• 4:20
  SPEAKER_00: You finished 2025 with no long-term debt and 477 million US dollars in cash.
• 4:27
  SPEAKER_00: Very strong balance sheet there.
• 4:28
  SPEAKER_00: What does that give you the opportunity to do in terms of reinvesting in the business?
• 4:33
  SPEAKER_01: Well, it's a fabulous position to be in.
• 4:35
  SPEAKER_01: It's the strongest position we've ever had in our 36 year history as a company.
• 4:40
  SPEAKER_01: Um, when you have a strong balance sheet and you know, a fortress balance sheet of that magnitude, it allows us to do a lot of things.
• 4:46
  SPEAKER_01: And firstly, it allows us to reinvest back in the business.
• 4:50
  SPEAKER_01: Uh, we are investing over$300 million in sustaining capital.
• 4:54
  SPEAKER_01: A lot of that is about making our uh operations more resilient and getting more days per year of production in.
• 5:01
  SPEAKER_01: Also, in that growth capital, we are investing in the uh establishing a drift across the Palomino underground at Hale.
• 5:08
  SPEAKER_01: That will give us a new underground or source of higher grade to the mill.
• 5:12
  SPEAKER_01: Um, and you know, uh we'll also continue to strengthen the balance sheet.
• 5:16
  SPEAKER_01: We're going to increase by 50% our exploration expenditures.
• 5:19
  SPEAKER_01: Uh we spent$40 million US last year, we're going to spend$60 million this coming year.
• 5:25
  SPEAKER_01: And last of all, um we can do all this.
• 5:28
  SPEAKER_01: That is sustain, grow the business, uh, strengthen the balance sheet, but we're going to more than double the amount of uh capital returns to our shareholders.
• 5:36
  SPEAKER_01: Uh for the year ahead to 2026, our dividend will be three times higher, and our share buyback is going to be two times higher.
• 5:44
  SPEAKER_01: In total,$435 million is up to$435 million going back to shareholders this year.
• 5:51
  SPEAKER_01: And that last year I shouldn't say too, with all those records that you referred to, that was on a uh gold price of$3,500 realized for the year.
• 5:59
  SPEAKER_01: Gold price is now 50% higher.
• 6:01
  SPEAKER_00: Okay, um, I want to go back to the exploration uh in just a moment, but I want to first continue your point about returns to shareholders.
• 6:09
  SPEAKER_00: Um my calculation, your free the percentage of your free cash flow that you returned to shareholders was about 37% last year, with returns going up uh this year.
• 6:19
  SPEAKER_00: Do you have a sort of target of how much free cash flow you want to return to shareholders, or how are you making that that that judgment, that assessment?
• 6:27
  SPEAKER_01: Uh there's no firm target, but we're really uh pleased that you know if you look at the allocation of operating cash flow, uh which is you know from which you deduct all those things that get you to your free cash flow, visually it's uh you know it's about 30-40% of our uh operating cash flow going back to shareholders.
• 6:43
  SPEAKER_01: Uh how we approach this is um the first order of the business is to sustain what we have, uh, second order of business is to grow what we have, that's the growth capital and the expiration, keep a strong balance sheet and then give shareholders back their money.
• 6:57
  SPEAKER_01: But we can see again, with um 12% higher production, with 7% lower all-in sustaining costs and 50% higher gold price prevailing presently, uh, we can be in this uh uh this holy grail state of being able uh to do all those things and give shareholders back more money.
• 7:16
  SPEAKER_01: Um, and as happened last year, if we deliver on our production guidance and if the gold prices stay high, uh we have the option to further increase beyond that 435 that we've spoken about already, uh increase so the returns to shareholders.
• 7:30
  SPEAKER_01: We did it last year, uh, we upsized our buyback from an original 100 to 175.
• 7:35
  SPEAKER_01: We could do that again this year if uh if the future plays out, as I just said.
• 7:40
  SPEAKER_00: Regarding returns to shareholders, do you think um returns to shareholders that's an entry ticket to get the interest of investors, or is it really a competitive factor between you and other gold-producing companies?
• 7:53
  SPEAKER_00: Well, good, cool question.
• 7:55
  SPEAKER_01: I mean, I think um investors ultimately do want a return.
• 7:59
  SPEAKER_01: I mean, they like people coming to a gold stock wanting to get the benefit of a gold price exposure for all the reasons that that represents.
• 8:06
  SPEAKER_01: And then inside of the universe of possible investments, they want to find a company, I believe, that has a diversified suite of assets that are well managed and that have a track record of delivery, uh, that have growth options, uh, that have a growth, near-term growth, long-term growth, all of which Oceana Gold has.
• 8:24
  SPEAKER_01: Um, strong balance sheet.
• 8:26
  SPEAKER_01: Every investor I've met loves the fact that we have a strong balance sheet.
• 8:29
  SPEAKER_01: Uh, and then if you can have a track record of returning, providing good returns to your shareholders both directly in the form of dividends and buybacks, but also importantly, share price appreciation, which we've had a tremendous record of, um, I think that's uh that provides everything that an investor should want in a gold stock.
• 8:45
  SPEAKER_00: Okay, well you talked a lot about growth, and uh with the 50% increase in your exploration budget from I think you said$40 million to$60 million this year, um, high gold price, higher cash flow means you you can invest more in exploration and hopefully find more ounces there.
• 9:00
  SPEAKER_00: But what about the impact of the gold price on your reserves and resource base?
• 9:05
  SPEAKER_00: Um higher gold price, if you evaluate your resources at a higher price, boom, without doing any extra work apart from a bit of calculation, you you've got more resources.
• 9:14
  SPEAKER_00: Uh how how are you sort of managing that aspect?
• 9:17
  SPEAKER_01: Yeah, well we in 2024 at the year-end reserves estimate was done on a$17.50 gold price.
• 9:24
  SPEAKER_01: Uh we increased that at the end of 2025 to 2200.
• 9:28
  SPEAKER_01: Um, when I look at what the prevailing gold price is now, that's pretty uh conservative.
• 9:33
  SPEAKER_01: It's um you know, next year, you know, we are again if prices were to stay at around this level.
• 9:38
  SPEAKER_01: You're right, we could increase that reserve price.
• 9:40
  SPEAKER_01: And particularly at McCray's, you could see us increasing our reserves there.
• 9:45
  SPEAKER_01: We added five years of reserves at McCrae's just by moving from uh 1750 to 2200.
• 9:53
  SPEAKER_01: There's no shortage of mineralisation there, we have a 30 kilometres of strike, uh, and we're doing a lot of work to both unlock from an economic perspective as well as the gold price, but also technically to get that uh reserve into the 2040s.
• 10:06
  SPEAKER_00: Given the that large delta between the the actual gold price, the spot price, and the reserve and resource calculation price, is there perhaps a a need to communicate you know base price price, like we do with economic studies, you have your base case analysis at you know 3,000 US dollars per ounce and the upside scenario or spot at you know 4,500, 5,000.
• 10:30
  SPEAKER_00: Is there a need to perhaps do that with the resources and reserves?
• 10:33
  SPEAKER_00: We calculated at$2,000 and we've got this million ounces.
• 10:36
  SPEAKER_00: If we use$5,000 per ounce, we'd have this many ounces.
• 10:39
  SPEAKER_01: Well you could do that, but I mean some things aren't linear uh like that.
• 10:43
  SPEAKER_01: Sometimes you have to also do the technical studies, you've got to have the permits, you've got to have the wherewithal to process economically uh what you have, and that can involve all manner of things, you know, including land access, uh power lines, uh uh tailings dam locations and so forth.
• 10:58
  SPEAKER_01: So it's not that um linear, uh, but certainly I think the company uh and anyone that looking at Ocean and Global will see that the companies had a long track rec track record of um replenishing reserves through exploration, uh irrespective of the reserve price.
• 11:14
  SPEAKER_00: Okay.
• 11:15
  SPEAKER_00: Now you've got quite a geographical spread in your business from the United States, the east coast of the United States to New Zealand.
• 11:21
  SPEAKER_00: You're also looking for opportunities elsewhere in the US, in Canada, in Australia.
• 11:25
  SPEAKER_00: Um what sort of challenges does that bring the business when you have that broad geographic spread multi-time zones?
• 11:31
  SPEAKER_01: Well, I guess it shows that uh we can already deal with it because we have done so successfully.
• 11:36
  SPEAKER_01: I think we have uh an excellent uh set of managers who are able to operate independently and uh you know within guide rails at the assets themselves, the four assets that you mentioned, but also a really dedicated and capable uh central team who provide you know technical oversight and and governance, and and we're used to doing so.
• 11:55
  SPEAKER_01: So I don't think we want to go any further west than we presently operate, and we don't want to go any further east, and we don't want more time zone challenge, but I think that we have shown that we can handle the time zones.
• 12:05
  SPEAKER_01: Um, we have to go where the gold is, uh, and you know and that's what we'll do.
• 12:09
  SPEAKER_00: Okay, um I want to sort of focus on costs with my next question and specifically the oil price.
• 12:16
  SPEAKER_00: Oil price, uh oil is obviously one of the key cost components for for mining companies, and uh in the past year or so the the oil price has been relatively sort of moderate at you know fifty-sixty dollars per ounce and that sorry per barrel, and that's obviously been a big drive in the fact of the only sustaining cost margin increasing.
• 12:34
  SPEAKER_00: Um, this weekend we've obviously seen the the start of conflict with Iran and potential shutting of the Strait of Hormuz.
• 12:41
  SPEAKER_00: Um, the analysis I've been reading this morning, oil prices going up.
• 12:44
  SPEAKER_00: By how much we don't know yet.
• 12:45
  SPEAKER_00: We'll find that out later today.
• 12:47
  SPEAKER_00: Um that could obviously have an impact in the only sustaining costs or the costs in general of uh producers.
• 12:53
  SPEAKER_00: You know, what's your view there?
• 12:55
  SPEAKER_00: Uh is there anything you can do to sort of perhaps try and mitigate that, or do you have to wait and see how things are going to play out for a bit first?
• 13:02
  SPEAKER_01: Well, for a number of years now, Oceana Gold has hedged 80% of our diesel requirements, which is uh priced off the oil price, uh, for Hale and McRae's, which are our two largest producers, um, 12 months in advance.
• 13:15
  SPEAKER_01: So for the coming year ahead, um we're we're insulated from you know that uh that price spike that we all expect to see in relation to oil.
• 13:23
  SPEAKER_01: So that strategy's paying off.
• 13:25
  SPEAKER_01: Um oil, I think diesel represents around 8 to 10% of our cost base.
• 13:30
  SPEAKER_01: It's it's significant, but it's not huge.
• 13:32
  SPEAKER_01: And as I said, we're hedged, so I think we're going to be fairly inoculated from that.
• 13:36
  SPEAKER_00: Well in terms of MA, I'm gonna labour the point because that's you know one of the things I do.
• 13:39
  SPEAKER_00: Um got big companies buying smaller companies with the the metals prices rising up.
• 13:44
  SPEAKER_00: Is there an opportunity cost there to wading?
• 13:47
  SPEAKER_00: Because if if prices continue getting higher, any potential MA presumably is gonna be more expensive, more costly, the premium may have to be bigger, and so ultimately it could be cost companies much more to fill their pipelines.
• 14:00
  SPEAKER_01: Well, you're right if that's how it plays out.
• 14:02
  SPEAKER_01: Um no one's has has a crystal ball as to what the gold price is going to do.
• 14:06
  SPEAKER_01: Um, you know, I think I saw some of these, um a small number of acquisitions that were done in 2024 and uh at at much lower gold prices, and prices paid then were really or seemed high, uh, and yet the gold price has gone on a on a tear since.
• 14:19
  SPEAKER_01: So those in um investments which seemed like they were uh highly priced now look um uh you know well they're very good for their shareholders.
• 14:27
  SPEAKER_01: Um no one knows what's going to happen next.
• 14:30
  SPEAKER_01: That's one of the uh the allures of the gold industry.
• 14:32
  SPEAKER_01: And I I think you know, um I I think as as if I talk from our perspective, um, you know, the greatest opportunity for advancing growth uh is if you have prospective land and uh organic growth inside your portfolio.
• 14:45
  SPEAKER_01: And I'm really pleased to say that that of all of our land holdings, we have some really exciting growth prospects, and we have uh through mine design, mine optimisation, and process plan improvement, we see the ability to drive um organic growth in the near term from our own portfolio.
• 14:59
  SPEAKER_01: And of course, we have the Waihee North project, which as I said before is one of the world's best underdeveloped ore bodies.
• 15:05
  SPEAKER_01: That's a long way of saying that as it relates to Oceana Gold, we don't have to.
• 15:09
  SPEAKER_00: Okay.
• 15:09
  SPEAKER_00: Uh we've covered a lot of ground in our conversation today, Gerard.
• 15:12
  SPEAKER_00: Uh maybe we can end with what's uh some of the key catalysts after 2026 that our viewers should be watching out for.
• 15:18
  SPEAKER_01: Well, we're about to put out three technical reports that will colour in uh you know each of Hale, McRae's, and Dipio's future, um, you know, their fly path as it relates to production costs, capital, and so forth, and that will uh give their market a lot more insight there.
• 15:32
  SPEAKER_01: Uh we're drilling um we're um at the Wahee North project, and and then that's a uh you know super prospective all body and land district, and so we're doubling our uh expenditures there.
• 15:43
  SPEAKER_01: We've doubled our drill rigs, um so you'll see drill results come through, and then we have the listing, uh, and then that listing uh we'll wait and see how that translates into increased buyer interest in Oceana Gold.
• 15:54
  SPEAKER_00: We'll look forward to seeing what the results of that will be.
• 15:56
  SPEAKER_00: Gerard Bond, thank you very much for joining me today.
• 15:58
  SPEAKER_00: Thank you, Paul.
• 15:59
  SPEAKER_00: Appreciate it.
• 16:00
  SPEAKER_00: And once again, Oceana Gold trades on the TSX under the ticker OGC.
• 16:04
  SPEAKER_00: We have a lot more to come from the 2026 Prospectors and Developers Association conference here in Toronto.
• 16:09
  SPEAKER_00: So stay tuned and hit that subscribe button.
• 16:12
  SPEAKER_00: I'm Paul Harris and this is Kiko Mining.