OGC is good value - why such a lagger, page-15

Worzel

Thanks for digging out this report. It looks like production will only average around 120k ounces until the ore is existed, plus copper credits which are much lower than in the past - that implies AISC will also be higher.

They used gold at $1300/ounce, copper at $3.20/lb in their assumptions.

Note that 8% of dividends (after costs) go to the former owners of the deposit (but these payments form part of the Philippines 60% share of net revenue, plus there are a range of royalties/taxes which also form part of that 60% as well some other costs. We need a clearer indication of how much of the stream of earnings go to OGC over the remaining life of the mine.

I wonder if OGC has come out with a revised life of mine plan since that report was released - I suppose they would only do that if they had to change the sequence of mining or had found more ore. I did not find any change of LOM plan announcement so I assume there is none, but perhaps talking with the company may clarify that matter.

Going forward Dipidio will not be generating the strong cashflow it did in the past. Can Haile plus Waihi with a bit of help from Dipidio (Macreas is an unknown, despite the CEO's optimism) give the company a valuation of over $2b. I dunno.

This is the weblink I forgot to include in my previous post - OGC target prices - note the drop in the upper level since mid 2017.

I expect OGC to run again if the USD POG runs, especially given the prices of other good mid tier goldies and that there are so few of them, so its worth a punt at some point in time.

loki