OceanaGold Corporation 2026 Q2 Earnings Call

Please go ahead. Good morning, everyone, and welcome to OceanaGold's second quarter 2026 operating and financial results webcast and conference call.

I'm Valerie Burns, Director of Investor Relations. Joining me today are Gerard Bond, President and Chief Executive Officer, Marius van Niekerk, Chief Financial Officer, and Bhuvanesh Malhotra, Chief Operating Officer. The presentation that we will be referencing during the conference call is available through the webcast and on our website. As we will be making forward-looking statements during the call, please refer to the cautionary notes included in the MD&A and annual information form. All dollar amounts discussed in this conference call are in U.S. dollars. I will now turn the call over to Jared for opening remarks.

Thank you, Val, and good morning, everyone. We had a really good second quarter. We safely and responsibly delivered 7% more gold than we did in the first quarter. We continued to generate strong free cash flow. We made great progress with our organic growth projects. We returned meaningful amounts of capital to shareholders, and we still added cash to the balance sheet. Our gold production of around 139,000 ounces and copper production of 2,700 tons was in line with plan, keeping us on track to deliver on our full-year guidance. Our margins remained strong. Even with the pullback from the record-high gold prices of the first quarter, the second quarter delivered a record quarterly adjusted EBITDA margin of 61%.

After investing in our growth projects, which include the Waihi North Project and the Palomino Underground mine, we generated $130 million of free cash flow, taking us to $385 million of free cash flow year to date. In line with our capital allocation framework, we continue to actively provide capital returns to shareholders, returning $78 million through dividends and buybacks in the quarter. And we strengthened the balance sheet with cash up 6% to $655 million, and we remain debt-free. We made great progress at our flagship Waihi North Project, with the tunnel towards the high-grade Wharekirauponga ore body is well underway, and we have advanced numerous other aspects of this exciting project. Finally, we released more high-grade drill results for multiple targets at Haile. These demonstrate our ability to add value through exploration and highlight the significant upside potential that we have in our portfolio.

We are on track to deliver on our 2026 guidance. At the halfway mark of the year, we're around halfway towards the midpoint of full-year guidance for both gold production and capital spend, and we expect stronger copper production in the second half that will achieve our copper production guidance. In terms of the shape of the rest of the year, we expect the company's third quarter gold production to be similar to the second quarter, and we expect fourth quarter gold production to be the highest of the year. This increase is driven by expected stronger production at Haile in the third quarter and again in the fourth. This higher gold production in the second half, together with a lower rate of sustaining capital, is expected to drive our all-in sustaining costs lower in the third quarter and again in the fourth.

Our all-in sustaining costs for the year is anticipated to near the upper end of our 2026 guidance range. This reflects labor cost inflation, more investment in maintenance and reliability improvements that have really high payback, the impacts of higher diesel prices where we are unhedged, and lower silver by-product credits due to a lower silver price than we expected. Total capital expenditure is expected to be in line with guidance. In the coming half, we expect an increase in growth capital for the Waihi North project and Leadbetter Underground and more waste stripping at Haile, partially offset by lower sustaining CapEx across the company. Overall, we're very pleased with our performance in the first half of 2026 and remain focused on safely and responsibly delivering on our full-year guidance in the second half.

Our capital allocation framework allocates our operating cash flow in a very balanced way, and you can see how in the first half of this year, we're almost evenly distributing it to sustaining the business, growing the business, returning capital, and adding cash to the balance sheet. By component. The $165 million of sustaining capital include investments in site infrastructure, improving the integrity of plants and equipment, mobile fleet improvements, as well as deferred stripping and capitalized mining. Our growth capital of $118 million was mainly investment in the Waihi North project and the Leadbetter Underground at Haile. The $25 million of exploration expenditures reflects that big step up in drilling across the portfolio, where we think we can add enormous value to exploration.

We remain very focused on shareholder returns and are pleased to have returned a total of $174 million of shareholders' money back to them in the first half of the year through our high dividend and share buyback program. A reminder that we have an approved program of up to $350 million of buybacks for 2026, of which $134 million has been bought back to date. After all that, we were still able to add $178 million of cash to the balance sheet in the first half of the year, which is a 37% increase in cash from the year-end. In summary, our capital allocation framework is working as intended, funding the business, investing in growth, strengthening the balance sheet, and delivering attractive returns to shareholders. I'll now turn the call over to Marius to discuss our financial results in more detail.

Thank you, Jared, and good morning, everyone. Q2 delivered another strong set of financial results. Notably, we achieved a record-adjusted EBITDA margin of 61%, driven by the lower cost of sales and a lower additional government share at Didipio, also reflecting our ability to translate strong operational performance and disciplined cost management bottom line. We place strong emphasis on our per share metrics, which pleasingly reflects step-ups across the board. On screen, we compare second quarter against the same period last year, all financial metrics improved. EBITDA was up 84%, operating cash flow was up 38%, and earnings per share increased by 102% to $0.99. We generated free cash flow of $130 million, resulting in a free cash flow per share of $0.58.

After the investment in organic growth and shareholder returns that Jared spoke about, and after higher annual tax and government cash payments made this quarter, we were able to still add $35 million in cash to the balance sheet. We generated revenue in the quarter of $647 million at an average realized gold price of just over $4,400 an ounce, reflecting the timing of our gold sales. These are solid financial results, importantly, with increasing production and unit costs expected to come down, we remain well-positioned to continue to generate significant free cash flow for the remainder of the year. As it relates to the Iran conflict, to date, there's been no disruption to our operations related to fuel or the supply network. We hedge approximately 80% of our diesel requirements at both Haile and Macraes.

With those hedges in place, should oil prices of around $100 per barrel prevail for the remainder of 2026, we continue to estimate an AISC impact of around $25 per ounce. We've extended 80% diesel hedges across all our operations from Q1 2027. I will now pass the call over to Bhuvanesh to discuss our operating performance.

Thank you, Marius, good morning, everyone. At Haile, we had a strong quarter, producing 60,000 ounces of gold, which was in line with our guidance, driven by increased access to open pit ore in Leadbetter 3 and higher-grade ore from the Horseshoe Underground. We expect this trend to continue in the second half of the year, with production to increase in the third quarter and then again in the fourth quarter, all-in sustaining cost is expected to decrease each quarter. Our continued mill optimization initiatives and the hard work of the team resulted in the outstanding achievement in June of record monthly mill throughput, the highest since the mill was commissioned in 2017. Development of the decline towards Palomino Underground progressed in the quarter, remaining in line with the plan to achieve first ore in 2028.

We continue to drill targets at Horseshoe, Leadbetter Underground, Pisces, and Clydesdale in the second half of the year. Haile is performing to plan and is well-positioned to continue delivering for the remainder of the year. Macraes had an exceptional first half of the year, producing 64% of the midpoint of its guidance already, driven by higher grades mined and processed from the Innes Mills open pit. In line with plan, production is expected to step down in the second half of the year, with full-year production and cost still expected to be within the guidance. At Coronation North, waste stripping continued to progress during the quarter in preparation for ore access later this year.