UBS found the cost performance in the June quarter worse than forecast, with all-in sustainable costs up 27%. Some of this was from heavy pre-stripping, so there will be a benefit in the future from greater access to ore and lower stripping costs.
The broker notes OceanaGold is heavily leveraged to the gold price and the share price has not rallied with the sector because of recent operating and regulatory issues, in particular Didipio in the Philippines.
Neutral rating maintained. Target is reduced to $4.40 from $4.75.
Sector: Materials.
Target price is $4.40.Current Price is $3.98. Difference: $0.42 – (brackets indicate current price is over target). If OGC meets the UBS target it will return approximately 10% (excluding dividends, fees and charges – negative figures indicate an expected loss).
