OceanaGold: good news from the mine

[elZorro]

....cheers Elz, still holding tightly and they're looking well supported at this stage. Apparantly the Gold buying season is about to start in India which will possibly push GP higher again?? I read somewhere the Indian yuppies (pseudo rich and genuine rich) are investing heavily into gold also.....will be interesting to monitor this new development (in Indian culture) over the next weeks and months and see whether it's just hype or for real?

Hi GR8DAY, yes, big sales at start of trade today in Aussie. Just a little issue with PoG, it's not sure which way to hop. Sometimes the Aussie market for OGC will finish where the TSX stopped, if PoG is about the same. So it might go up in the afternoon.

JBMurc has been posting about the seasonal changes too, often gold moves up in August, especially if there's a good monsoon in India. Well, there was plenty of water this year (too much?).

If we lived near Dunedin we could apply for this job (oops missed the deadline):

http://www.qualmaster.org/Jobs/JobView.aspx?ID=3614

Note Macraes is a 24 hr operation. Nice to know we're shareholders in a business that makes money while we sleep!

I thought those Aussie shares were cheap - someone just bought 311,000 of them at about AU$3.05, as gold started to move up again! 4.40pm.

[elZorro]

I have to report the failure of the EZ equation :( : overnight gold hit US$1207/oz, and stayed up near there (1205), but OGC on the TSX was being sold off, although relatively small volume. It could have been a day trader selling the shares they profited on the day before, and for once no big players were buying. Later on in the day the price started recovering, to close at CAD$2.89. Consternation all around (especially for TTSB -Stockhouse -perhaps). I guess if you wanted to buy a lot of OGC you'd wait for a day when the PoG was low, wouldn't you?

EZ prediction CAD$3.04, out by 4.9%.

[GR8DAY]

Ez.......im sure we will see continued firming in sp if gold stays above 1200 over the weekend.......looking good to break thru $4.00 maybe??

[elZorro]

Ez.......im sure we will see continued firming in sp if gold stays above 1200 over the weekend.......looking good to break thru $4.00 maybe??

Yes GR8DAY, it should break NZ$4.00 on Monday/Tuesday, if everyone is optimistic or buying/selling balance is average and gold stays up there :)

I found out what the mystery was about OGC not being shown on the Direct Broking NZ shares list. Its primary listing is in Aussie. It is shown on their S&P/ASX SMALL ORDINARIES list of indices. This will not stop OGC getting onto the NZX50 list, if there's enough turnover going on here.

We have the first two hours of trading every week (and every day) and can beat the Aussies in responding to gold price changes overnight. This might help in picking up some cheaper shares, although it can be smarter to wait most days..

Tracked this down off the web just now, needs a source.. from www.realpennies.com (http://www.realpennies.com)

Likely source: NZResources. http://nzresources.com/showarticle.aspx?id=1236&gid=30001236


OceanaGold May Hit The Acquisitions Trail

08/4/2010 (4th August)
Paul Bibby, Chief Executive of OceanaGold Corporation said that the company may consider going on the acquisition trail, with an Australian miner a likely candidate. Bibby added that at this time there was now an opening for mid-tier Australasian gold producers to grow with the void being made in the higher ranks with the takeover by Newcrest Mining Ltd of Lihir Gold Ltd. Now that OceanaGold is un-hedged it has the capacity to generate per annum up to $100 million in cash flow, and with another 900,000 ounces added to the resource inventory at the New Zealand mines there was a capacity now to look at mergers and acquisitions.

I think this is new info.

[mistymountain]

That's interesting EZ... acquisitions... hadn't thought about that on the radar. I wonder if this will eventuate.

[GR8DAY]

.....Im intending opening a "CHESS" a/c (i think it's called) with Direct and National Bank so I can trade on the Oz market as well.......gotta be opportunities there by having both markets covered?

[elZorro]

.....Im intending opening a "CHESS" a/c (i think it's called) with Direct and National Bank so I can trade on the Oz market as well.......gotta be opportunities there by having both markets covered?

Yes, chess accounts need a bit of paperwork to start with I think, then it's all done. I usually make a bit of a hash at trades, but most of the bigger traders on this forum seem to mostly trade on the ASX.

This site writes a gold/silver comment after US trading each day, and also has a fast loading chart. Bonus.

http://silver-and-gold-prices.goldprice.org/
(http://silver-and-gold-prices.goldprice.org/)

[elZorro]

Barrick Gold seems to have many of the same issues that Oceanagold has, on a bigger scale. But their founder is still bullish on gold, and determined not to be called a goldbug..


Barrick founder says gold prices to rise for years Tivat, Montenegro, 3 August 2010

A recent slide in the price of gold is temporary and the precious metal will continue to rise for years, the founder of the world's largest gold miner Barrick Gold Corp said on Monday.

Peter Munk, 82, Barrick's chairman, said in an interview that economic uncertainty and investor warniness about other asset classes -- particularly currencies -- would continue to support gold, which hit record highs in June.

"I expect the trend to continue because I think once people have lost confidence in their currency, once people have lost big money in equities and in bonds and traditional vehicles, their confidence in gold, especially having seen gold rise year in and year out for a decade, is reinforced," he told Reuters.

Gold hit a record $1,264.90 an ounce in June as investors flocked to it as a hedge against sovereign debt turmoil in countries such as Greece and Portugal. It has since fallen and traded around the $1,190 level on Monday.

"A temporary setback is normal in all trading situations and is not going to change that," Munk said, but added later: "I am categorically not a gold bug." Barrick last week said its second-quarter profits rose 59 percent on record bullion prices, prompting the firm to raise its dividend 20 percent. Munk said the company would keep raising its dividend as the price of gold increases in the future.

"Barrick's mission right now to maintain its leadership position in the industry is to improve its margins, pay out more dividends, cater more to an ever-greater shareholder base," he said. "The higher the gold price, the higher the return. The higher the return, it enables us more to increase our dividends."

POST HEDGING WORLD Munk also said high profit margins would provide a safety cushion for Barrick to operate without hedges. Such contracts offered forward sales at lower gold prices, but limited profit when gold prices rose as they have over the past decade. Barrick last year spent about $5 billion -- resulting in an annual loss -- to close out its hedges against lower gold prices.

"It's a major plus for us because the hedge was a counterbalance liability," Munk said on the end of hedging. Barrick, started in in 1983, has interests in 26 operating mines. Munk declined to detail any pending acquisitions, but added: "It is economically very prudent to add on to the land holdings, for example, of a perspective area."

Despite U.S. government assessments that there is vast gold and other mineral potential in Afghanistan, Munk said that was not a region Barrick was interested in exploring.

"Gold finds are becoming more and more difficult right now," Munk said. "What most large companies do now, they look for mixed metal mines, where gold is a part of other metals and other minerals....I think that is the future growth area for large gold producers."

Munk said past hedging made it possible for Barrick to grow by creating a steady cash flow. He said his experience in the 1950s and 60s with Clairtone, a high-end Canadian stereo company that ultimately failed, helped explain his cautious approach as he built up Barrick.

"I learned more in that year of failure than I did in 50 years," he said.

Ends --
--------------------------------------------------------------------------------
By Adam Tanner, Reuters - for Commodities Now.

[elZorro]

Again, not what I was expecting..I wish the market would behave itself..OGC looked a bit uncertain on the ASX today.
It ended up just below the TSX closing equivalent on Friday, with not a lot of interest. Maybe there were a lot of other good deals going. But gold kept trending up.. and the TSX should get in behind that tonight. Again, with gold up, maybe the biggest buyers are keeping out of it.

[Vtrader]

OGC featuring high in short sale value last month.
http://file.nzx.com/000/474/4006474.pdf

For perspective
APRIL $5M total NZSX shorts, least active of top 10 shorted $136250
MAY 6M total NZSX shorts, least active of top 10 shorted $159691
JUNE $12M total NZSX shorts, least active of top 10 shorted $167430
JULY $2M total NZSX shorts, least active of top 10 shorted $73724

So JUNE was the month for shorting, double the value of MAY.
JULY was less than 20% of June.
And of the $2M shorted in July OGC was $151748, or 7.5%
One of those statistical events, where a spike is magnified by a reduction in the population.
OGC short sales more than usual, but NZSX short sales much less than recent.

With the recent POG holding above 1200 USD and the media gloom, OGC could be returning to favour
Cannot be too long before the assays from recent drilling is announced...
Did we ever lose the confidence?
V.

[elZorro]

Cheers VTrader, I didn't realise you could dig up that data on the NZX. I have enough trouble playing shares straight, without trying shorts though. But there must be some who get a kick out of it.
I spoke to a more professional? trader (been at it 15 yrs) today, he said the market is tricky ATM.

He also said that TA trading went out about 20 years ago, everyones into AI? now.

Just trying to use a new Windows platform on a new computer, will be a bit slow for a few days. They've bleeding well changed everything.

Anyway VT, I'll bet you one handle of beer that OGC will do quite well on the TSX tonight ;)

[COLIN]

I spoke to a more professional? trader (been at it 15 yrs) today, he said the market is tricky ATM.

He also said that TA trading went out about 20 years ago, everyones into AI? now.



Whew! That's a provocative statement! You could get hung, drawn and quartered around here, for a statement like that, EZ - just wait until Phaedrus returns from his holiday in the tropics!

Anyway, I'm not sure whether AI stands for "Artificial Intelligence" or "Artificial Insemination" or even something else!

Cheers.

[elZorro]

Whew! That's a provocative statement! You could get hung, drawn and quartered around here, for a statement like that, EZ - just wait until Phaedrus returns from his holiday in the tropics!

Anyway, I'm not sure whether AI stands for "Artificial Intelligence" or "Artificial Insemination" or even something else!

Cheers.

Well Colin, neither was I. I think the former. I'm not so sure the trader I spoke to was doing that well anyway. But as you say, an interesting comment I couldn't help but bring into the forum..:)

Here's an older article, a bit more about Didipio.


Soaring NZ margins help boost earnings for miner BARRY FITZGERALD
July 30, 2010

CASH operating margins at its New Zealand gold mines have more than tripled for Oceana-Gold (OGC) due to the closure of its out-of-the-money hedge book earlier this year.

OGC reported yesterday that margins increased to $US627 ($694) an ounce in the June quarter, compared with $US192 in the March quarter. The boost underpinned a rise in earnings before interest, taxes and depreciation to $US39.2 million from $US8.47 mil-lion in the March quarter.

OGC, of Melbourne, ranks behind Newcrest and Lihir, which are set to merge, as the third-biggest fully unhedged ASX-listed gold producer.

Gold production in the June quarter was 67,541 ounces of gold, up modestly on 65,291 ounces in the March quarter.

Production for the June quarter would have been higher but for heavy rain at the Macraes mine in NZ in May. The area got half its annual rainfall in 2½ days, forcing OGC to process a higher percentage of lower-grade stockpiles.

OGC said it was continuing to evaluate '''strategic'' and funding options for the Didipio gold and copper project in the Philippines. It said ''good progress'' had been made in the June quarter.

Mine-design optimisation studies are nearing the final stages for the planned restart of Didipio, most likely with a partner happy to pick up the development costs in return for its equity share in the operation.

OGC's chief executive, Paul Bibby, said the company expected further production increases in the second half of the year.

"This was the first quarter in the company's history where OceanaGold has been hedge free and 100 per cent exposed to the spot market,'' Mr Bibby said. ''This has significantly increased our ability to strengthen the balance sheet and has provided the flexibility to direct investment back into the business.''

Source: The Sydney Morning Herald

[Hoop]

I spoke to a more professional? trader (been at it 15 yrs) today, he said the market is tricky ATM.

......He also said that TA trading went out about 20 years ago, everyones into AI? now......

....I'm not so sure the trader I spoke to was doing that well anyway. But as you say, an interesting comment I couldn't help but bring into the forum..:)....

;)
I can believe that...;)

[elZorro]

Hi Hoop, my equation is still not working, should I get some TA software?

Vtrader, looks like I'm buying, another mildly cr*p day for OGC.

[GR8DAY]

......dont panic Elz .....the day was just 'flat' until some small-fry flicked 2000 "at-market".....thus the drop of 13c. I think Oz held up ok considering little direction from GP.

[elZorro]

......dont panic Elz .....the day was just 'flat' until some small-fry flicked 2000 "at-market".....thus the drop of 13c. I think Oz held up ok considering little direction from GP.

No panic GD, just wish I had some funds available so I could average down (oops did I write that?).
If I had absolute faith in the EZ equation I would say that OGC is a relative bargain at 1203/oz.

Remember someone bought 300k shares at AU$3.05 recently.

At current rates (gold on 1203) we should have:
TSX price 302
ASX price 321
NZX price 406

But these are prior 2-3 month readings from a swinging graph of data. Even so, a major swing back to interest in gold is on the cards.

[elZorro]

And someone sold 300k shares at AU$3.05 recently as well. :mellow:

To be fair Yankiwi, on that day the shares were being sold off a bit, and I could see a whole lot of cheap looking shares in small parcels on the ASK side, by afternoon. The PoG was bobbing around, and on one of the upticks all those small parcels disappeared. It's the opposite of what I saw happening when PoG was trending down.

[elZorro]

OGC finished at about C$2.71, with gold near 1200/oz, so a 10% discount to the 'normal' situation. Volume was about 1/2 that of a good day, so many prepared to wait and see which direction gold will go..

Here's the latest presentation from Oceana's website. The reserves and resources chart stayed the same I think, but is likely to be updated at some stage this year. Note the comparison graph with other miners. OGC still relatively undervalued, but there are some other companies that are in a similar boat.

http://www.oceanagold.com/images/documents/presentations/100801_ogc_corporate_presentation_aug_2010.pdf

[GR8DAY]

........should see a turnaround today Elz.........the few brave souls of yesterday (buyers) could be well rewarded today? Im still holding and can see POG going ballistic if this "double-dip" uncertainty continues......Ive put money on it!!

[elZorro]

........should see a turnaround today Elz.........the few brave souls of yesterday (buyers) could be well rewarded today? Im still holding and can see POG going ballistic if this "double-dip" uncertainty continues......Ive put money on it!!

Your timing has again been good GR8DAY, although the TSX market is still seeing selling, plenty waiting over there to buy in at the low. It had increased only 2c when I looked.

The next thing to do is to plot OGC against PoG and see how far away the OGC price goes in the worst cases from an EZ equation (or something like it), what percentage drop/gain. If people get bullish on gold and gold equities again, the equation should start to work as before, and at some stage the share price will meet up with the current PoG.

At 1215/oz, CAD price should be.. 312c.

[GR8DAY]

......keep plotting m8........my plotting is from a different angle. There's nothing like uncertainty to spook the markets (as we're seeing) and if that uncertainty turns to just outright pessimism and negativity I feel pretty confident POG will surge to new highs and maybe in the not-too-distant future either.

[mistymountain]

Meanwhile, as I'm not a trader, I'll throw my 2 cents in and say, as before, all the macro indicators haven't changed one bit. Bring on the next 1 - 5 years. Looking forward with interest.

[elZorro]

Meanwhile, as I'm not a trader, I'll throw my 2 cents in and say, as before, all the macro indicators haven't changed one bit. Bring on the next 1 - 5 years. Looking forward with interest.

Mistymountain, I'm not a trader either, except when I have to be (always at the worst time). But are you not tempted to buy some more OGC now, in anticipation of a higher gold price?
You could then get a capital gain as well as the eventual dividends. I'm sure there will be some good value-adding press releases this year.

The only fly in the ointment is the possibility that all equities (even miners) will be caught up in a big slide downwards. It would be a crazy situation for OGC if gold goes higher or holds, and the share price drops, but there you go. It happened just a year or two ago.

At the moment OGC is trading back up towards an average-to-optimistic valuation (viz: the EZ equation) but could still be well undervalued compared to other miners when it gets back to that position. Any pessimism towards OGC (with its small debt issue) should surely be overridden by an accelerating gold price. As long as gold does what many predict.

I'm not sure if this link will work: OGC plotted on top of PoG. Look at the three month graph (smaller one) down the bottom of the page. You can see the doubt showing up in the last week or so.



http://www.infomine.com/ChartsAndData/ChartBuilder.aspx?gf=110575.USD.oz|112355.CAD.&df=20100514&dt=20100814

[elZorro]

I was going to spend a whole lot of time researching to see if other gold miners were behaving like OGC at the moment, and what might happen in future. As usual, I am about 20 years behind the market.

Wikipedia has a page on the goldBUGS index, and from there I could see that the HUI/Gold ratio chart would do all that I needed.

http://en.wikipedia.org/wiki/Amex_Gold_BUGS_Index

Here's even more detail on a promising few months ahead.

http://jsmineset.com/wp-content/uploads/2010/08/General-charts-for-8-13-2010.pdf

The HUI/gold ratio (HGR) will probably be used by large investors to evaluate individual shares. Luckily for the EZ equation, this ratio has been fairly tight over the last few months. But note there is an upwards trend, and that while the September/October 2008 sharemarket collapse clobbered the ratio along with all the big miners, it is recovering.

Gold outperforms bonds as a safe haven asset, see the gold/bonds ratio. Gold is in a 9-year bull market, with a good RSI trend. Open interest in gold (whatever that is) is likely to increase, see pattern comparison on the last chart.

All four charts show promise, and they are right up to date.

This recent BNN feed was noted on Stockhouse: Jay Taylor still likes Oceanagold. But note he's half expecting OGC to drop again if there's an equity selloff. I think keeping an eye on the HGR might be handy.

http://watch.bnn.ca/#clip336176

I wasn't reading this link (below) in late 2008. But it does explain what happened then, and hopefully it was a once-in-a-lifetime event. I bought some cheap GEL shares in 2009, but would have been a lot better off with OGC.

http://www.safehaven.com/article/12130/gold-stock-panic-ends

[elZorro]

Something a bit more recent from Adam Hamilton.

http://www.zealllc.com/2010/gsrec2.htm

At $1215 gold and current exchange rate, OGC could be valued at NZ$4.24, with average sentiment. Is the HGR doing that badly that an 11% discount is necessary?

@12:30 - ASX selling off again, Gold sharply rising to 1218/oz, a flow from equities to gold.

[GR8DAY]

......POG firmly nicely (steadily).....one might say showing maturity.... OGC also climbing in tandem, nothing too silly yet (only 2-5% a day!). Think I'll start accumulating now for medium/long term........scary stuff but you've gotta be in to win (or loose).......ever the optimist. BRING ON THE UNCERTAINTY!

[Vtrader]

VTrader thinks one more correction before the next significant rise in OGC.
As yet this is new thought without any credibility. Time will tell all...
V.

[GR8DAY]

.....gr8day is picking the signs are already there V.......UPWARDS,downwards but mainly UPWARDS.......so it's BOP v Waikato (I probably don't stand a chance with you and Elz BOTH Hamiltonians!).........lucky I was born there so both bases covered.

[elZorro]

.....gr8day is picking the signs are already there V.......UPWARDS,downwards but mainly UPWARDS.......so it's BOP v Waikato (I probably don't stand a chance with you and Elz BOTH Hamiltonians!).........lucky I was born there so both bases covered.

Which begs the question, why did you desert the bustling metropolis of Hamilton?:)
I have to agree more with you GR8DAY, regarding OGC for the next while, VTrader has been looking too hard at TA...and OGC must have a press release coming up.

[GR8DAY]

...for sunnier climes and bigger snapper Elz! ( not to mention the wife is a BOP girl)...........still got strong connections tho to old Hamy......but bin in Tauranga 30 odd years now. Oops forgot to mention SP inching up nicely, lets see what happens when Oz fires up!!

[elZorro]

...for sunnier climes and bigger snapper Elz! ( not to mention the wife is a BOP girl)...........still got strong connections tho to old Hamy......but bin in Tauranga 30 odd years now. Oops forgot to mention SP inching up nicely, lets see what happens when Oz fires up!!

Fair enough GR8DAY, the sea fishing's not so good in Hamilton - although we like to say we're central to anything you might like to visit..

Gold should rest at 1225, it hit 1228 overnight, has been trending slowly up for 2 weeks. OGC finished at CAD$2.91, I'm guessing because a trader sold a parcel of nearly 40,000 shares they bought early the previous day. If so, a profit of CAD$3,000 was made, not bad.. In any case that's the fourth day of a rising price for OGC on the TSX. I still think it's 10% undervalued compared to how it traded for the previous few months (tied to the gold price).

I plotted out the HUI/Gold ratio on stockcharts.com, (this is gold equity sentiment effectively). It had an historical value of about 0.5 until late 2008, dropped to hell and now is back near 0.38. It is trying to get back to 0.5,and if it did there would be about a 50% increase in the OGC price, if gold also went up 20%. This is without OGC management doing anything new, no press releases or changes. So I think we can be bullish about the prospects for OGC.

Howzatt? 4% increase already (@12.30 NZT), this has to be a resetting of the sentiment towards OGC, closer to normal. The PoG is the same as it was yesterday, and the ASX has met the TSX close and surpassed it a little.

[GR8DAY]

.....GOOD WORK ELZ.......APPRECIATE YOUR EFFORTS......not allota sellers today and buyers stacking up, looking for an opportunity to buy more......back to the OGC of the past....looking like $4 will soon be broken thru??

[elZorro]

.....GOOD WORK ELZ.......APPRECIATE YOUR EFFORTS......not allota sellers today and buyers stacking up, looking for an opportunity to buy more......back to the OGC of the past....looking like $4 will soon be broken thru??

GR8DAY, you should be seeing some profit by now then? Always good to see. Here's someone else doing a valuation on OGC

http://www.worldofwallstreet.us/2010/08/ogcto-cgato-bwrto-and-eqnto-compared.html

They came out second lowest valuation in the miners chosen.

[GR8DAY]

hi Elz..yes sitting on a modest profit at the moment (2.5-3k)......but happy to hold and watch. I still believe GP could spike significantly in near future as double-dip sets in and further uncertainty strengthens......I hope it doesnt happen as the economy worldwide will probably be hit far harder than we've seen on first-dip. Yes that chart is interesting but a little hard to interpret..........the main point of interest to us is OGC is the only one he rates as "UNDERVALUED"........which you can only take as more upside to come...here's hoping.

[elZorro]

hi Elz..yes sitting on a modest profit at the moment (2.5-3k)......but happy to hold and watch. I still believe GP could spike significantly in near future as double-dip sets in and further uncertainty strengthens......I hope it doesnt happen as the economy worldwide will probably be hit far harder than we've seen on first-dip. Yes that chart is interesting but a little hard to interpret..........the main point of interest to us is OGC is the only one he rates as "UNDERVALUED"........which you can only take as more upside to come...here's hoping.

This person also said "unclear growth plans" or similar. From Proactive investors site:

Tuesday, March 30, 2010
OceanaGold completes de-hedging

http://www.proactiveinvestors.com/genera/img/companies/news/australia_and_new_zealand350_4bb1fc334b756.jpg

By Ross Louthean, Mineweb.com (http://www.mineweb.com/)
In recent months OceanaGold Corporation (TSX, ASX & NZX: OGC) has undertakeb major capital raisings in Canada and Australia to clear a hedge book that would have been wound down by next year, but on a hedge price of less than $NZ800/ounce ($US568.50/oz) that has impacted the profit line for the Macraes gold operations.
There were no hedge positions in place for the company's second mining centre - the Globe-Progress mine in the Reefton goldfield on the South Island's West Coast.
Clearing the hedge book to be totally a spot gold price producer, and the record production in 2009 of 300,044 ounces and a strong growth in resource and reserve inventory at Macraes from intensified exploration have been the primers for a strong rise in Oceana's share price on all three bourses. This month the Macraes operation poured its three millionth oz.
Early in 2009 OceanaGold was looking unappealing, having been forced to mothball its new Didipio gold-copper project in the Philippines, and carrying a hedge book that largely negated the profit line from the balance of spot-price related production.
A report today in the Melbourne Age newspaper said Oceana can now generate about A$2 million (US$1.83 million) per week in cash flow providing the gold price remains around US$1,100 an ounce (NZ$1,4008 /oz).
In the past two years NZ gold miners have basked in a gold price of up to $NZ1,800/oz but Oceana was saddled with a hedge book that some analysts considered a millstone - where it had sold forward up to one-third of production from Macraes.
However, Oceana's chief operating officer Mark Cadzow reportedly told the Melbourne Age: "Oceana is now in a position to present itself as an unhedged gold producer, and a significant one at that, at a time when gold is pretty strong and people are still looking for a safe haven."
Cadzow also reportedly said that several companies had expressed interest in a joint venture on Didipio but no move would be made until Oceana has completed an evaluation on the project.

If gold keeps going the way it is, surely we'll see some growth, even if we have to wait for the new digger to arrive. It's not so far off.

Found this link, good data on the NZ mines. Average wage/salary paid by OGC is $71,500. Operational details etc

http://www.nzherald.co.nz/fish-and-game/news/article.cfm?o_id=600638&objectid=10634612

150,000 shares purchased on the ASX late in the day, at AUD$3.11

[GR8DAY]

......and the "unhedging" effect appears to be kicking in now. OGC now fully exposed (positively) to gains in GP as evidenced overnight with continued firming in both GP and SP (up over4% on TSX). Am I correct Elz is saying if these GP levels are maintained or even bettered, then OGC (as one of the few non-hedgers) should see SIGNIFICANT gains to bottom line??

[elZorro]

......and the "unhedging" effect appears to be kicking in now. OGC now fully exposed (positively) to gains in GP as evidenced overnight with continued firming in both GP and SP (up over4% on TSX). Am I correct Elz is saying if these GP levels are maintained or even bettered, then OGC (as one of the few non-hedgers) should see SIGNIFICANT gains to bottom line??

Hi GR8DAY, in fact OGC followed other major miners to unhedge, and I guess that says a lot about where gold should head. These are major decisions. OGC has slavishly followed the gold price for months already. Every so often the sentiment slips away, like it did for a two week period just gone. I'm hoping it will get back to the same EZ equation based on gold price.

Regarding the TSX overnight, will finish about CAD$3.00, but went higher on big daily volume, over 1.1 million. Looks to me like TTSB or a major buyer bought in the morning, pumped it up and had a lucky break with the gold price going over 1230. Much of it was then sold at the peak (just guessing of course).

OGC will have to go over $4.00 today here, and note there's hardly any shares for sale at a sensible price. That only happens when the moves are bigger, just like the PoG, it's getting more volatile.

[GR8DAY]

.......RIGHT AGAIN ELZ!!.......looking VERY firm in Oz (up over 4% again) and this is on the back of only modest gains in GP. I thought I wud test out my new CHESS a/c and grab a little profit over there at A$3.22....they wudnt accept the Sell order as I hadnt purchased them in Oz.........2minutes later they were $3.28!! (close call) OGC appears to have been well and truely oversold recently so looking good for further revaluing upwards....here's hoping.

[mistymountain]

Just wait for positive mining announcements and resource upgrades; OGC could lift 10% - 15% in a day if you are into your day trading. Long term holders like me are just interested in fundamentals that look fantastic. Thanks ElZorro for your incredible research. Very very informative etc. Cheers.

[elZorro]

You guys are too kind..note that I'm only looking at one share, and without any pro graphing packages, so it's more like clipart. But at least my red portfolio arrows have changed back to blue recently.

MM, exactly right, with OGC we can do much better with more resources being added, but the market will want to see more income per quarter. That last report, end of July, not good. Despite the income being high, the low net profit seemed a surprise. If you look at the latest plot of OGC on top of PoG, (use the smaller 3 month table at bottom), the lines have diverged.

http://www.infomine.com/ChartsAndData/ChartBuilder.aspx?gf=110575.USD.oz|112355.CAD.&df=20100514&dt=20100814

OGC is still tracking gold, but the offset (or intercept) has changed in the EZ equation. That means we won't do so well when the gold price gets to 1260 (big assumption) as we did last time. Perhaps the sentiment will change back. But someone out there (maybe a few of them) are effectively using a new equation.

[GR8DAY]

.......gaining some good momentum now in Oz, up over6% ystday.....put on a further 19c, toronto up just the 8c but still heading in the right direction (if your'e a holder) and I see our own market is happily lacking sellers with some reasonable buying depth building although buyers seem to appear out of thin air and are grabbing what they can at the moment. Think I read somewhere that September is the strong gold buying month for India and GP usually heads north.......correct me if Im wrong someone??

[elZorro]

.......gaining some good momentum now in Oz, up over6% ystday.....put on a further 19c, toronto up just the 8c but still heading in the right direction (if your'e a holder) and I see our own market is happily lacking sellers with some reasonable buying depth building although buyers seem to appear out of thin air and are grabbing what they can at the moment. Think I read somewhere that September is the strong gold buying month for India and GP usually heads north.......correct me if Im wrong someone??

Hi GD, maybe a 4-5% increase is usual in September from the Indian festival season. The TSX showed a movement to gold and away from standard equities early in trading last night. But gold returned from 1238 or so. Still, each high is pushing up.
The volume of OGC traded dropped back too.

OGC did OK today, about 600k shares traded on the ASX. Gold is holding above 1230.

I found this series of photos of Macraes on the ODT site.

http://www.odt.co.nz/news/galleries/gallery/otago/105719/a-tour-through-macraes-gold-mine

[elZorro]

There has not been much in the way of new OGC info on the web, but there's some jobs available in Reefton.

http://jobs.odt.co.nz/displayjob.php?JobID=145192&occupation%5B%5D=7

So this looks like business as usual, and at this stage OGC subcontracts labour and equipment for that site. 24/7 operation.

Regarding the share price, gold looks to be slipping back again.

[GR8DAY]

hi Elz.....thought you must have gone underground for a closer look at things! Yes POG slipping a bit and it will be very interesting to see where it heads from here......finely balanced I think as is the SP.......I took some profits on Friday as I detected a weakening GP......... so not too worried either way....might get a chance to buy them back soon?.

[elZorro]

hi Elz.....thought you must have gone underground for a closer look at things! Yes POG slipping a bit and it will be very interesting to see where it heads from here......finely balanced I think as is the SP.......I took some profits on Friday as I detected a weakening GP......... so not too worried either way....might get a chance to buy them back soon?.

Not today, going on the gold price going back up, but some have been sold on the NZX for a bit of a bargain this morning.
We're going to have to make our minds up - is there going to be a double-dip or not? Certainly seems to be some immediate interest in gold and gold equities, when the Dow drops. A $25 dollar rise last night in PoG (maybe a bit of shorting first) was quite a lot.

[GR8DAY]

......Elz, where did you get that from ($25 rise POG)?.......This a.m. they were reporting a $5 rise, "GOLDPRICE" is showing a DROP of $1.10 today and "Kitco" also showing a drop??

[elZorro]

......Elz, where did you get that from ($25 rise POG)?.......This a.m. they were reporting a $5 rise, "GOLDPRICE" is showing a DROP of $1.10 today and "Kitco" also showing a drop??

Gold dropped sharply to 1210 or so overnight and then raced back up to 1235. We have been told to watch out for 20-30 dollar upwards changes in gold, I guess measured at end of day's trading. This would signal a major shift out of stocks. Most of the action seems to occur on the NYSE? or wherever the bad news has come from.

[Vtrader]

Gr8day,
Up $25 during first half of NYMEX period.
http://www.kitco.com/charts/livegold.html
And could be starting up wave 5 of a minor Elliott wave pattern.
V.

[GR8DAY]

.....maybe V but that was after a $10-15 drop then followed by a further $5-10 pull-back so the net result at the end of the day was only a $4.50 gain??

[elZorro]

.....maybe V but that was after a $10-15 drop then followed by a further $5-10 pull-back so the net result at the end of the day was only a $4.50 gain??

GR8DAY, we goldbugs are waiting for one of those rises to take us back to 1260 and beyond.. but yes if you have to be accurate, the net result wasn't big ;)

VTrader -
wave 5 of a minor Elliott wave pattern.
- Have you gone over to the dark side? (TA). I'm going to need a beer to digest that information :D

[Vtrader]

And now 21:30 NZT and recent high of $1237, NYMEX due to open in 2.5 hours... The numbers are always the numbers, but the words around the numbers create the interpretation. All are correct here at ST as usual. And we are big enough to validate or counter claim as necessary. I find this thread is very informative, without undue negativity and more enjoyable than some other threads. Perhaps due to OGC management? or ST members?

Z,
You have chalked up the first beer, the reason evades me. For the second beer I wager the next turn of OGC about Friday 3 Sep and target $4.40 (where I do not mind overshoot) Do not all rush for the door at once, the subsequent correction may be large or small.

V.

[GR8DAY]

LOLv.........you could well be right m8.............you could well be wrong.......all I know for sure is she's a dangerous game we play.

[elZorro]

And now 21:30 NZT and recent high of $1237, NYMEX due to open in 2.5 hours... The numbers are always the numbers, but the words around the numbers create the interpretation. All are correct here at ST as usual. And we are big enough to validate or counter claim as necessary. I find this thread is very informative, without undue negativity and more enjoyable than some other threads. Perhaps due to OGC management? or ST members?

Z,
You have chalked up the first beer, the reason evades me. For the second beer I wager the next turn of OGC about Friday 3 Sep and target $4.40 (where I do not mind overshoot) Do not all rush for the door at once, the subsequent correction may be large or small.

V.

VTrader, yes I owe you the first beer, as OGC went down when I thought it should go up :( But it's all OK now. :)

Would you like to apply Elliot Wave Theory to the gold price, because that's still the issue most days. Look again at the latest Canadian OGC price against gold (http://www.infomine.com/ChartsAndData/ChartBuilder.aspx?gf=110575.USD.oz|112355.CAD.&df=20100514&dt=20100814), using the lower small graph.

The new EZ equation is something like OGC (CAN cents) = 0.8xPoG (US$) -675 (not 660) Remember, this eqn is a bad idea..use sparingly.

Here is the HUI compared to gold (http://finance.yahoo.com/q/bc?t=3m&s=%5EHUI&l=on&z=m&q=l&c=gold)-big miners dropped away on average in June/July but have rejoined gold as it rises again.

Looks like gold is going higher for the meanwhile, without a doubt. Unless there's some huge shorting might out there. There wasn't as much buying of OGC today though. It's not a relative bargain. Those big buys are happening on low PoG days. They are not panic sales of OGC, these are some massive players buying back in. We need to keep a lookout for Baker Steel next time they disclose.

Gold is going higher because in most of the world's economies, it is currently the best investment amongst bonds, bank interest, property, and most equities. It's a no-brainer, and so is OGC. IMHO.

[Vtrader]

OK Z,
3 beers I can handle.

http://i949.photobucket.com/albums/ad333/VtraderNZ/OGC_GOLD_AUG2010.jpg
Gold does not lead OGC significantly on the plot.
Current data has gold just leading OGC, where a reasonable projection is that they both increase for a short while (as per end may 2010)
Last wave set has many defined points from EWT.
Current wave plot indicates a smaller wave 1 than the previous by 0.618 (ahem, a golden ratio)
Dip of last few days is too early for end of wave 3 which may now be an extended 3rd...

Cut to the chase, extrapolating from all this gives the next turn about $1260, a correction to $1240 and next turn at $1280.
Seem to have my newly learned EWT stuck a long way out here, hey we are all friends here arent we...

Disclosure: Rank = Amateur
Relativity1: The EWT fraternity are particularly bearish at present, for those who believe.
Relativity2: Gold is currently up $20 in the last 2 days to $1240.
Relativity3: All this EWT projection is valued at maximum liability/benefit of 1 beer.
V.

[elZorro]

V. Fair enough, good to see gold predicted to be higher. If you look at OGC/Gold over the last three months, the relationship is stronger because the hedging finish has been factored in, and ore recovery stayed constant. On the plus side, I would expect some OGC press releases between now and Christmas.

[elZorro]

Expect more from OGC:



Weekly Update from OB Research

While the GDX has risen roughly 10% sofar during 2010, our two main holdings have clearly outperformed. We at OB Research make no secret of the fact that Orvana Minerals and OceanaGold are our two largest holdings. We expect this to continue since they are both entering an interesting period that we expect will give us increased production as well as growing profits. As the companies continue to grow we expect further stockprice growth and re-rating as more and more investors and analysts discover these golden gems.

Presentation
On October 4th, O B Research will organize and host a day of presentations for the two companies in Stockholm. Subscribers to our newsletter will receive an invitation shortly, keep an eye out for this as we expect a full house."
http://www.ob-research.com/signup

[elZorro]

Something good, but strange, going on with the TSX overnight: OGC finished at about CAD$3.30 , 3% up, on good volume of 900,000 shares. That sees a return to the original EZ equation, as gold was at around $1237-1238/oz (EZ eqn 1 predicts $3.30). The price got as high as 3.37 during trading, plenty of volume at the end. It's been suggested that there is an announcement coming up (Stockhouse).

[elZorro]

It's going to be a big day for OGC again.

Here's a link to a pdf indepth report on OGC (http://incakolanews.blogspot.com/), spotted by a Stockhouse person. Click on the freebee for today link down the page.

This report, that is a couple of weeks old, concludes that OGC is like many other gold miners, and will do well if gold stays above 1200/oz (69% share price improvement predicted). There was no effort made to crunch numbers assuming the gold grades in NZ increased, or throughput here increased. Didiopio was relatively undervalued, but reasons given. Current debt is about 272mill, interest payments well within the budget.

[GR8DAY]

.Elz, why didnt you tell me they were gonna power on thru to 4.50sh!! Damn, thought I was doing well to get 4.20sh........dear God I hate the sharemarket at times!! (LOL)

[elZorro]

.Elz, why didnt you tell me they were gonna power on thru to 4.50sh!! Damn, thought I was doing well to get 4.20sh........dear God I hate the sharemarket at times!! (LOL)

I didn't know either, at the moment it all depends on the gold price. I did figure that there'd been only reasonable overseas news for awhile, and if the underlying story wasn't great, then surely some bad news was due and gold would go up. On top of this, OGC should only have good news for shareholders in the second half of the year. If gold throughput goes up 10% to 308,000 oz, the shareprice should follow suit. That's entirely possible. There are lots of other possibilities in the pipeline.

Like you, I wish I had some more OGC at this point.

[Vtrader]

Keeping to my story... have reduced my OGC holding yesterday and today. Like Z says plenty of upside for OGC to come, but the EWT suggests a correction before another large rise.
V.

[GR8DAY]

..well done V........better call than mine at 4.20sh (mind you that was on a purchase at 3.65 only 10days prior)...........dont know if Ive got the right temperament for these gold shares........they're just so damned temperamental.......dont think I'll buy back in at these levels. (famous last words)

[elZorro]

Keeping to my story... have reduced my OGC holding yesterday and today. Like Z says plenty of upside for OGC to come, but the EWT suggests a correction before another large rise.
V.

You might be right Vtrader, I think I bought some of your shares today;), thought we should at least keep up with the Canadians. I did find one site that was a bit disparaging about EWT, but I can have you on about that during the meeting :cool:

So the question is, will gold follow classic EWT or TA predictions, or will it be spurred higher by some global financial misfortune or bad statistic? If it does the latter, but not too sharply, OGC should follow. I like these $10 daily rises in gold that occur every few days. That will be fine. It's September, and weddings etc in India are on the way.

There were quite a few Aussies buying OGC, they even exceeded the Canadian price for awhile before settling down. Gold rose again near end of trading there.
The trend indicators for OGC are showing positive. When they do that, they generally stay there for 2-3 weeks. Any help from TA addicts welcome :).

Reuters article (http://www.reuters.com/article/idUSTRE67F05920100831)implies gold could easily get to $1300/oz in September. That's putting OGC at CAD$3.80. Gold up over $1250 as I write.

[elZorro]

Oceanagold may be added to a TSX composite index.. (http://business.financialpost.com/2010/09/02/seven-stocks-qualified-to-join-sptsx-composite-index/) again this would help with volume of shares traded. Note that while OGC has not gained much in the last 2 days, gold is holding at or above 1250, and the OGC volume traded has been relatively high on the TSX and ASX. Those sentiment indicators have crossed the line and are well positive. Some big parcels being purchased, well over 1.3mill shares traded on the TSX overnight. Everything is in place, just hinging on the gold price, or any relevant market announcements.

OGC finished at CAD$3.46 after two big purchases. This beats the EZ equation by 5c, bullish. Note silver continues to climb.

Market release, Oceanagold to be added to the S&P ASX200 index on 17th Sept!
http://www.asx.com.au/asxpdf/20100903/pdf/31s9nkrpvkhzkg.pdf

How long before it's on the NZX50?

[Vtrader]

You might be right Vtrader, I think I bought some of your shares today;),
Looks like you are doing well with my shares today elZ.
Good news about the index inclusion.
V.

[GR8DAY]

....or mine.....BUGGER!

[elZorro]

Don't worry guys, my holding is also a fraction of what it was, after I needed some cash for other things. Wish I could have at least waited until a day like today. But in theory, plenty more days like this to be had, if gold keeps going.

What do they say? shut your eyes and buy as much as you can..(on the big dips of course)..be brave when others are afraid etc.

[elZorro]

Big day in Canada for OGC, 1.4 mill shares traded, price up to CAD$3.54, 17c above the (first) EZ equation prediction, considering gold at 1246 when it finished. Must be the S&P announcement, bullish. Big turnover in Aussie too.

I found this gold data on the Kitco site (http://www.kitco.com/charts/CPM_charts.html), a heap of useful info there. Gold is being hoarded, not just by the ETF funds. Gold annual mining production has been dropping. Demand for gold has been strong for several years in a row. Jewellry buying has slumped a fair bit, but we have been in a bit of a recession. This makes the increased demand even more remarkable. The extra gold has come from secondary sources like melted down jewellry, recycled hoards?

[elZorro]

Let's hope another big week is in store for OGC. I found this link about the new $8m digger (http://www.baucm.com/news/html/14/n-714.html), it's due to turn up in October 2010, and according to the article, once it's commissioned, it will be doing most of the overburden work at Macraes. If it does work alongside the slightly smaller -5 version digger, perhaps that will remove a bottleneck, could also lead to better ore grades being reached quicker. It should certainly help with production figures for the second half of the year.

Paul Bibby was earlier this year talking about Didipio (http://www.forexpros.com/news/general-news/interview-odds-for-philippine-gold-mine-improve--oceanagold-124983). Seems it could be in production within just over two years if the restart button was pushed. Surely most options have been thrashed out by now, one could expect an update on progress soon. A report on the assays at Round Hill is overdue, August was a quiet info month from OGC.

[elZorro]

Nothing new here, but a bit of a summary of the current OGC position in the gold market. From NZresources.com.


Purple period continues for OceanaGold


Simon Hartley — 6 September 2010

Shares in East Otago-based OceanaGold Corporation (NZX, ASX & TSX: OGC) and also global spot gold prices edged towards near record levels again as investors in producer stocks and the precious metal began eyeing safe-haven investments.
Oceana became a $1 billion company, by market capitalisation, in mid-June when its shares edged over $4.65 and on Friday headed further with sales at $4.78, compared to the record $4.85 set on June 21.
By comparison, 21-months ago Oceana's 22c shares valued the company by capitalisation at $50 million and at $4.78 on Friday it was worth $1.07 B.
Spot gold prices, having hit a record $US1,265/ounce ($NZ1,771/oz) in early-June, were last week trading up at $US1,250 from $US1,190/oz in August.
Craigs Investment Partners broker Peter McIntyre said aside from investors heading back to the historical safe-haven of bullion, the annual wedding seasons in India and China were under way which prompted price spikes.
“Gold plays a big role in wedding gifts, and there is a growing middle-class,” underpinning increased demand, McIntyre said.
During the past year, the International Monetary fund has sold a total 283 tonnes of gold, of more than $403t it put on the market, including sales to the central banks of Mauritius, India and Sri Lanka.
While Oceana has faced an escalation in costs of producing gold from Macraes in East Otago and Reefton on the West Coast, that blow has been cushioned in recent months by large gains in its profit margin.
In its second quarter and half year results to June, released in late-July, it booked a 226% increase in profit margins to $US627/oz, but its costs to produce each ounce crept up from $US822 in the first quarter to $US841/oz in the second.
A year ago for the first half-year overall costs were $US532/oz compared with $US831/oz for the last quarter to June 2010. Oceana raised production from the first quarter to second from 65,291oz to 67,541oz; tallying 132,832oz for the half to June, but that was down 16% compared with the 158,277oz produced last year.
Oceana's fortunes have revived after having bought back its entire forward contract hedge book in March for $102 million, following a $119 M capital raising to finance the purchase.


I wonder if any privately owned businesses in NZ have turned a valuation of 50 million into 1 billion in 21 months?

OGC traded heavily on the TSX (1.4 mill shares), finished at CAD$3.54 (so still well above the EZ eqn), and hit a 52 week high of $3.58 early on. Gold was static, Labor holiday in USA, ending just below 1250. It's certainly a good deal for OGC.

Gold heading past 1250 this morning on resumption of trading.

[elZorro]

Breaking News:

OCEANAGOLD CORPORATE UPDATE
OceanaGold Corporation OGC (http://www.stockhouse.com/financialtools/sn_overview.asp?symbol=T.OGC&table=LIST)
9/7/2010 4:10:00 PM
MELBOURNE, Australiahttp://images.intellitxt.com/ast/adTypes/mag-glass_10x10.gif (http://www.stockhouse.com/News/CanadianReleasesDetail.aspx?n=7864002#), Sep. 8, 2010 (Canada NewsWire via COMTEX News Network) -- /NOT FOR DISSEMINATION OR DISTRIBUTION IN THE UNITED STATEShttp://images.intellitxt.com/ast/adTypes/mag-glass_10x10.gif (http://www.stockhouse.com/News/CanadianReleasesDetail.aspx?n=7864002#) AND NOT FOR DISTRIBUTION TO US NEWSWIRE SERVICES/
The Board of Directors of OceanaGold Corporation (ASX: OGC, TSX: OGC, NZX: OGC) today announced that they have accepted the resignation of the Company's Chief Executive Officerhttp://images.intellitxt.com/ast/adTypes/mag-glass_10x10.gif (http://www.stockhouse.com/News/CanadianReleasesDetail.aspx?n=7864002#), Paul Bibby, who has decided to step down from the position for personal reasons. The Board has commenced an immediate executive search to fill the role.
Mr. Bibby said, "OceanaGold is now in a very strong position both operationally and financially, we have increased international market awareness and the exploration efforts continue to produce outcomes that will sustain the New Zealand operations. I am pleased with what has been achieved during my time with OceanaGold and wish the OceanaGold team and its shareholders the very best in the future."
Jim Askew, Chairman of OceanaGold commented, "Paul has made a significant contribution since joining the Company and as a result the group management is on a solid footing. On behalf of the Board of Directors I wish Paul well with his future endeavours. In the interim, I will be assuming an Executive Chairman role to lead the executive committee. The Company is fortunate to have a strong and diverse range of skills amongst the management team and this will result in a seamless transition in the operations of the business."
About OceanaGold
OceanaGold Corporation is a significant Pacific Rim gold producer with projects located on the South Island of New Zealand and in the Philippines. The Company's assets encompass New Zealand's largest gold mining operation at the Macraes goldfield in Otago which is made up of the Macraes open pit and the Frasers Underground mines. Additionally on the west coast of the South Island, the Company operates the Reefton open-pit mine. OceanaGold produces between 270,000 - 300,000 ounces of gold per annum from the New Zealand operations. The Company also owns the Didipio Gold-Copper Project in northern Luzon, Philippines.
OceanaGold is listed on the Toronto, Australian and New Zealand stock exchanges under the symbol OGC.
SOURCE: OceanaGold Corporation
Mr Darren Klinck, Vice President, Corporate and Investor Relationshttp://images.intellitxt.com/ast/adTypes/mag-glass_10x10.gif (http://www.stockhouse.com/News/CanadianReleasesDetail.aspx?n=7864002#), Tel: +61(3) 9656 5300
Copyright (C) 2010 CNW Group. All rights reserved.

Paul Bibby hasn't been with OGC that long, seems to have done a good job though. Will wait to hear more detail about the reasons for leaving. With the massive turnaround seen by the company, he could have been attracted away. SMH article: no more info. (http://news.smh.com.au/breaking-news-business/oceanagold-ceo-resigns-20100908-14zw6.html)

OGC has restored its strong link with gold (http://www.infomine.com/ChartsAndData/ChartBuilder.aspx?gf=110575.USD.oz|112355.CAD.&df=20100514&dt=20100814) (use lower 3 month chart), and on the TSX is 20c above the original EZ eqn, equiv to NZ$4.84 this morning, with gold poised at 1257, just below its dollar all-time high.

[JBmurc]

So if your'd loaded up On OGC at there lows how much higher now 1500% etc now thats some easy money

[yabster]

thats a big if!

[JBmurc]

thats a big if!

I did But stupidly sold way to early-I was telling others how good a buy it was..

[GR8DAY]

........you're not alone JB.....I wud be 7k better off if I didnt take my profit 10days ago.....ouch!!

[elZorro]

Yeah well, I was about the price of a cheap new car up at one stage, but did I sell using some TA skills? No.
Still driving around in an old car..hope to get my timing right soon. MistyMountain (Mr Buy and Hold) must be laughing..

[GR8DAY]

....at least we can all still laugh about it i(hope you are JB?).........I had a m8 who had over 600,000 Mineral Resources (martha hill) at one stage, that he had accumulated around the 16-30c mark. They ran thru to $2.80 (work it out) but he refused to sell and ended up loosing everything including his house........he doesnt laugh anymore!

[elZorro]

....at least we can all still laugh about it i(hope you are JB?).........I had a m8 who had over 600,000 Mineral Resources (martha hill) at one stage, that he had accumulated around the 16-30c mark. They ran thru to $2.80 (work it out) but he refused to sell and ended up loosing everything including his house........he doesnt laugh anymore!

I agree GR8DAY, we can't expect one share to make our fortune for us, unless we already have a small fortune.

On the TSX: more big volume, over 1.2mill, finished on a subdued gold price still up! OGC valued by many others at NZD$4.95. We could see it breaking $5 today, been waiting a while to see that.

Here's a short list of references from Bloomberg:





OceanaGold Corporation Announces Executive Changes
09/7/2010
OceanaGold Corporation announced that it has accepted the resignation of the company's Chief Executive Officer, Paul Bibby, who has decided to step down from the position for personal reasons. The Board has commenced an immediate executive search to fill the role. In the interim, Jim Askew will be assuming an Executive Chairman role to lead the executive committee.

OceanaGold May Hit The Acquisitions Trail
08/4/2010
Paul Bibby, Chief Executive of OceanaGold Corporation said that the company may consider going on the acquisition trail, with an Australian miner a likely candidate. Bibby added that at this time there was now an opening for mid-tier Australasian gold producers to grow with the void being made in the higher ranks with the takeover by Newcrest Mining Ltd of Lihir Gold Ltd. Now that OceanaGold is un-hedged it has the capacity to generate per annum up to $100 million in cash flow, and with another 900,000 ounces added to the resource inventory at the New Zealand mines there was a capacity now to look at mergers and acquisitions.

OceanaGold Corporation expected to report Q3 2010 results on October 29, 2010. This event was calculated by Capital IQ (Created on July 30, 2010).
07/30/2010
OceanaGold Corporation expected to report Q3 2010 results on October 29, 2010. This event was calculated by Capital IQ (Created on July 30, 2010).



When Paul Bibby spoke to a NZ reporter and this acquisition article was written, it was not followed up by OGC press release. I thought that was very strange at the time.

On the other hand, being CEO was a career advancement for Mr Bibby, although not that well paid? (http://investing.businessweek.com/research/stocks/people/person.asp?personId=8626713&ticker=OGC:AU&previousCapId=9376903&previousTitle=OCEANAGOLD%20CORP-CDI) I hope he bought some shares when he started.

(Apologies, this link has been modified since. I think from memory the salary was a bit over $120k (AUD?), bonus shares etc might have added $200k, possibly a one-off.)

It would be my hope that OGC will continue to prove its near-mine resources, converting them to reserves, and to work on ways of increasing the gold output with relatively modest capital purchases of plant. That process has worked brilliantly for the last year and a half, and the company is out of the mire it got itself into.

OGC's share performance is mostly due to the very dim view the market had of OGC being involved with massive capital costs in Didipio, while a recession was happening. The company was always worth a lot more than $50mill though, its market bottom.

Would it not be better to sell Didipio outright - and the market for that is surely fairly good right now - or at the least carve off the copper output and sell that, the cash being used to do the mine development. Didipio is predicted to add 50% to OGC's annual output of gold, but there is risk involved. We could probably get the same production increase here in NZ, for a lot less risk.

Maybe OGC will end up doing both, and doubling output.

[geezy]

i m thinking of exiting OGC at 5 dollars, whats your valuation on this stock EZ? I wished i held more OGC than NZO :(

[elZorro]

i m thinking of exiting OGC at 5 dollars, whats your valuation on this stock EZ? I wished i held more OGC than NZO :(

If you have a rocketing share to move to (try RSG, courtesy Whirly), moving at $5 might be OK, as the output from the mines is constant ATM. But there are several fronts that OGC could put out a nice press release on, so anybody's guess. OGC in a year or two, with the same gold price? maybe double, maybe more.

[geezy]

sp cud move if gold price goes up to 1300 today !

[mistymountain]

I'll stick with previous comment of SP $6 by Christmas based on continued positive news.

I'm waiting with interest on news regarding the Didipio Project as it was this mine's negative news (and the GFC) that sent OGC from $4 to $0.18 in late 2008. I think that resource upgrades, profit and positive market sentiment will assist in a steadily appreciating share price.

I see no reason to sell given potential for steady capital growth with more positive announcements on the horizon.

Traders may agree to differ though...

[elZorro]

I'll stick with previous comment of SP $6 by Christmas based on continued positive news.

I'm waiting with interest on news regarding the Didipio Project as it was this mine's negative news (and the GFC) that sent OGC from $4 to $0.18 in late 2008. I think that resource upgrades, profit and positive market sentiment will assist in a steadily appreciating share price.

I see no reason to sell given potential for steady capital growth with more positive announcements on the horizon.

Traders may agree to differ though...

Hi there MM. That very poor recent sentiment on Didipio is why I cannot get enthusiastic about it. Seems every miner has a "massive copper-gold porphyry", and in this case a lowish-grade potential 150,000oz p.a. mined in tricky conditions might not compare too well with what OGC have here in NZ. It is true that the OGC reserves/resources tables are boosted by Didipio, but the market is not factoring that in, at the moment anyway. Maybe OGC could take the money and buy a better resource? Or take the money, have no debt, and get in some plant to remove any bottlenecks to production here. The sole custom-made autoclave is a case in point, it's running 24/7, and if it goes down, NZ production stops. I'm sure it's a terrific piece of gear, but that is a business risk that could be tidied up, and of course NZ production would be increased too.

[elZorro]

OGC still following the gold price on the TSX, but at a premium of about 20c with higher building volumes. 1.6million shares traded there yesterday. Maybe something is brewing..

Still no news on why Mr Bibby left.. but we're not the only company losing a CEO this week (PRC). Perhaps our payscales need adjusting.

http://www.odt.co.nz/news/business/125574/oceana-gold-again-loses-ceo

Not sure how up to date it is, but metals industry professional Paul Bibby on Linkedin, (Melbourne), is not shown as having a current position.

[elZorro]

This will explain it: Oceanagold has indeed been added to the S&P/TSX smallcap index (http://www.stockhouse.com/News/CanadianReleasesDetail.aspx?n=7869361)as of 20th September 2010. As most of the OGC shares are traded on the TSX, this is very good news.

Many analysts have been comparing the valuations of goldminers in production, and as OGC reports, our company is modestly priced. One of the perhaps correctly valued companies in the same league has been Semafo. Semafo (and a few other goldminers) have just been dropped from the same index.

When I checked properly, I see that the reason is their market caps got too big, most likely.

Here is the list of the 100 most sought-after listed goldminers (http://www.mineweb.co.za/mineweb/view/mineweb/en/page33?oid=110973&sn=Detail&pid=102055)courtesy Macduffy: performance over the last year given. None shown are losers, the best is a whopping 4500% increase...OGC is neither the best nor the worst, probably a good safe bet though.

[elZorro]

Today's press release from OGC: just a bit of reassurance?

http://www.stuff.co.nz/business/4121249/Miner-tips-30m-boost-to-profits

[elZorro]

OGC added to three S&P indexes including ASX200 on 20th Sept.

http://www.asx.com.au/asxpdf/20100913/pdf/31sgkgjhd31qh0.pdf

There was only one share added on the ASX200, one bumped off. (http://www.standardandpoors.com/servlet/BlobServer?blobheadername3=MDT-Type&blobcol=urldata&blobtable=MungoBlobs&blobheadervalue2=inline%3B+filename%3D20100903_Sep tQuartRebal.pdf&blobheadername2=Content-Disposition&blobheadervalue1=application%2Fpdf&blobkey=id&blobheadername1=content-type&blobwhere=1243747781827&blobheadervalue3=UTF-8) OGC is not the smallest by capitalisation either. I wonder if this will help the Aussie sentiment towards OGC, which generally lags TSX and NZX as far as price goes. Good volume over there for the last few days. OGC has to be a bit more exciting than BHP, the biggest share on the ASX200.

[elZorro]

One of the biggest nights ever for OGC: 3,250,000 shares traded on the TSX, finish price $3.78, about 40c above the price being paid relative to gold for a good period of time. The share hit $3.87 before dropping back on profit taking. So over 1% of the shares traded, the highest price since listing 3.5 years ago.

One of the Stockhouse posters noted that index funds will have to buy OGC, I hadn't thought of that. TTSB (Canada) is on the back foot, owned 800k shares at one stage, now has none, he could have made CAD$200,000 in one day's trading..

I wouldn't expect the same excitement from the Aussies today, but by the end of trade the price should match the Canadian effort, as long as gold stays around 1245. Those big trades we saw earlier on (TSX, ASX) not only were they good timing, but their very size ensured OGC got on these indexes. Is that an easy way to make money or what?

Market seems happy with $5.00 today, valuing OGC at 1.14 billion, up $45mill today, dollar volume better than most on the NZX50.. and gold is moving up..:)

[mistymountain]

and the P/E ratio is still below 11.

If profits continue to grow in final quarter my previous SP prediction of $6 before Christmas is still on the cards...

Longer term looks even better....

EZ I was wondering about acquisitions; I know HGD are underperforming but too muchh of a long shot as I reckon OGC would pick a producing mine IF they do go on a M and A trail in 2011/2012

[Vtrader]

+_)(*&^%$#!~
Need to learn to count to 5.
V.

[mistymountain]

POG spiked last night...

I wonder how this will affect SP today

[elZorro]

Hi MM, nice gold price. About buy-ins, it looks more like OGC management are wanting to focus on getting all their NZ prospects and the balance sheet in order, and that is a tactic that could be aimed more at garnering interest from bigger players. Very hard to tell though. In any case, it's a safe policy, a win-win.

Vtrader: were those expletives about EWT? I saw gold spiking a bit early last night but didn't expect this result. I'm still underweight with OGC, lack of more funds, but still made some good moolah on paper yesterday.

OGC still heading up on the TSX, should break $4.00, again on high volume, up 5%.

[GR8DAY]

misty think the SP will crash big time today..........just so I and VT can buy back in.........I hate OGC!

[elZorro]

Little doubt that the Aussies are still keen this morning, PoG up because the dollar is weakening as expected. Good buying pressure on gold bullion as well. Gr8day, what if the rally for gold continues for a few days? you may as well swap some OGC with your HGD shares..

[GR8DAY]

......if I did that Elz you cud put money on HGD taking off the next day!! I wud never have held OGC thru this amazing run anyway, Im just too damned short sighted and love to bank a profit............maybe a lesson here for me if I can take it on board for next time?

[elZorro]

......if I did that Elz you cud put money on HGD taking off the next day!! I wud never have held OGC thru this amazing run anyway, Im just too damned short sighted and love to bank a profit............maybe a lesson here for me if I can take it on board for next time?
GD, your buy-in timing was near perfect, you got plenty of mine back then. Anyway you did make a profit, reset to stop losses of 20% as Mr P suggested. I wonder if he's still holding..and why don't we have a flash chart of this phenomenal capital growth? OGC has plenty of upside surprises left, so until gold heads south in a big way you'd be fairly safe holding.
IMHO, DYOR etc...

[elZorro]

GD: This looks like a good article (http://www.resourceinvestor.com/News/2010/9/Pages/Big-Autumn-Gold-Rally-on-the-Way.aspx), if you're still not sure about ongoing capital gains from high priced goldminers - we haven't seen it all yet.

And, Simon Hartley must have written this before gold raced up..




Simon Hartley — 15 September 2010

Shares in OceanaGold Corporation (TSX, NZX & ASX: OGC) passed through $5 for the first time yesterday after having been added to three more Standard & Poor's rating agency indexes, including the influential ASX 200 Index on the Australian Securities Exchange.
Oceana shares, which hit a record $4.94 last week, yesterday traded up more than 4% and gained 20c to hit $5 -- a far cry from the 22c per share New Zealand's largest gold miner had slumped to 21-months ago.
The stocks of miners have seen some revival in fortunes, following the dampening of the proposed Australian Government's mining tax, plus some resurgence of interest in delivery of raw materials to China.
While global spot gold prices have softened to around $US1,245/ounce ($NZ1,705/oz), from a record $US1,265/oz in June, investors are keeping in touch with gold as a safe haven investment -- underpinned by China and India's seasonal demand of bullion for weddings and jewellery.
Oceana announced on Monday it had been added to the international rating agency Standard & Poor's ASX 200 Index, and in Toronto on to the S&P TSX Composite Index and S&P TSX Small Caps Index.
In mid-June it was placed on S&P's TSX Global Gold Index and its TSX Global Mining Index.
Inclusion on the ASX 200 attracts more scrutiny from large, institutional investors, many of which must carry a swathe of ASX 200 companies within their respective portfolios, said Craigs Investment Partners broker Peter McIntyre.
“Their inclusion will see a lot more interest taken by larger players,'' McIntyre said.
He said overall annual gold production was down; underpinning some demand and China was rebuilding its own gold inventory.
“Gold has always been considered a hedge against inflation and it has become more mainstream for institutions and governments to hold gold,'' he said.
Forsyth Barr broker Suzanne Kinnaird said investor sentiment in Oceana is positive following their strong, recent, share price gains, bolstered by this week's inclusion on the three additional S&P indices.
“This [inclusion] can create demand from both index tracking funds, as well as speculators trying to benefit short-term from these fund managers' demand,” she said.
Kinnaird noted that triple-listed Oceana's primary listing is on the Toronto stock exchange in Canada and the respective share prices were “trading in-line” as expected. On Monday its Toronto share-price closed at $C3.78, which equated to $NZ5.03, Kinnaird said.
*Simon Hartley is a senior business reporter with the Otago Daily Times.

[elZorro]

Here's something for MistyMountain: a possible Didipio partner? (http://www.gmanews.tv/story/201130/philex-may-buy-into-oceanagolds-didipio-mine)

Having the biggest Phillipines miner on board (Philex) might be a very good idea. Note they have much larger projects over there to look at, but don't seem to be too knowledgeable about the super-big gear. So maybe Didipio is a good fit, certainly well inside their budget. The article is not well-written, might need to do some more research.

Here's another take:



Philex eyes Oceana Gold's Vizcaya project
By Marianne V. Go (http://www.philstar.com/ArticleListByAuthorName.aspx?AuthorName=By+Mariann e+V.+Go) (The Philippine Star) Updated September 16, 2010 12:00 AM Comments (0) (http://www.philstar.com/Article.aspx?articleId=612285&publicationSubCategoryId=66#comments) http://www.philstar.com/images/post-comments.jpg (http://www.philstar.com/Article.aspx?articleId=612285&publicationSubCategoryId=66#comments) MANILA, Philippines - Aside from the Tampakan project of Xstrata, Philex Mining Corp. is also looking at Oceana Gold’s Didipio gold project in Nueva Vizcaya.

This was revealed yesterday by Jose Ernesto Villaluna Jr., president and chief operating officer of Philex on the sidelines of a three-day conference and exhibition on mining at the Manila Hotel.

Villaluna said Philex is now conducting studies and may soon undertake a due diligence for the acquisition of Australian Indophil’s 37.5-percent stake in Sagitarrius Mines Inc. (SMI) which is the Philippine subsidiary controlled by Swiss-based Xstrata (62.5 percent).

In addition to this, Villaluna said Philex is also looking at other projects including Didipio.
“We are conducting studies on these projects to find fatal flaws and possible opportunities,” he said.
Both the Tampakan and Didipio projects are facing problems.

The Tampakan project which straddes South Cotabato, Davao del Sur and Sultan Kudarat is faced with an open pit mining ban passed by the provincial board of South Cotabato.
Chinese firm Zijin had made an offer for Indophil’s stake in SMI, but backed out following the approval by the South Cotabato provincial board of the open pit mining ban.

The Didipio project of Oceana Gold has been moribund since 2008 after encountering security problems. Oceana Gold has been trying for a couple of years now to attract a strategic investor in the project.

Meanwhile, Villaluna said Philex is continuing to undertake the developing of its Bulawan project in Negros as well as its Silangan project in Mindanao.

Security problems? or cash? The meaning might have been lost in translation.

[GR8DAY]

...cheers Elz, now I suppose you will tell us you've been holding from 22c..........please don't!! (anyone out there in that lucky boat?)

[elZorro]

...cheers Elz, now I suppose you will tell us you've been holding from 22c..........please don't!! (anyone out there in that lucky boat?)

No, while that was happening I bought and sold a few without doing any FA work on OGC. I had heaps of GEL instead. So I do know this much, OGC is a better bet than GEL (and HGD) at the moment.
Ask JBMurc about OGC, he spotted it a long time ago. I've said this for awhile, without really committing to it, but it's undeniable now. OGC is a very good share, plenty of prospects ahead yet.

Here's another article from the Business news on Didipio (http://www.bworldonline.com/main/content.php?id=17799). It's obviously imortant over there.

Over two years ago, this article appeared in the ODT regarding Didipio (http://www.odt.co.nz/news/business/18113/oceana-insists-didipio-still-has-potential?page=0%2C0)and the effect on the OGC share price. Still very interesting, and with hindsight, quite amusing.

[Jay]

Mr Phaedrus
With OGC gapped up a couple of time now, do " we" still use the same indicators/settings to watch for an exit signal as you previously mentioned to ez? or is there a btter way in thse kind of instances?

Thanks in advance

[mistymountain]

Here's something for MistyMountain: a possible Didipio partner? (http://www.gmanews.tv/story/201130/philex-may-buy-into-oceanagolds-didipio-mine)

Having the biggest Phillipines miner on board (Philex) might be a very good idea. Note they have much larger projects over there to look at, but don't seem to be too knowledgeable about the super-big gear. So maybe Didipio is a good fit, certainly well inside their budget. The article is not well-written, might need to do some more research.

Here's another take:


Security problems? or cash? The meaning might have been lost in translation.

Thanks EZ for that great research. Brilliant! With all due respects to the TA specialists my strategy with OGC is to hold for the long term. With EZ continually finding more support from the media and researchers why would you want to jump off now!?

I'll still go SP$6 Christmas and double figures by end of 2011.

[Jay]

I see OGC mentioned on the Business news on ONE today, so lets hope it all up in the main

[mistymountain]

Something new to ponder from a TA perspective is POG.

To my untrained TA eye we could see POG US$1400 by early 2011 based on charts from http://www.goldprice.org/gold-price-history.html

I'd be interested to hear a chart experts point of view though. I guess this can be discussed on the ASX thread under Gold

[elZorro]

Something new to ponder from a TA perspective is POG.

To my untrained TA eye we could see POG US$1400 by early 2011 based on charts from http://www.goldprice.org/gold-price-history.html

I'd be interested to hear a chart experts point of view though. I guess this can be discussed on the ASX thread under Gold

Hi MistyMountain, most chartists see some upside to gold, they vary a lot in the prices it may reach. Last night on the TSX, gold briefly climbed back past its all-time dollar high, and yet OGC was sold off. Looks to me like a lot of day-traders had a go with OGC, and the previous day's gold price dip scared them back out. It's also possible this drop was engineered by a large fund wanting to buy more OGC at a sensible price. Looks like it finished at CAD$3.85 after climbing back from $3.70, massive volume of 3.5million shares.

There is some mention on Stockhouse about OGC being added to a very select Gold Junior ETF with about 58 worldwide stocks, average market cap 1billion. Semafo is/was one of the two biggest stocks in the GDXJ portfolio, a van Eck fund. http://www.vaneck.com/funds/GDXJ.aspx?redirect=1&orig=http://www.vaneck.com/index.cfm?cat=3192&cGroup=ETF&tkr=GDXJ&LN=3_02

On the news I heard that the reason for the latest gold price highs was in fact widespread rumours (http://www.goldalert.com/stories/1300-Gold-Price-on-Deck)about a new tranche of quantitive easing soon.

[Phaedrus]

Phaedrus, do we still use the same indicators/settings to watch for an exit signal as you previously mentioned? Why not? They are as good as any - and better than most in my opinion.

Here is a chart update. Note that the dead simple, bog-standard trendline works just as well as more complex and sophisticated indicators.

See how all these very different indicators triggered almost simultaneously. I like it when that happens. Rapid confirmation of buy or sell signals from a wide range of indicators is a good thing to have.

http://i602.photobucket.com/albums/tt102/PhaedrusPB/OGC917.gif

[Jay]

Thanks P
I was looking at the trendline in association with the OBV

[elZorro]

I've been thinking..

A while back OGC was trading below the patented EZ equation =US$PoG x 0.8 -660 (in CADcents), then it was up to 45c higher than predicted, with gold increases and the index listings news. It's still 15c higher now, but NZ has followed those perennial pessimists, the Aussies, to downgrade the price further today. In all three markets OGC is still trading above the EZ eqn, but is trending closer. If you believed in the equation, you would be relatively happy buying when the OGC price was at or below the EZ equation.

Because chances are, there will be some good news that will pop along so that OGC temporarily trends above the equation. We'll have to call it the optimistic offset ;)

Let's face it, the share is already liquid, additional indexes won't help that, but might increase stability of the price. We're still looking at 280,000 to 290,000 ounces p.a. Unless something changes the cash position in a big way, or production figures ramp up or down, the books are fairly well known and priced in.

Plots of OGC against Gold price: (http://www.infomine.com/ChartsAndData/ChartBuilder.aspx?gf=110575.USD.oz|112355.CAD.&df=20100514&dt=20100814)

[adamcz]

Damn whats up on the Toronto exchange 14million shares traded today!

[elZorro]

Damn whats up on the Toronto exchange 14million shares traded today!

Hello there Adamcz, this would be the GDXJ and other funds buying the shares they need to balance their portfolios for the weighting before 20th September. GDXJ apparently put a weighting of 1.39% on OGC, meaning they needed 4.7 million shares. This is by far the biggest trading day for OGC ever, best volume before was about 4 mill I think (could be corrected).

I think smaller retail purchasers bounced the price up a bit too high, but when the big guys started selling down to shake the little fellas out, we saw a volatile pattern. The price dropped as low as $3.69 overnight, ended at $3.85, while gold peaked at about $1284 and is back at $1274 or so.

[adamcz]

Sorry make that 20million.... Might be a bit of a dumb question but they did buy them all today? if so how do you manage to buy 20mill shares with out pushing the price up more

[elZorro]

Sorry make that 20million.... Might be a bit of a dumb question but they did buy them all today? if so how do you manage to buy 20mill shares with out pushing the price up more

That's a good question. Who had that many to sell? There were some big holders like Baker Steel already with some, and Mr Chen etc, maybe they sold some, knowing that if the gold price drops for a short while, they can buy more from the market at around the same price. Still, it's nearly 10% of all the shares available, and they were possibly all purchased on the TSX. On Monday we might see some paper purchases in NZ at the start of trading, if some came from our market.

[geezy]

how does dual listing work? and in this case triple listing for OGC? aus, canada and nz? do they all share the equal amount of shares issued on this stock?

[elZorro]

how does dual listing work? and in this case triple listing for OGC? aus, canada and nz? do they all share the equal amount of shares issued on this stock?

I'm not an expert on this, Geezy. But the shares have identical value as voting rights etc on all three markets. As new shares are issued by OGC, each market should update its records to show the new total no. of shares. That is sometimes delayed, meaning the market caps will be inaccurate. You can buy shares in one market and do some paperwork to move them to another market. Most shares for OGC seem to be on the TSX, ASX is next.

I've just been plotting out the top 98 gold shares on a spreadsheet, see earlier post from Macduffy (http://www.mineweb.co.za/mineweb/view/mineweb/en/page33?oid=110973&sn=Detail&pid=102055). Interesting points:

Of the 98 shares, none with a current market cap of $700mill USD or more, did better than 300% capital gain in a year. OGC was 800mill, 289%.
Performance wise, OGC was 14th out of 98. However not sure on criteria for the list of shares. None had an Mcap less than 20mill.

Some of these miners are only explorers at the moment. At least 52 of them have their principal listing on the TSX, which seems to be one indicator of success.
Of the thirteen gold shares with a better performance for the year over OGC, none produced any gold at all. In some, their big gains have been just over the last month or two.

As the Mcap goes up, performance tends to drop, as none with Mcap over 20bill or more did better than a 50% increase.
Over the last year, a sweet spot for gold explorers with current Mcap of 200mill-600mill produced 4 explorers with gains of over 900%, one was 4566% (Canaco Resources).
One outlier, North Atlantic Resources, achieved 1436% and is still valued at just 23mill.

Of course, for each stella explorer's return there would be many duds. But if capital gain from goldminers is an aim, I'd be looking for small to midcap miners that are expanding their production. Or as in OGC's case, fixing up the state of their books, and getting on with core business while gold is high.

Once I've added tickers and gold production and reserves/resources data I'll post the results. Unless someone's already done this? Please? :cool:

[geezy]

does anyone wanna check out NME? :D

[elZorro]

:confused:
does anyone wanna check out NME? :D

Geezy, that share looks a little illiquid, I have not done proper DD. But OGC did look very undervalued compared to a lot of miners I looked at yesterday. Don't look now, plenty of interest in OGC today in Aussie :)

[elZorro]

I noticed a weird pause in ASX trading late today, and this has been emailed to those signed up: Update on Didipio (http://www.oceanagold.com/images/documents/files/100920_didipio_project_update.pdf)

So this signals an upcoming increase in annual production of about 71,000 oz, or 25% more. The gold is also quite cheap to produce (US$331/oz), once the copper around it is sold to defray extraction costs. Extra capital costs are not to exceed US$140 mill with the new plan of attack. $80mill has been spent already, with a lot of hardware already on site. Looks like the new feasibility plan will be filed within 45 days, of course it might be a while before anything starts (production within 2 years), and this is not HGD we're talking about here.

Funding options are still being talked about, with Philex perhaps a frontrunner. Maybe this helps to explain the OGC interest today, which exceeded what effect the increasing gold price should have had on the share. Glad I bought some OGC today, against my better judgement.

What do you think MistyMountain?

[mistymountain]

This is very very encouraging for those investors willing to hold for the medium to longterm.

Mothballing Didipio was just one trigger in 2008 that sent OGC SP from over $4 to $0.18. Given SP now $5.30 ish new good news about Didipio can only be postive heading into 2011/12.

Yes we may see OGC SP show volatility against POG but the bigger picture indicators, such as your last posting EZ, are continuing to make OGC an increasingly robust and sound investment

At this stage OGC is ticking every box. Brilliant!!

[Vtrader]

Z,
You have done well with my OGC shares recently, care to sell them back?
Even (a beginners) EWT says buy.
V.

[elZorro]

Thanks MM and VT, both long term and EWT people are keen on OGC then..Like you guys, I'm still trying to make some overall profit here. Hard to believe.

I've just been adding more data to my spreadsheet. At this stage paying a fee for GoldNerds looks very attractive, has anyone done this and can advise?

BUT: From a couple of charts plotting Mcap against gold production for a few shares, there is a strong looking relationship, linear, with a bit of spread. If you can picture OGC being in between New Gold and Semafo in terms of annual production, OGC is about US$0.85Bill MCap, the other two are over $2.5Bill. Semafo is probably overvalued. But New Gold looks to be about right (production 0.35Moz).

2914

Hold onto your hats, OGC could be getting revalued steadily soon, and that could mean a doubling of the share price.

Overnight nothing too startling on the TSX, over 1.2 mill shares traded so far, price about C$3.93, so perhaps a bit overcooked here yesterday. Gold price holding up.

[elZorro]

There was not much interest in OGC on the TSX last night, and the reasons for that might be that the fund purchases have been and gone for now, it didn't ramp the price up that much. The Didipio press release didn't mention two things: who is stumping up with the capital, and when is the mine development restarting. Add in the nearly two year delay before we see any added production and cashflow, and while it's promising, the share price impact for this year is minimal. Eventually the NZX and ASX came to the same conclusion.

10% of OGC's shares were sold to new owners late last week. I was wondering about a rights issue to cover the Didipio mine prep and the current debt. Would those major shareholders that sold recently, be happy to buy more shares on offer, knowing the share price appreciation and sentiment would probably cancel out any dilution? Probably. If annual production goes up 25%, so will the share price.

Here's another graph, plotting the top few producers in the list, production against Mcap. That's a strong linear relationship, OGC is tucked away down near the origin.

2922

Although more data might confuse the nice lineup, this article suggests OGC (http://www.goldval.com/news/)and others as worth looking at, undervalued in Jan 2010.

[elZorro]

Stockhouse people are discussing this low-key but startling presentation from Mr Askew in Denver at a conference.
http://www.gowebcasting.com/events/denver-gold-group/2010/09/20/oceanagold-corporation/play/stream/1049

I think MistyMountain is right: Didipio is just the start of big news for OGC. Gold production there will cost minus US$330 an ounce, by factoring in the copper price. They are also looking at their other prospects over there soon. Lots of other very useful research points in the speech and report that went with it.

Among these points:
7-8 years of future mining ahead will be their constant aim for each year.Macraes to go on for many years.
Expect more reserves/resources to be added to the EOY 2010 table (so probably no update to it before then)
Reefton: all indications that this is highly prospective, expect great results here in the next few years. New areas several km outside the existing mining operation, but still close enough. Drill results coming in soon.
Didipio changes are to improve safety aspects. Not expecting much trouble with consents or local issues. Net effect will be to bring OGC into the lower quartile in terms of mining cost per ounce, around US$300.
OGC looking very undervalued by the market in EV terms.

VectorVest value OGC at CAD$6.30 right now. Note that this valuation places no value at all on the Philippines assets. So will the market accept and adjust to these sorts of valuations in the short term?

VectorVest Stock Analysis of Oceana Gold Com as of 9/21/2010

Summary AnalysisOGC is undervalued compared to its Price of CAD$3.93 per share, has about average safety, and is currently rated a Buy.

Company Information
Business: Oceana Gold Com, (OGC) OceanaGold Corporation engages in the exploration, development, and operation of gold and other mineral resource properties. The company holds interests in the Macraes Goldfield mine located in the Otago region of the South Island of New Zealand; and the Reefton mine, which consists of four open pits and is located within the West Coast Region of New Zealand’s South Island. It also owns interests in the Didipio Gold Copper project located north of Manila, in Luzon Island, the Philippines; and the Junction Reefs property located in central New South Wales, Australia. The company was incorporated in 2003 and is based in Melbourne, Australia.

Capital Appreciation Value: Value is a measure of a stock's current worth. OGC has a current Value of $6.31 per share. Therefore, it is undervalued compared to its Price of $3.93 per share. Value is computed from forecasted earnings per share, forecasted earnings growth, profitability, interest, and inflation rates. Value increases when earnings, earnings growth rate and profitability increase, and when interest and inflation rates decrease. VectorVest advocates the purchase of undervalued stocks. At some point in time, a stock's Price and Value always will converge.

RV (Relative Value): RV is an indicator of long-term price appreciation potential. OGC has an RV of 1.49, which is excellent on a scale of 0.00 to 2.00. This indicator is far superior to a simple comparison of Price and Value because it is computed from an analysis of projected price appreciation three years out, AAA Corporate Bond Rates, and risk. RV solves the riddle of whether it is preferable to buy High growth, High P/E stocks, or Low growth, Low P/E stocks. VectorVest favors the purchase of stocks with RV ratings above 1.00.

RS (Relative Safety): RS is an indicator of risk. OGC has an RS rating of 0.99, which is fair on a scale of 0.00 to 2.00. RS is computed from an analysis of the consistency and predictability of a company's financial performance, debt to equity ratio, sales volume, business longevity, price volatility and other factors. A stock with an RS rating greater than 1.00 is safer and more predictable than the average stock in the VectorVest database. VectorVest favors the purchase of stocks of companies with consistent, predictable financial performance.

RT (Relative Timing): RT is a fast, smart, accurate indicator of a stock's price trend. OGC has a Relative Timing rating of 1.75, which is excellent on a scale of 0.00 to 2.00. RT is computed from an analysis of the direction, magnitude, and dynamics of a stock's price movements over one day, one week, one quarter and one year time periods. Once a stock's price has established a strong trend, it is expected to continue in that trend for the short-term. If a trend dissipates, RT will gravitate toward 1.00. RT will explode from bottoms, dive from tops, and reflect changes in price momentum. VectorVest favors the purchase of stocks with RT ratings above 1.00.

VST (VST-Vector): VST is the master indicator for ranking every stock in the VectorVest database. OGC has a VST rating of 1.46, which is excellent on a scale of 0.00 to 2.00. VST is computed from the square root of a weighted sum of the squares of RV, RS, and RT. Stocks with the highest VST ratings have the best combinations of Value, Safety and Timing. These are the stocks to own for above average, long-term capital appreciation. VectorVest advocates the purchase of safe, undervalued stocks rising in price.

Recommendation (REC): VectorVest gives a Buy, Sell, Hold recommendation on every stock, every day. OGC has a Buy recommendation. REC reflects the cumulative effect of all the VectorVest parameters working together. These parameters are designed to help investors buy safe, undervalued stocks rising in price. They also help investors avoid or sell risky, overvalued stocks falling in price. VectorVest recommends that investors buy high VST-Vector, Buy-rated stocks in rising markets.

Stop (Stop-Price): Stop is an indicator of when to sell a long position or cover a short position. OGC has a Stop of $3.36 per share. This is $0.57 below OGC's current closing Price. A stock's Stop is computed from a 13 week moving average of its closing prices, and is fine-tuned according to the stock's fundamentals. High RV, high RS stocks have lower Stops, and low RV, low RS stocks have higher Stops. In the VectorVest system, a stock gets a 'B' or 'H' recommendation if its Price is above its Stop and an 'S' recommendation if its Price is below its Stop.

GRT (Earnings Growth Rate): GRT reflects a company's one to three year forecasted earnings growth rate in percent per year. OGC has a forecasted Earnings Growth Rate of 29.00%, which VectorVest considers to be excellent. GRT is computed from historical, current and forecasted earnings data. It is updated each week for every stock in the VectorVest database. GRT often foretells a stock's future price trend. If a stock's GRT trend is upward, the stock's price will likely rise. If GRT is trending downward, the stock's Price will probably fall. VectorVest favors the purchase of stocks whose GRT is rising and is greater than the sum of current inflation and interest rates, as shown weekly in our investment climate report.

EPS (Earnings per Share): EPS stands for leading 12 months Earnings Per Share. OGC has a forecasted EPS of $0.33 per share. VectorVest determines this forecast from a combination of recent earnings performance and traditional fiscal and/or calendar year earnings forecasts.

P/E (Price to Earnings Ratio): P/E is a popular measure of stock valuation which shows the dollars required to buy one dollar of earnings. OGC has a P/E of 11.91. This ratio may be deemed to be high or low depending upon your frame of reference. The average P/E of all the stocks in the VectorVest database is 70.74. P/E is computed daily using the formula: P/E = Price/EPS.

EY (Earnings Yield): EY reflects earnings per share as a percent of Price. EY is related to P/E via the formula, EY = 100 / (P/E), and may be used in place of P/E as a measure of valuation. EY has the advantages that it is always determinate and can reflect negative earnings. OGC has an EY of 8.41 percent. This is above the current average of 1.42% for all the stocks in the VectorVest database. EY equals 100 x (EPS/Price).

GPE (Growth to P/E Ratio): GPE is another popular measure of stock valuation. It compares earnings growth rate to P/E ratio. OGC has a GPE rating of 2.44. High growth stocks are believed to be able to justify high P/E ratios. A stock is commonly considered to be undervalued when GPE is greater than 1.00 and overvalued when GPE is below 1.00. Unfortunately, this rule of thumb does not take into account the effect of interest rates on P/E ratios. The operative GPE ratio of 1.00 is valid when and only when interest rates equal 10%. With long-term interest rates currently at 4.64%, the operative GPE ratio is 0.22. Therefore, OGC may be considered to be undervalued.

Dividend Information DIV (Dividend): VectorVest reports annual, regular, cash dividends as indicated by the most recent payments. Special distributions, one-time payments, stock dividends, etc., are not generally included in DIV. OGC does not pay a dividend.

DY (Dividend Yield): DY reflects dividend per share as a percent of Price. OGC does not pay a dividend, so it does not have a Dividend Yield rating. . DY equals 100 x (DIV/Price). It is useful to compare DY with EY. If DY is not significantly lower than EY, the dividend payment may be in jeopardy.

DS (Dividend Safety): DS is an indicator of the assurance that regular cash dividends will be declared and paid at current or at higher rates for the foreseeable future. OGC does not pay a dividend, so it does not have a Dividend Safety rating . Stocks with DS values above 75 typically have RS values well above 1.00 and EY levels that are much higher than DY.
DG (Dividend Growth Rate): Dividend Growth is a subtle yet important indicator of a company's financial performance. It also provides some insight into the board's outlook on the company's ability to increase earnings. OGC does not pay a dividend, so it does not have a Dividend Growth rating . YSG (YSG-Vector): YSG is an indicator which combines DIV, DY and DG into a single value, and allows direct comparison of all dividend-paying stocks in the database. OGC does not pay a dividend, so it does not have a YSG rating . Stocks with the highest YSG values have the best combinations of Dividend Yield, Safety and Growth. These are the stocks to buy for above average current income and long-term growth.

Price-Volume Data Price: OGC closed on 9/21/2010 at $3.93 per share Open: OGC opened trading at a price of $3.91 per share on 9/21/2010. High: OGC traded at a High price of $3.95 per share on 9/21/2010. Low: OGC traded at a Low price of $3.85 per share on 9/21/2010 Close: OGC closed trading at price $3.93 per share on 9/21/2010. (Close is also called Price in the VectorVest system) Range: Range reflects the difference between the High and Low prices for the day. OGC traded with a range of $0.10 per share on 9/21/2010. $Change: OGC closed up 0.01 from the prior day's closing Price. %PRC: OGC's Price changed 0.26% from the prior day's closing price. Volume: OGC traded 1,985,952 shares on 9/21/2010. AvgVol: AvgVol is the 50 day moving average of daily volume as computed by VectorVest. OGC has an AvgVol of 1,385,100 shares traded per day. %Vol: %Vol reflects the percent change in today's trading volume as compared to the AvgVol. %Vol equals ((Volume - AvgVol) / AvgVol ) * 100. OGC had a %Vol of 43.38% on 9/21/2010

CI (Comfort Index): CI is an indicator which reflects a stock's ability to resist severe and/or lengthy price declines. OGC has a CI rating of 1.91, which is excellent on a scale of 0.00 to 2.00. CI is quite different from RS in that it is based solely upon a stock's long-term price history. VectorVest advocates the purchase of high CI stocks.

Sales / Market Capitalization Information Sales: OGC has annual sales of $264,000,000

Sales Growth: Sales Growth is the Sales Growth Rate in percent over the last 12 months. OGC has a Sales Growth of 46.00% per year. This is excellent. Sales Growth is updated each week for every stock. It is often useful to compare Sales Growth to Earnings Growth to gain an insight into a company's operations.

Sales Per Share (SPS): OGC has annual sales of $1.16 per share. SPS can be used as a measure of valuation when comparing stocks within an Industry Group.

Price to Sales Ratio (P/S): OGC has a P/S of 3.39. This ratio is also used as a measure of valuation. Here, too, it is useful when comparing stocks within an Industry Group.

Shares: OGC has 228,000,000 shares of stock outstanding.

Market Capitalization: OGC has a Market Capitalization of $896,000,000. Market Capitalization is calculated by multiplying price times shares outstanding.

Business Sector: OGC has been assigned to the Mining Business Sector. VectorVest classifies stocks into over 200 Industry Groups and 40 Business Sectors. Industry Group: OGC has been assigned to the Mining (Gold\Silver) Industry Group. VectorVest classifies stocks into over 200 Industry Groups and 40 Business Sectors.

[elZorro]

Looks like OGC will be pausing at $4.02 on the TSX, about its all-time high. Two big purchases of $1mill worth helped trading totals. Note these buyers don't seem too concerned that in early August they could have bought the shares for about $2.70. What's important is the forward momentum, and the expectation that OGC will revalue more in line with the reported analysts figures. The PoG looks set to continue its climb.

[lewinsky]

Thanks for passing this information on EL Zorro.

There is some excellent information here. Gold up again overnight which makes those margins look even more compelling.

DISC: Hold OGC, AZX,RMS, IGR

[elZorro]

Thanks for passing this information on EL Zorro.

There is some excellent information here. Gold up again overnight which makes those margins look even more compelling.

DISC: Hold OGC, AZX,RMS, IGR

You're welcome Lewinsky. I always figure the more investors, the merrier, safety in numbers etc. Plus I'd be keen to see OGC on the NZX50 sometime, they deserve it.
This information provided by the market and google is OK, but it would be great to have some direct feedback from the company. In fact I did email Mr Klinck a few weeks back, when nothing much was being disclosed, and while there was nothing in his very prompt reply to a few questions that I felt was unknown to the market, the fact I got a reply was reassuring. He also said:

Don’t pay too much attention to bloggers is usually my advice..

Guess what Darren, I am a blogger..but this is a fairly sensible warning. I can get things horribly wrong, and I have lots of trouble making dollars out of shares.

I've had another look at the Denver video. Very useful data:

6 drilling rigs running at Reefton soon, very significant results expected within 2 years. 60% of the NZ exploration investments are being made over there, when currently only 25% of the gold is sourced from the West Coast. (Much higher grades there in general, on that reef).

Debt of 165Mill in convertible bonds, a strong hint that these will be taken up as shares.

OGC recommitted to Didipio, they're talking about the new contracts already, happy the site is unencumbered, not wanting to sell other sites they have in the Philippines, plenty of offers. I missed the fact that near Didipio, there are heaps of other drill sites showing promise, all within the permit area. OGC also has several other big permits spread throughout the Philippines, and now they have the cashflow to start proper work on them. Two other western miners have helped to make restarting the mining operation easier over there.

Here's a freezeframe of the presentation, the valuation page.

2932

Note Semafo and Alamos up the high end, OGC at the undervalued end.

At the Denver Gold Forum (http://www.denvergold.org/i4a/pages/index.cfm?pageid=3282), OceanaGold presented on day one in the afternoon, in one of two ballrooms. I wondered why there wasn't any rapturous applause. These more junior miners had just 20 minutes each, see the list of companies. (http://www.denvergold.org/files/public/DGF10DraftProgramWeb.pdf)Semafo, with less gold production, fewer resources and about the same reserves, has three times OGC's valuation. They presented for 30 mins the next day amongst a group including Franco-Nevada, IAMGOLD, Randgold, Golden Star, Harmony Gold. Looks like promotion is one thing that Semafo does very well. Alamos was similarly organised, speaking first in a group finishing with African Barrick Gold. Alamos produces just 160,000 oz, valuation US$2bill or so.

Despite the gold price being over $1290/oz and no bad news for OGC that I can see, the ASX and now the TSX have dropped the price back a little from its high. No comments on the stockhouse forum to make any sense of this, so perhaps a buying opportunity.

A TA person would say "Don't buy until the shares have stopped dropping back and are rising again" and an FA person would say "If we all did that, the share would disappear into nothingness".;)

[elZorro]

Thanks for passing this information on EL Zorro.

There is some excellent information here. Gold up again overnight which makes those margins look even more compelling.

DISC: Hold OGC, AZX,RMS, IGR

Lewinsky - you seem to be fairly good at picking shares! Of these other three, which do you recommend purchasing now, as they've all had good gains in the last month or so?

[GR8DAY]

hi again Elz......well if it's of any consequence I picked OGC yesterday (yes back on board).........now watch the Sp drop!! (NOT) The GP just seems to keep on going and going.....all brilliant news for OGC's UNhedged position........$US goes down GP goes up, the big question I guess is for how long. Still, you've gotta be in to win and my approach is to now accumumlate for further revaluations IF and WHEN they come. Im sitting on $5k profit from my initial "dabble" so have a small buffer for any pullback in SP......which I will look upon as a buying opportunity.

[elZorro]

Hi GR8DAY, I have just checked, and at NZ$5, OGC is trading at just 3c above the EZ equation prediction, considering the gold price about $1294. So it's safe buying if you believe in the equation, and this equation assumed the market does not revalue OGC upwards apart from a rising gold price, or place any value on the Philippines assets.

[GR8DAY]

.....looks like I was a day out with my timing, someone getting good value this morning I think....esp with GP stronger again over night.

[adamcz]

I see they are up to something with the Sams Creek area where there are inferred resources of .77Moz. Anyone suscribe to the Nzresources article to shed some light on exactly what they are doing. i assume its just further exploration (its been mentioned in a number of older articles that they expect to find alot more gold up there)

[mistymountain]

Gr8Day... great attitude to OGC... but my thinking is just buy and hold this baby... until the macro indicicators change... at this stage I'd say this won't happen for a couple of years...

[elZorro]

Hi Adamcz: Tracked down a couple of references to Sam's Creek, certainly interesting..

Crown Minerals 2004 (http://www.crownminerals.govt.nz/cms/news/2004/news_item.2007-05-08.0224664063), Research paper 2004 approx, (http://sylph.gns.cri.nz/research/MWE/images/Sams%20Creek%20Brathwaite%20et%20al%202006.pdf)

Here's the reference you were after: 24th September in NZResources: http://nzresources.com/showarticle.aspx?id=1383&gid=30001383

Being so removed from their main NZ mining area, perhaps OGC are looking for a cash injection from Sam's Creek. Certainly the recovered costs/oz won't be as good as at Didipio.

Mistymountain: are you sure we'd have to wait 2 years for a major revaluation and possible dividend? I guess OGC has moved past the exciting stage that NAV showed yesterday (up 57% in a day and of course I didn't have any shares in it at the time), but we are seeing evidence of major interest in OGC, and in gold. We're certainly sitting in one of the hotspots with this share.

OGC down on the TSX overnight, back to lower volume too, this wasn't a selloff. PoG 1296 most of the night here, with a near breach of 1300. I applied the EZ equation: OGC is now back in synch with the gold price, neither up nor down. So maybe what we saw was the market predicting major share purchases from the funds before 20th September, and bumping the price up. From now on, I'd expect OGC to resume tracking the gold price, in between (invariably positive) news releases.

[mistymountain]

Apologies EZ; I was a bit vague in my last post. What I should have explained was that all the big macro factors currently indicate substantial upside for OGC for at least the next two years. I think a SP of $6 by end of 2010 will be followed by double digits by the end of 2011.

Therefore traders could trade the uptrend or long term investors could buy and hold with confidence.

A review of this strategy in 2 years would only be to reflect: check if gold's inflationary hedge status still applies, progress at Didipio on track, growth prospects in NZ / Pacific Rim fulfilled.

I think investors would find that these checks would still be positive too....

Maybe a dividend in 2013?!

Cheers

[elZorro]

Hi MM, I thought as I was writing the last post, maybe I'd read it wrong.. thanks for clarifying.

An extra bit about Didipio. Philex is at least 46% owned by First Pacific Group/Co, Hong Kong based. On the Philex website, a recent clarification: (http://philexmining.com.ph/images/stories/Philex/documents/News/dc2010-6218_px.pdf)

Note that Philex shares bounced up nearly 100% in September after the loosely-written media articles appeared, without a corresponding formal press release from Philex. They related to the possible involvement in two prospects in the Philippines, including Didipio. Philex's share price had been in a downtrend all of 2010, while gold prices were rising. Shares in the parent company First Group (HK) also moved up nicely in September. Philex has an Mcap of about NZ2.38Bill, First Pacific's is NZ$4.88Bill. There was a similar "not decided' press release about the other prospect.

When you add in the Paul Bibby comment about possible takeovers (that was never formally acknowledged by OGC) this reminds me a little of the way the big power companies in NZ operate: in their case press releases about how they propose to build a power station somewhere in 3 years, and their competitor pipes up with a station proposal somewhere else. Neither gets built of course, they're just sounding each other out.

In OGC's case, the ability of Didipio to supply very cheap gold must be a scarce resource. You can make some money in today's market with a recovery cost of US$1,000 per ounce, but Didipio can operate in any market.

[lewinsky]

Hi elZorro,

Sorry I missed your post of the 24th.
As IGR should announce their first gold pour over the weekend, I think this should trigger a re-rate.
As I have said this, it is normally LEW's luck that they will go down.
Gold up again over the weekend, so you should be holding gold shares.
lew

[elZorro]

Hi elZorro,

Sorry I missed your post of the 24th.
As IGR should announce their first gold pour over the weekend, I think this should trigger a re-rate.
As I have said this, it is normally LEW's luck that they will go down.
Gold up again over the weekend, so you should be holding gold shares.
lew

Hi Lewinsky, thanks for that, it was a bit of a cheeky question on my behalf, and I now have an order in for some IGR. Plenty of interest in the share at the moment.

[Vtrader]

For the second beer I wager the next turn of OGC about Friday 3 Sep and target $4.40 (where I do not mind overshoot) Do not all rush for the door at once, the subsequent correction may be large or small.

V.

So there was overshoot from an extended wave 5 which delayed the correction 2 weeks, and the correction appears to have been bugger all.
Lessons learned and all that...
see also... http://www.sharetrader.co.nz/showthread.php?7944-Elliott-Wave-Theory

And while I was posting gold sharply down. Perhaps an OGC buying opportunity coming, will see what the morning brings.
http://i949.photobucket.com/albums/ad333/VtraderNZ/gold.gif
V.

[elZorro]

So there was overshoot from an extended wave 5 which delayed the correction 2 weeks, and the correction appears to have been bugger all.
Lessons learned and all that...
see also... http://www.sharetrader.co.nz/showthread.php?7944-Elliott-Wave-Theory

And while I was posting gold sharply down. Perhaps an OGC buying opportunity coming, will see what the morning brings.
http://i949.photobucket.com/albums/ad333/VtraderNZ/gold.gif
V.

Flash post there, Vtrader, the start of a volatile night for gold. Another new high reached, over 1310 at one stage. So far a muted response from the TSX with OGC. The dip produced a small selloff at start of trade and this soon recovered. Maybe everyone's wondering whether gold will keep moving up from this point (in US$ anyway).

[mistymountain]

POG broke sharply through US$1300 last night.

[elZorro]

POG broke sharply through US$1300 last night.

Hi MM, yes, may go even higher tonight. OGC has been a bit subdued over the last two days, but it is trading right on the EZ equation (for every dollar the gold price goes up, the share should rise about CAD 0.8c - I guess about 1c NZ).

This article from Terry Hall appeared in Fairfax publications over the weekend. http://www.stuff.co.nz/business/opinion/4170484/It-pays-to-stick-with-same-old-gold-story

Nothing new there, and I had to wait until it became unsubscribed. But maybe the big traders are waiting to see who's paying for Didipio to get restarted. Rather flattering bylines for Glass Earth and Heritage Gold Terry, and by comparision with OGC it is true that percentagewise they could certainly make a move, but the odds are stacked against them. Almost no trading in NZ on OGC though, we're all reluctant to drop below $5.00. The Aussies are not so encumbered.

[elZorro]

On the TSX, OGC trended sharply downwards at start of trade until it reached $3.70, at which point someone bought $800,000 worth at a (nearly 4%) discount. It's now back near $3.82, where the equation predicts it should be. I could be a showoff now, and go back in time, show how much money I could have made if I'd followed the EZ formula and reinvested 100% at every stage (without even using TA), but in fact I didn't trust in the equation myself! As most (if not all) news from OGC is to the upside, the eqn could be a good start point for purchasing (but not necessarily selling) OGC. The equation should hold for as long as OGC's gold output stays around 280,000 oz, and if there is no real action at Didipio.

EZ eqn: OGC price (CAD cents) = (0.8x US$gold price) -660

[GR8DAY]

Elz.....wasnt the SP sitting around $5.40 a couple of weeks ago when GP was way less than it is now?.......... how does this fit in with your working equation? Based on previous movements to 5.40sh surely the SP shud now be more $6.00sh??

[elZorro]

Elz.....wasnt the SP sitting around $5.40 a couple of weeks ago when GP was way less than it is now?.......... how does this fit in with your working equation? Based on previous movements to 5.40sh surely the SP shud now be more $6.00sh??

Yes, exactly, GR8DAY. I was hoping that OGC was being re-rated by the market as undervalued around then. But in fact it was a whole lot of retail traders thinking they would cash in when the big guys needed to buy some OGC for their index funds. So it traded well above the EZ eqn for a few days, and then trended back down towards it. Similarly, when the last quarter report came in and the data wasn't as hot as expected, it traded lower than predicted for a few days.

In retrospect, if we had a fairly good idea where the gold price was going next, we could buy/sell based on the equation and come out better off??. Or we could simply buy and hold like MM, and still come out smiling :)

[GR8DAY]

........yes indeed. Im not smiling much at the moment ( tho HGD is giving me a tiny little grin.....but cant count on that lasting)....... dont think it will take much at all tho for OGC to swing suddenly upwards again Fingers xd. Keep that positive news flowing Elz, it's much appreciated m8.

[Vtrader]

elZorro,
Are you sleeping? or being polite so that someone else can post something new about OGC
Perhaps you are busy buying OGC shares...


MEDIA RELEASE
4 October 2010
OCEANAGOLD ANNOUNCES SENIOR MANAGEMENT ADDITIONS

(MELBOURNE) OceanaGold Corporation (ASX: OGC, TSX: OGC, NZX: OGC) (“the Company”) is pleased

to announce two appointments associated with the September 20

th announcement of the re-optimisation of


the Didipio Gold-Copper Project in Luzon, The Philippines. Martyn Creaney has been appointed as Project

Director and a member of the OceanaGold senior executive team. Martyn will oversee all aspects of

construction and project management for the Didipio project. Mark Cadzow, currently the Chief Operating
Officer of New Zealand, will assume the duties of Group Chief Operating Officer which will encompass all





of the Company’s operations.


http://www.oceanagold.com/images/documents/files/101004_senior_management_update.pdf



Jim Askew, Executive Chairman commented “These appointments are key elements to establishing the

leadership and operations requirements to successfully complete the construction of the Didipio project and

to integrate that operation into the stable of well managed mines that already exist in New Zealand. Didipio
represents a long life mine with robust economics which, after allowing for copper by-product credits, will





create a cash cost profile that will put the Company within the lowest quartile amongst its peer group.”


GR8DAY could this be the swing you are waiting for?
elZ, there is the predicted extraction cost, could be a forward measure for another EZ equation.

V.

[GR8DAY]

V.....your'e talking like a man "back-on-board".......were you the lucky one to pik up 5000 ystday at 5.02.......well done if you were! I think this is generally the best time to buy any stock (but esp GOLDs) ie when the SP has plateaued? The pundits all seem to be picking GP to continue it's upswing for sometime....lets hope they're right. Regardless, OGC must now be reaping large profits at anything above $1200 an oz.

[Vtrader]

GR8DAY
Yes I hold an OGC position again. But was not my purchase yesterday.
V.

[GR8DAY]

....latest announcement sounds positive also. Further cash injection(115m CAN) BY WAY OF "SPECIAL" share and warrant placement. I guess this will negate any call (or at least reduce) on shareholders for funds to continue with Didipio? Good to see our directors are once again being proactive and keeping ahead of the ball........well done! They go on to say even tho we will be hit with increased production costs because of falling $UD this will be more than offset by the rising GP.....more good luck than good management I guess but then that is why the GP is increasing in the first place, so a bit like a natural buffer.

[mistymountain]

Didipio is moving faster than I thought it would as I didn't expect project development until 2011.

This has potential for some significant SP growth before the end of 2010 given that it was mainly Didipio being mothballed that sent OGC down from over $4.

We could see a market rerating upwards on what we have already witnessed.

[Vtrader]

With POG at $1340USD, the EZ equation suggests NZD OGC=540. However OGC on CAD is down overnight...
This looks more like USD weakness rather than POG strength.
V.

[corran]

kitco.com have got a nice feature where they show what part of the price of gold's increase (or decrease) is due to a change in USD strength and what is due to predominant buying.

According to them, today's $25 increase in price of gold is almost equally due to a weaker USD ($12.20 of the $25) and predominant buying ($12.90 of the $25)

[COLIN]

Disappointed to see that the discount on the placement was over 8% on the previous closing share price - lots of lolly for the privileged few.

[GR8DAY]

........fair deal I wud have thought Colin.......if I had that sort lolly to spend I wud have expected more than an 8% discount! As institutional investors they're not gonna dump them on the market either so that's gotta be more good news. OGC now $115M CAN better off!

[elZorro]

Hiya, I'm away fishing and have just caught up on the news: there's the capital issue gone for now, but as Colin says, a blimmin' good deal, although would that 8% be roughly equal to share dilution? If the SP can keep going from here it's good news. I note Mark Cadzow is well appreciated by management, he's the brains behind the high extraction rate in NZ.

Link to the shares issued 4th October. (http://tmx.quotemedia.com/article.php?newsid=34488501&qm_symbol=OGC:CA)

[COLIN]

........fair deal I wud have thought Colin.......if I had that sort lolly to spend I wud have expected more than an 8% discount! As institutional investors they're not gonna dump them on the market either so that's gotta be more good news. OGC now $115M CAN better off!

Well, its sp hasn't exactly reacted too favourably today, on what has been a very positive day for the POG, gold miners and the market in general. Its a nice tidy way to do things, from the company's point of view, I guess, but I do observe that the institutions get a slab of the company, at a generous price, which yields them an immediate return when they revalue their holdings by "marking to market".

[GR8DAY]

Being the eternal optimist that I am, I view this as a positive for the co. They didnt seem to have any trouble selling the idea to insto's and a clean deal done overnight.......pretty damn good for everyone I would have thought. Agree the SP hasnt exactly reacted accordingly......maybe the market is still digesting things. What I shud do is sell some of my holding and you can then watch the price take off again!! Elz are you having any luck on the briny.....where r u fishing??

[adamcz]

I was hoping that the Canadian price would have stayed around the same with the nice increase in gold overnight. By my calcs (maybe im missing something here)
Price Share Total Value
Prior Day Close 3.86 228,230,392 880,969,313
New Issue 3.50 33,000,000 115,500,000
Total On Issue 261,230,392 996,469,313

Therefore with the extra $115,500,000 cash that OCG now has
Expected Price 3.81

[elZorro]

Hi Adamcz: Maybe we'll have to wait for a new EZ equation, to reflect the higher number of shares. Until more gold is being produced, the perceived equity per share remains the same, perhaps still diluted a bit to be fair.

Maybe the new digger, finding higher grades in the existing mines will boost the output short term.

GD: was flyfishing on one of the streams feeding Taupo: got a nice freshrun fish yesterday, and lost another. Very relaxing.

[elZorro]

Article this morning in the Sunday Star Times: "Oceanagold fills its project coffers" gives some more detail about Didipio.

Jim Askew told the Australian Financial Review (anyone have a subscription?) that OGC has ruled out increasing debt levels or bringing in a joint venture partner for Didipio. The "project economics are too strong.. frankly". While the intention is to mine 71,000 oz of gold a year, this will have a nett cost of -$300 or so per ounce, and it sounds like the other carrot is the highly prospective areas also contained in the permit. It's also good the main mine is underground later on, as one province in the Phillipines has banned opencast mining recently. However, political interest in mining as a source of income appears high, and this decision could just as easily be reversed perhaps.

But: an earlier article on 6th Oct (http://nzresources.com/showarticle.aspx?id=1416&gid=30001416)isn't quite so dismissive of JVs. Maybe the PR department is still making up their mind? In any case, I'd have thought the very strong cashflow OGC is getting, would provide the (say) 50Mill capital shortfall as it is needed for contractors.


OceanaGold’s big raising plan in Canada


Ross Louthean — 6 October 2010

The capital raising run for OceanaGold Corporation (ASX, NZX & TSX: OGC) continues with the company announcing yesterday that it plans to raise $C115.5 million ($NZ152.4 M) through a syndicate of Canadian underwriters.
The capital will be used primarily for completion of development of the Didipio gold-copper project in Luzon in the Philippines and to push ahead with exploration in and around the Macraes gold operations and the Reefton goldfield where the company operates the Globe-Progress gold mine.
The Canadian underwriters agreed to purchase special warrants and common shares in the company available as ASX listed CHESS depositary interests (CDIs) at a price of $C3.50 ($NZ4.60). The CDIs shall be purchased at the $A equivalent of the offering price.
Each special warrant will entitle the holder to receive, without payment of additional consideration, one TSX-listed common share.
Oceana said the offering should close on October 20. The CDI’s will be freely tradable on the ASX the business day following closing. The Special Warrant and CDI placements are subject to certain customary conditions and regulatory approvals, including the approval of the TSX.
The company will use its best efforts to file and obtain a receipt for a final short form prospectus in the week beginning November 8 for the purpose of qualifying the distribution of underlying common shares issuable upon exercise of the Special Warrants.



Oceana said a portion of the capital will be used to:

Fund part of the estimated $US140 M ($NZ189 M) required to complete development of Didipio.
Provide capital and exploration funds to continue the quest to extend the mining life at Macraes and Reefton.
Oceana said the company was also considering options to finance the balance of capital required for developing Didipio. This may include the introduction of a joint venture partner on which discussions were underway “with a number of parties”.
Earlier this year Oceana undertook large capital raisings on the Australian and Canadian bourses to take out its existing $NZ102 M hedge book on about one-third of Macraes gold production.


Also from NZResources .com. on 8th October:



Good news for Otago likely from capital raising

Dene Mackenzie — 8 October 2010

OceanaGold Corporation (ASX, NZX & TSX: OGC), which operates gold mines at Macraes and Reefton, easily raised $C115 million ($NZ151.5 M) through a capital raising of warrants destined to be traded through the Toronto Stock Exchange.
Craigs Investment Partners broker Peter McIntyre said the capital raising had come at a good time for the company with gold reaching a new high on Wednesday of $US1,340/oz ($NZ1,835/oz).
“The stars are in alignment for OceanaGold. It is very positive how quickly they did the capital raising,'' he said.
Underwriters had confirmed orders for 33 million special warrants to acquire common shares and Chess Depository Interests in the company, OceanaGold said in a statement.
The offering was being privately placed with institutional investors in Australia, Canada and internationally at an offering price of $C3.50, representing an 8.85% discount to the last close on the Toronto Stock Exchange of $C3.84 and an 8.29% discount to last close on the Australian Securities Exchange of $A3.86.
Oceana said it intended to use the net proceeds from the offering to fund a portion of the capital spending needs, estimated at $US140 M ($NZ187.5 M), for development of the Didipio gold and copper project in the Philippines.
Some would also be used for future capital and exploration spending associated with extending mine life in this country, and some would be for general working capital requirements.
The company was considering options for the rest of the Didipio capital expenditure.
McIntyre said there were other reasons to be investing in gold at present. They included that global production was slowing, growth in Asia where gold was used as gifts and central governments buying gold.
Oceana had also indicated that the mine life of Macraes could be extended.
“We suspect mine life there is now 17 years and will go out further. That is very good for the Otago economy,'' he said.
*Dene Mackenzie is business and political editor of the Otago Daily Times.

News associated with companies mentioned in this article


OceanaGold Corporation (43 articles) (http://nzresources.com/companyarticles.aspx?id=92)

[elZorro]

Here's more good analysis by OBR on Oceanagold (http://www.ob-research.com/sites/default/files/OBR_OceanaGold_Oct_4_2010.pdf)against its peers, updated before the latest capital raising. Tracked from Stockhouse site. The new SP target for 2011 is CAD$6.00. All assuming the PoG holds where it is, and of course it could trend higher for awhile yet. OGC has a lot of tax assets, may not pay any on income until 2014. Note Semafo looks overpriced, OGC the lowest of its peers except for Jaguar Mining, who produce half as much, and at a high cost. Debt should effectively be gone in a few months, that should help with market perceptions. OBR has converted the older debt to shares (on paper) and added it to the share total. We'd need to modify these figures to account for the latest capital raising.

Things become a lot easier when the money is flowing in. You can't blame OGC management for this approach, we all want gold out of the ground and sold, while prices are high. No matter how much the share price rises on the market, OGC cannot use any of that extra leverage without issuing more shares, or borrowing funds. Both have an effect on the share price, and selling shares is tidier, carries little baggage.

[elZorro]

That OBR report (above) has had me puzzled. It's unfortunate that all the work was done just before OGC raised more cash. Here's an excerpt from the end of year report:



DISCUSSION OF FINANCIAL POSITION AND LIQUIDITY

Company's funding and capital requirements

For the year ended December 31, 2009, the Company earned a profit of $54.5 million. As at December 31, 2009 the current liabilities of the Company exceeded current assets by $103.6 million. Excluding the non-cash hedge derivative liabilities (which will be settled by delivery of future gold production by December 2010), the shortfall of assets is $13.7 million. Current liabilities include $48.7 million of convertible notes with a call option held by the note holders, for repayment in December 2010. The company has cash on hand of $42.4m and cash flow projections indicate sufficient funds to meet all operating obligations for at least 12 months. However a funding shortfall was forecast to arise if all convertible note call options were exercised by the note holders, prior to completion of the committed equity raising described below.
On February 19, 2010 the Company announced that it has secured, through the issue of 27,099,132 Subscription Receipts in Canada and 10,949,648 CHESS Depository Interests (CDI's) in Australia, an equity raising of C$78 million (before costs) at a price equivalent to C$2.05 per share. The Subscription Receipts will be converted to common shares and the CDI's will be issued, on shareholder approval, at an Extraordinary General Meeting to be held on March 25, 2010. The proceeds from the Subscription Receipts will be held in escrow until the Release Conditions (which include shareholder approval) have been met. The company expects these conditions will be met by 31 March 2010.


Since we have already seen a breaking down of the flawed EZ equation due to dilution, I'm wondering what the short-term effect of these convertible notes being due in December will be. OBR assume most will be converted to shares I think (please correct me if I'm wrong). Would that be another 40million shares in the pool?

All of these goings-on might help explain Baker-Steel's reduced presence in this share a few months earlier. The gold price has helped to soften the dilution for OGC holders, the share price hasn't dropped in the same percentage.

In the course of looking around for more shares that might be entering the ealier stage of OGC where the price esclated, I was recommended to look at IGR on the ASX (Lewinsky). Guess who's just added to their holdings, and now have 8% of IGR? Baker Steel.

Another mover over there is SVL, went up 20% yesterday. This one is a silver minnow (thanks JBMurc).

This doesn't mean I've less interest in OGC. Depending on the gold price, and how quickly the market takes a new look at OGC with its very low debt, another mine about to start producing etc, the new digger's effect, 2011 should be a great year.

[GR8DAY]

.......what always puzzle me Elz with these share placement things is: yes there is an inevitable dillutionary? effect but these shares aren't given away for free.......at the same time OGC recieved a $115C injection of funds....so surely this must be also factored in by way of an increased (if not just balancing) effect on NTA per share??........am I missing something?

[elZorro]

.......what always puzzle me Elz with these share placement things is: yes there is an inevitable dillutionary? effect but these shares aren't given away for free.......at the same time OGC recieved a $115C injection of funds....so surely this must be also factored in by way of an increased (if not just balancing) effect on NTA per share??........am I missing something?

GR8DAY, I'm not sure, I was waiting for someone else to enlighten us both. But as far as I know a convertible note (or, if it has a maturity of greater than 10 years, a convertible debenture) is a type of bond that the holder can convert into shares of common stock in the issuing company, or cash of equal value, at an agreed-upon price. It is a hybrid security with debt- and equity-like features. Although it typically has a low coupon rate, the instrument carries additional value through the option to convert the bond to stock, and thereby participate in further growth in the company's equity value. The investor receives the potential upside of conversion into equity while protecting downside with cash flow from the coupon payments.

From the issuer's perspective, the key benefit of raising money by selling convertible bonds is a reduced cash interest payment. However, in exchange for the benefit of reduced interest payments, the value of shareholder's equity is reduced due to the stock dilution expected when bondholders convert their bonds into new shares.

Yes, you guessed it, I flogged all the useful information from Wikipedia :) . No mention there about how the cash coming in balances the books. But if the company was really strong, it wouldn't need any extra capital at all. It would all be funded from operating profit. In a few years I'm sure OGC will be in this position, but by then it might be bought out, or looking to stage its own takeover.

The digger has arrived! (http://www.odt.co.nz/regions/otago/130076/new-toy-boys-macraes)Have a look at this baby in operation.. and another slightly smaller one is on order. No wonder we need some more capital.

[COLIN]

GR8DAY, I'm not sure, I was waiting for someone else to enlighten us both. But as far as I know a convertible note (or, if it has a maturity of greater than 10 years, a convertible debenture) is a type of bond that the holder can convert into shares of common stock in the issuing company, or cash of equal value, at an agreed-upon price. It is a hybrid security with debt- and equity-like features. Although it typically has a low coupon rate, the instrument carries additional value through the option to convert the bond to stock, and thereby participate in further growth in the company's equity value. The investor receives the potential upside of conversion into equity while protecting downside with cash flow from the coupon payments.

From the issuer's perspective, the key benefit of raising money by selling convertible bonds is a reduced cash interest payment. However, in exchange for the benefit of reduced interest payments, the value of shareholder's equity is reduced due to the stock dilution expected when bondholders convert their bonds into new shares.

Yes, you guessed it, I flogged all the useful information from Wikipedia :) . No mention there about how the cash coming in balances the books. But if the company was really strong, it wouldn't need any extra capital at all. It would all be funded from operating profit. In a few years I'm sure OGC will be in this position, but by then it might be bought out, or looking to stage its own takeover.

The digger has arrived! (http://www.odt.co.nz/regions/otago/130076/new-toy-boys-macraes)Have a look at this baby in operation.. and another slightly smaller one is on order. No wonder we need some more capital.

Company also reaps a benefit in that the interest on the bonds is deductible for tax purposes, until the bonds convert - unlike dividend payments.

[GR8DAY]

ok who's playing silly buggers with the price........someone selling to themselves is it just to crash the price so they can pik up that 10000 at 4.15.......ha! oldest trick in the book!! Oz up a couple of cents today.......Im not playing your game whoever it is??

[troyvdh]

GR8DAY....yep truly bizzare.....he/she must have really wanted that 3k...thats the mkt I suppose......in fact in Oz its just gone up...

[elZorro]

That's my reassurance bid at $4.80, you guys could have rescued it.. but yes it would be heart attack material, that price, if you have everything in it..

We should be buying more over here anyway, help get the share into the NZX50. It certainly helped the read count on the thread ;)

[Vtrader]

Leaves a bit of a scar on the plot.
My guess is someone was expecting to expose some automated stoploss sells. It appears there were none...
For every action there is an equal and opposite reaction, perhaps tomorrow?
V.

[COLIN]

Isn't there a Stock Exchange rule against this sort of behaviour, i.e. where someone tries to buy/sell at a price which is obviously so far away from the market? If not, there should be, as it creates an artificial and completely misleading picture. In today's OGC case it is also now quoted as the last selling price, and will distort the charts.

I think there is such a prohibition on the ASX? I seem to recall a Sharetrader member telling us that he had been cautioned for such behaviour, on the ASX, if not outright suspended or banned. If there is no such rule on the NZX, there should be, for the sake of an orderly market. I am not talking about a situation where someone takes advantage of a genuinely wide gap which might occur between bid and offer prices, but a situation where a price is plucked out of the stack.

[Jay]

Colin, I thought there was something about the buys/sells would not go thru with such a wide margin as well - given we are talking about 725 shares.

So If I was the only buyer at say 3.50 then would I get my buy if the first seller was at 4.50 it would appear so, if not then what are the rules???
Thse are the trades for the day on the NZX according to Stockness

41072571$2,97214811,0001$4,81024821,0001$4,8201483 1,1001$5,31314841,4005$6,77614891,7005$8,313248450 02$2,4201486230$1,1181




Last trade showing on left

[Piggy]

Overnight, OGC is up 6% in TSX. Will NZX and ASX follow today?

[GR8DAY]

.......all this "blip" exposes is the ridiculous folly of the market. .......that just one miniscual trade of 725 shares can momentarily wipe out huge capital. I see overnight they have gained 6% on the TSX........GP romping away again (up 0ver $25 I think?)..........commentators seem to be all agreeing a continuation in a rising GP is on the cards. Should be some good gains today and hopefully the SP will return to above my last purchase (5.24!) Good effort Elz re your "correctional" effort......I nearly did the same myself to deal to the nonsense......anyway, someone should make a few easy dollars today!

[elZorro]

Overnight, OGC is up 6% in TSX. Will NZX and ASX follow today?

Welcome aboard Piggy: most OGC shares are traded on the TSX, so the market here has to follow it closely, because the Aussies certainly do, although they are not as enthusiastic about it in general. Note the massive share purchases (TSX) last night, two lots of 500,000 shares in one go, followed by two lots of 250,000 shares. This is not retail purchasing, it's a big fund surely.

Gold price increases of $20 in one session are normally cause for alarm for those in general stocks. That's why we're in gold (or PGM) stocks.

[COLIN]

Even our resident gold arch-sceptic, Skol, now seems to be into it - see his post on the RDR thread (ASX).
Perhaps that's a signal that we're near the peak!

[elZorro]

Even our resident gold arch-sceptic, Skol, now seems to be into it - see his post on the RDR thread (ASX).
Perhaps that's a signal that we're near the peak!

Hi Colin, I see what you mean, sounds like a clear case of gold fever..
I had half suspected that he's been using the GOLD thread for backup info, but at least we've had to justify our comments and think about them a bit. Not long ago Skol was implying GP would never reach $1300.

Is this Skol? (http://www.google.co.nz/imgres?imgurl=http://www.odt.co.nz/files/story/2009/01/gold_fever_lawrence_man_ernie_mccraw_tries_his_han _1933253189.jpg&imgrefurl=http://www.odt.co.nz/the-regions/central-otago/40577/turning-treasures-biography&usg=___8jPRTAuorrMSs3N0KQRZqlJjQc=&h=615&w=800&sz=97&hl=en&start=16&zoom=1&tbnid=vxWIXp6BLPGEOM:&tbnh=110&tbnw=143&prev=/images%3Fq%3Dgold%2Bfever%26hl%3Den%26sa%3DG%26gbv %3D2%26tbs%3Disch:1&itbs=1)

[elZorro]

Yankiwi, it's true the US$ is falling fast today (http://quotes.ino.com/chart/?s=NYBOT_dx). But Strat/EZ? posted some other charts showing that over a longer timeframe, gold has appreciated in most currencies, including NZ, It's not as noticeable.

I fail to see why you'd buy US$ if its real value is depreciating fast, or is that the point? If so I'd also commend you to hold onto HGD, as with the gold price going sky-high, their shares will increase (oh that's right.. they are just talking about getting some gold..) :)

Southland Times reports on the digger (http://www.stuff.co.nz/southland-times/news/4200905/For-a-big-dig-get-a-bigger-digger)
Extra for experts (http://www.dealsonwheels.co.nz/View/Article/Super-size-Hitachi-excavator-delivered/2168.aspx)

The older digger needs maintenance, will then be returned to work at Macraes.

[adamcz]

Someone at the SMH didnt really look much into the OCG rise before writing their brief:

http://news.smh.com.au/breaking-news-business/nz-share-market-rises-20101014-16l97.html

[COLIN]

Is this Skol? (http://www.google.co.nz/imgres?imgurl=http://www.odt.co.nz/files/story/2009/01/gold_fever_lawrence_man_ernie_mccraw_tries_his_han _1933253189.jpg&imgrefurl=http://www.odt.co.nz/the-regions/central-otago/40577/turning-treasures-biography&usg=___8jPRTAuorrMSs3N0KQRZqlJjQc=&h=615&w=800&sz=97&hl=en&start=16&zoom=1&tbnid=vxWIXp6BLPGEOM:&tbnh=110&tbnw=143&prev=/images%3Fq%3Dgold%2Bfever%26hl%3Den%26sa%3DG%26gbv %3D2%26tbs%3Disch:1&itbs=1)

It could well be him!

Gold up further tonight, I see. It'll soon be cracking the $1,400 mark. But, of course, we have to remember that this is the price in US dollars, which gets diminished as that currency falls. And parity between the US & Aussie dollars has almost been reached.

[elZorro]

It could well be him!

Gold up further tonight, I see. It'll soon be cracking the $1,400 mark. But, of course, we have to remember that this is the price in US dollars, which gets diminished as that currency falls. And parity between the US & Aussie dollars has almost been reached.

Hi Colin, this article in WSJ (http://www.theaustralian.com.au/business/record-gold-price-brings-a-glow-to-miners/story-e6frg8zx-1225938884358)has a similar comment.

[elZorro]

Chen Lin has long been an advocate of OGC, he's made a lot of money from this share. He and Jay Taylor have recently met with Jim Askew and Darren Klinck (http://174.143.121.75:83/jtaylormedia/2010/10/17/stock-picking/), and I think they found out quite a lot of probable future activities the rest of us have yet to be advised about :cool:



Associate, stock picker and investor Chen Lin has an amazing record as a private investor of turning approximately $5000 in an IRA to over $1,000,000 in about 8 years. Less than two years ago he agreed to share some of his stock picks and supporting research through a timely email newsletter that is sent out when he buys or sells stocks or just gives updates.
To give you an sample of a recent newsletter sent out by Chen, read what he wrote below.
What Is Chen Buying? What Is Chen Selling?
Letter # 409
October 12, 2010
Update:

I had another big day yesterday despite Canadian market was closed. In addition to the big jump of Bullion Monarch Mining Inc (BULM.ob), we have Golden Minerals Company (AUMN) up 27%, Ur-Energy Inc (URG) up 14%, Alexco Resource Corp. (AXU) up 13%, ATP Oil & Gas Corporation (ATPG) up 9%, Federal Agricultural Mortgage Corp. (AGM) up 7% and many more. Consider yesterday is a thinly traded day, I feel the money on the sideline is rushing into the market right now. In the market like this, I would become more cautious, gradually taking some profits. It is perfectly OK to leave some money on the table. Warren Buffett: “Investors should try to be fearful when others are greedy and greedy when others are fearful”. I was quite aggressive in the summer when everyone is staying at the sideline. Now I am getting more cautious when everyone is rushing into commodities.
We seem to have a healthy bull market running here. Today we have another weakness in the morning. You want to see that in the bull market and watch to market strengthen by the time the market closes. You don’t want to see is a huge gap up in the morning and close the gap in the late afternoon. I think the consolidation is healthy.
For example, AXU remains one of my favorites and top holdings of 2010. On 7/14/2010 I wrote in letter 349:
“I met with Western Copper management this week. I asked them in details why their water license was denied and their takes on the Alexco Resource Corporation (AXU) water license. Their water license was not granted mostly due to the fierce opposition of the first nation. In AXU case, there was no opposition from the First Nation at all in the hearing two weeks ago, I was told. It sounds like a smooth sailing to me and confirmed what I heard from AXU.

Since there are so many doubts the Alexco Resource Corporation (AXU) water license after the Western Copper incident, I think it is a tradable event. I would continue to accumulate AXU on any weaknesses in the next a few weeks. I am hoping to hold 130-150% of the number of shares into the announcement so I can flip the extra shares on the pop. There is no guarantee in life, but I like the risk-reward here.
I want to emphasis that the Yukon water board hearing is open to public, everything I heard so far is public information.”

I bought a lot of AXU in mid July at around 3 dollar. Now it is already over 6 dollar, I have been gradually selling some of the “extra” shares I bought in the summer while still keeping my core position. I am still very bullish on the stock, just my position became too big after the 100+% run. Of course I am leaving some money on the table here because I believe AXU will go higher, but it is a prudent thing to do.

Jay Taylor and I had a meeting with OceanaGold Corporation (OGC.to) chairman Jim Askew and IR VP Darren Klinck on Sunday. It supposed to last for half hour to an hour and turned out to be almost two hours. They are on a tour to Europe and N. America to meet analysts and institution investors. The meeting was quite upbeat. Basically OGC has transformed itself from a 300K producer in NZ to a growth story to 400 and beyond in 2 years. In the Philippines, Didipio is comparable to MLL.to, a low cost gold producer with about 1 billion market cap. At the current gold and copper price they are generating similar cashflow. In addition, if you know OGC for the while, the old Didipio design calls for 120-150K oz of gold per year, the new design dropped it 75K oz for lower capex and longer mine life. As soon as they find more ore in the area, which they believe they will, the Didipio gold output can be easily scale up to over 100K oz/year.

They believe this round of raise, a little over 100 million will create over 1 billion in NAV of the company. They have been talking to a lot of analysts lately, and I was told the analysts are starting to put Didipio into the calculation. OGC is going to build the 4th and 5th mines in NZ. They haven’t decided which one and when. It will be either high grade underground mine in Reefton or Black water. The high grade ore can be processed without autocave and increase its production without any mill expansion.

I believe in two years, OGC gold production can easily reach 400K or more. The issue facing is not there are not enough gold around, they are the largest land holder in both NZ and Philippines, but to prioritize and decide where to go first. The company was significantly under capitalized for the past years, now they are generating over 50 million cashflow and 30 million free cashflow per quarter, the blue sky potential starts to show up.

I was told the company is looking at acquisition targets as well with its cash on hand and incoming cashflow. 11/7 is the deadline for the 55 million bondholders to turn in their bond. Since it is already trading at premium to par value, they don’t expect any redemptions. Then it frees up another 55 million for growth.

The only negative I got from the meeting is that the gold production cost for the year will be slightly higher than guidance due to the strength of Kiwi dollar. I think investors will probably be OK on that as USD has been dropping like a rock lately.
In conclusion the OGC story will change from a steady 300K producer to a growth company. Once the investors and analysts see this, I believe
they will likely to re-price the stocks even higher. I am holding tight my shares looking for more appreciations in the coming years.


Blackwater: 2009 data (http://www.crownminerals.govt.nz/cms/news/2009/oceanagold-puts-blackwater-reef-back-on-exploration-agenda/)

Blackwater on OGC site: (http://www.oceanagold.com/index.php?option=com_content&view=article&id=76&Itemid=160)

Despite the info above (maybe it was PR?) the share didn't do so well in Aussie today. I did note that those big share purchases on 13th October were just one day after Chen's newsletter went out. The timing of the purchases looked a little unfortunate (much like my own) considering the amount of money that was involved. Chen is on record as hoping that OGC would simply buy back the earlier debt in November/December, to reduce any dilution effect on his shares presumably. It now looks more likely the convertible debt will become issued shares. If we were crude about it, the convertible notes and the more recent capital raising with more shares have added quite a few new shares to the count. The first will be issued in 2 days time. The debt mountain has gone in short order, that will tidy up the books. There is more cash available for exploration, and to complete Didipio.

However in the meantime, the trading business cashflow stays constant, with more shares on issue. Would prudent investors wait until all the shares have been issued to buy more at the new price? Can more experienced investors please advise what is likely to happen in the next two months?

[GR8DAY]

Well I guess the GOOD NEWS folks is this GP correction is from all-time historic highs.......which still leaves the GP at...............historic highs!! When you think about it -$40 an ounce is just returning the last 10days gains so not a biggy in context. Where to from here?........I still believe GP will continue its upward trend once the US starts this next Money-Printing round.

[elZorro]

Well I guess the GOOD NEWS folks is this GP correction is from all-time historic highs.......which still leaves the GP at...............historic highs!! When you think about it -$40 an ounce is just returning the last 10days gains so not a biggy in context. Where to from here?........I still believe GP will continue its upward trend once the US starts this next Money-Printing round.

OBResearch has suggested this is a buying opportunity.. (http://www.ob-research.com/OceanaGold_in_the_Press)

Here is a small part of OGC's 2009 end of year report:




5.75% Convertible Notes (Unsecured)


The Notes bear interest at 5.75% per annum payable semi-annually in arrears. The convertible note liability has been classified as current at December 31, 2009 as the note holder has the option to put the note for redemption to the issuer on December 22, 2010 at a price equal to its Accredited Principal Amount as at the date fixed for redemption together with accrued interest to such date. The Notes mature in 2012 and are redeemable at 109% of their principal amount unless converted to common shares prior to this date at the option of the note holder.


The number of shares to be delivered upon conversion shall be determined by dividing the principal amount of the note by the conversion price of A$4.162 (subject to adjustment for certain specified events). Of the A$52.9 million (US$39.1m) net proceeds of the issue A$48.5 million (US$35.8m) was allocated to interest bearing liabilities and A$4.4 million (US$3.3m) was allocated to equity.




7.00% Convertible Notes (Unsecured)


The Notes bear interest at 7.00% per annum, payable semi-annually in arrears and have a face value of A$70 million. Interest accrued in respect of the notes for the first two years is not payable but is instead capitalised into the redemption value of the notes. The Notes are due for redemption in 2013 at a value equal to the sum of their principal amount plus the capitalised interest amount, unless converted to common shares prior to this date at the option of the noteholder. The number of shares to be delivered upon conversion shall be determined by dividing the principal amount of the note by the conversion price. The conversion price is A$3.967 (subject to adjustment for certain specified events). Of the A$67.4 million (US$52.9m) net proceeds of the issue A$59.2 million (US$46.5m) was allocated to interest bearing liabilities and A$8.2 million (US$6.4m) was allocated to equity.


On March 22, 2007 an additional A$30 million (US$24.2m) in convertible notes was issued under the same terms and conditions as the 7% convertible notes. The conversion price is A$4.166 (subject to adjustment for certain specified events) and the notes are due for redemption in 2013. Of the A$28.8 million (US$23.2m) net proceeds of the issue A$24.9 million (US$20.1m) was allocated to interest bearing liabilities and A$3.9 million (US$3.1m) was allocated to equity.





MD&A:



Company's funding and capital requirements



For the year ended December 31, 2009, the
Company earned a profit of $54.5 million. As at
December 31, 2009 the current liabilities of the
Company exceeded current assets by $103.6 million.
Excluding the non-cash hedge derivative liabilities
(which will be settled by delivery of future gold
production by December 2010), the shortfall of assets
is $13.7 million. Current liabilities include $48.7
million of convertible notes with a call option held by
the note holders, for repayment in December 2010.
The company has cash on hand of $42.4m and cash
flow projections indicate sufficient funds to meet all
operating obligations for at least 12 months. However
a funding shortfall was forecast to arise if all
convertible note call options were exercised by the
note holders, prior to completion of the committed
equity raising described below.
On February 19, 2010 the Company announced that
it has secured, through the issue of 27,099,132
Subscription Receipts in Canada and 10,949,648
CHESS Depository Interests (CDI’s) in Australia, an
equity raising of C$78 million (before costs) at a
price equivalent to C$2.05 per share. The
Subscription Receipts will be converted to common
shares and the CDI’s will be issued, on shareholder
approval, at an Extraordinary General Meeting to be
held on March 25, 2010. The proceeds from the
Subscription Receipts will be held in escrow until the
Release Conditions (which include shareholder
approval) have been met. The company expects
these conditions will be met by 31 March 2010.





Does this mean that providing OGC's price exceeds the range of about AUD$3.90 -$4.20 this December, the convertible notes will be converted early? Or would note holders convert anyway, if they consider the capital appreciation of the share will give a better result than holding to term?

More detail about the latest capital raising, release to market in Canada (http://www.marketwire.com/press-release-canada/OceanaGold-Closes-Equity-Raising-TSX-OGC-1338127.htm). Shares on the move back up overnight, after 4 days of downtrend.

[elZorro]

Australian detail about the CDI's sold over there. 2/3 of the capital was raised in Aussie, rest in Canada.
http://www.asx.com.au/asxpdf/20101021/pdf/31t8bhk2ss1065.pdf

CDIs, Convertible Notes etc, can be lower interest cost to the issuer, with the small problem of share dilution to existing shareholders, when /if they are converted to shares. A rule of thumb in UK markets is to not release more than an extra 5% of ordinary shares per year, or shareholders get grumpy. Convertible notes aren't ordinary shares, no such limits?

Perhaps we are seeing why OGC hadn't obtained a similar valuation to Semafo, on a gold recovered basis. By the start of 2011 it should look a lot better.

[Piggy]

Any update on the drilling progress in the Phillipines??

[elZorro]

Any update on the drilling progress in the Phillipines??

Hi Piggy, I think Didipio has been well drilled over the years, plenty of data to support the mining proposed. But there are numerous hot pockets of gold also on the permit, scattered nearby, and maybe they are working on delineating those.

For the last 2 years or so, a lot more effort has been spent here in NZ, proving reserves and adding new resources etc. We should expect plenty of releases about this in the next few months, Round Hill (Macraes) being well overdue for a report, Reefton exploration obviously going really well, and with the new digger machinery turned up at Macraes, recovery rates could increase. Note that at no stage has management changed its tune from a range of 270,000 to 290,000 oz though. The autoclave is running 24 hrs full bore, so any increase would require better average ore grades.

The 3rd quarter report will be out promptly on 28th October. They're very good at paperwork too, OceanaGold.

Just one thing we might be missing out on, and that's an up-to-date number of shares on issue (http://www.oceanagold.com/index.php?option=com_content&view=article&id=63&Itemid=130). Is it still 228mill odd, or a bit higher? And of the three markets, none tend to have the same number of shares showing in their stats. OGC management should keep their website current at all times, and a simple 'date of last change' posted on the front page would make this obvious. Just IMHO.

I have done a bit of research on the common share numbers. The OGC site reports 228,897, 612 shares as at September 2010. The NZ market is way off, reports less than that (on Direct Broking anyway). The Aussie market reports 249,874,252 today, which is exactly the OGC figure plus all the latest Aussie CDIs that were recently issued on 20th October. That's a raw dilution of 9.16%. There are another 12,023,360 special warrants in Canada that might appear any day, or in four months time at latest. Another possible dilution of 5.25%. This lines up with the EZ equation being diluted by anywhere between 9% and 14%, as currently seen.

On the bright side, the company MCap in NZ$ could well be $1.223 billion dollars now. A lot of big miners have hundreds of millions of shares - perhaps over a billion shares on issue. Along the way shareholders would have noticed temporary dilution like this. OGC is growing fast.

[Piggy]

Hi elZorro. Thanks for replying.
We will get a update from the thrid quarter report next week.

[elZorro]

Hi elZorro. Thanks for replying.
We will get a update from the thrid quarter report next week.

Yes, this report should be a good one, a tidy set of books.

Here's a recent post from Stockhouse in Canada, Angeleyes3 is not happy with the share dilution lesson either. The post received a high rating for usefulness from other posters.


Well we can start to move up again given todays 3.50 price in the stock. I hate when companies do a done deal. This is what usually happens the stock weakens to that price. They would have done better to give existing shareholders a rights offering. That way we the owners of the company benefit from the deal. This way we end up only getting further dilution and no reward for being long the company. Please email them and inform them that you wanted a rights offering to benefit existing shareholders. We should see the share prices move towards 4 dollars now but most likely slowly as the new shareholders will sell alot of their shares at a higher price. Most often they are in for the quick flip and that is why I hate this method of financing companies. The other is borrowing money and locking in the gold price for delivery another bank tactic for fleecing gold companies. Just blowing off some steam since we were heading towards 4 dollars before this offer was done. I think they could have done the expansion slower from the positive cash flow being generated. Email the gold and commodity companies you own and ask them to instill a shareholders rights policy instead of underwriting. Underwriting only holds existing shareholders as hostages.


The only thing I'm worried about, is how much more dilution is yet to occur from the previous capital raisings with convertible notes etc? Would OGC care to provide a chart, or do shareholders have to figure this out for themselves? Buyer beware?

[elZorro]

OceanaGold reports third-quarter profit


ODT: Thu, 28 Oct 2010

OceanaGold, operator of mines on the Macraes and Reefton goldfields, has reported a $US13.7 million ($NZ18.3 million) net profit in the three months to September 30, up from $7.9 million in the previous quarter.
The company said its production of 68,763 ounces in its third quarter was 1.8 percent higher than the second quarter but 1.8 percent lower than the same quarter last year.
Third quarter revenue rose 3.9 percent on the second quarter. The company now sells all of its gold on the spot market and the average price it received in the third quarter was $US1232 compared to $US1191 in the second quarter.
Earnings before interest, tax, depreciation and amortisation and before gains and losses on undesignated hedges totalled $US42.6m, which is up from $US39.2m in the second quarter.
"This strong operating result has been achieved by higher gold revenue from increased gold prices," the company said.
Commenting on the Macraes Goldfield in Otago, the company said it completed 3600m of underground drilling at the Frasers underground part of the mine where it is focusing on the eastern-down dip extension, panel two deeps and the Kempe rise drilling program on the northern fringes of the deposit.
Two underground drill rigs are currently testing for extensions below and to the north of the already identified mineralised zones. Further infill drilling is expected to continue to upgrade the resource.
The company also has a number of exploration programmes under way at its Reefton Goldfield on the West Coast of the South Island. One programme is targeting down dip extensions of the main Glove-Progress ore-body beyond the extent of known historic underground workings.
A helicopter assisted programme is being carried out on a target to the north west of the current mining activity and at the Blackwater underground mine a programme is targeting an area below the historic Birthday Reef.
Testing is also under way in the historic Big River field where there were a number of high-grade underground mines operating between 1870 and 1950. The sampling to date has also identified two areas of particular interest where in-fill samples will be reviewed for potential drilling targets early in 2011.


Not a bad quarter, on target.

The full report? Might be viewable. (http://www.istockanalyst.com/article/viewiStockNews/articleid/4618373)

The market not so impressed with the quarter's returns: I think many were hoping for US$50mill of sales. Here's the corporate report on the Q3. (http://www.asx.com.au/asxpdf/20101029/pdf/31tj08crkptdfg.pdf) Certainly the exploration work and Didipio will impact on future earnings.

I have been too lazy to look any further into posible share dilutions for the next few months. Has anyone had a stab at it? If there is no more to follow, any lower prices could be a buying opportunity, assuming gold sits over US$1300.

[elZorro]

New Zealand gold miner continues shining run (OGC.T~OCANF)
The stellar run by OceanaGold, which continues to find more ore at its two NewZealand mining sites, was well illustrated in the September quarter.
Ross Louthean, NZ Resources
Friday , 29 Oct 2010
PERTH - -
OceanaGold Corporation (ASX, TSX, NZX: OGC), which is domiciled in Melbourne but has the Toronto Stock Exchange as its home bourse had a net earnings for the September quarter of US$13.7 million (NZ$18.28 million) and, at $42.6 million (NZ$56.8 million), a 9% improvement in EBITDA over the previous quarter.
Gold production for the quarter totalled 68,763 ounces,realising a year-to-date total of 201,595 -- in line with company projections.
There have been improved mining and milling rates at the Fraesers opencut and Frasers underground operations at Macraes, north of Dunedin on the SouthIsland, resulting in a 20% increase in production when compared to the previous quarter.

A New Zealand exploration program added 3,600 metres of underground drilling completed at Frasers Underground at Macraes and 7,600m of drilling at Globe Deeps at its Globe-Progress mine at Reefton on the South Island's West Coast.
Mill throughput of Macraes ore for the September quarter was 1.48 million tonnes, compared to June quarter's 1.34 Mt and the grades treated were generally higher. Cash operating costs were $US568/ounce(NZ$758/oz) compared to June quarter $US564/oz. A key factor for this was the progressively weakening American dollar, as the company pointed out that since June the $US had declined 10% to the $NZ.

The operating margin grew to US$664/oz (NZ$885/oz) compared to US$627/oz (NZ$836/oz) for June.

The Globe-Progress mine, which delivers a concentrate to the Macraes pressure oxidation plant, mined 14% less ore in the quarter due mainly to wet conditions on the West Coast that gave mining equipment poor access to the pit floor. Gold production attributable to Reefton was 19,031 oz, 7,000 oz less than the June quarter.

OceanaGold's executive chairman, Jim Askew, said the company's third quarter results demonstrated higher cash operating margins and solid cash flows from our NZ operations.
With the resumption of development of the Didipio gold-copper project in the Philippines "the company will be well positioned for ongoing earnings growth and expansion".
"Didipio represents a long life mine with robust economics that, after allowing for copper by-product credits, will create a cash cost profile that aims to put the company within the lowest quartile amongst its peer group," he said.

Since releasing the quarterly results, OceanaGold separately released a new technical report that provides positive signs for lifting the mothballs of this project and have it contributing to group production within two years. This year's group production from NZ operations was estimated to be between 270,000-300,000 oz.

[GR8DAY]

.....scarry stuff ElZ, I bailed and got burnt to the tune of $5k.....happy to sit on the sidelines for now, watch and wait.....buying back in is the easy part. Nothing wrong with the company but market sentiment aint lookn' too flash so will wait for what I hope is a better re-entry point.........maybe.

[Jay]

.....scarry stuff ElZ, I bailed and got burnt to the tune of $5k.....happy to sit on the sidelines for now, watch and wait.....buying back in is the easy part. Nothing wrong with the company but market sentiment aint lookn' too flash so will wait for what I hope is a better re-entry point.........maybe.

Same here G - about bailing - made a small profit - not as much as i could have if I listened to the indicators.
As Phaedrus says (paraphasing here) - it is mr market that sets the price not fundamentals.

[elZorro]

.....scarry stuff ElZ, I bailed and got burnt to the tune of $5k.....happy to sit on the sidelines for now, watch and wait.....buying back in is the easy part. Nothing wrong with the company but market sentiment aint lookn' too flash so will wait for what I hope is a better re-entry point.........maybe.

Sorry to hear that GR8DAY, I would probably have a similar situation if I sold. I still think that the only reason OGC is dropping back is because management chose to raise cash with shares, rather than fund using a bank loan or by some other method. The total market capitalisation of the company is still going up steadily, but the dilution effect is reducing the share price. So despite it being a bit hard to decipher from the small print in the company information, we need to know what the fully diluted share count is, before we can adjust something crude (like the EZ equation) to come up with a future possible share price. Of course in the meantime OGC could announce another capital raising as a done deal, but that is less likely now.

Keep an eye out for large share purchases (and sales) from big players like Baker Steel Group, as they have been fairly clever at timing this one.

Possible share count: according to the website and the third quarter report (MD&A last page), this was the position for the shares as at 30th Sept:

Issued shares: 228,897,612
Share options: 4,917,000 Approx, special staff allocation
Convertible Notes: 41,615,000 Various deals for trading these for shares..
Total: 275,430,000 Approx, known by the market in theory.

On 20th October, a new share issue was announced using special warrants (Canada) and CDIs (Australia) totalling 33 million shares. The CDIs have already been added to the shares on issue, the special warrants will I think be actioned as shares soon?

This gives a new fully diluted share count at about 308,430,000 shares. While 308 is 35% higher than 228, the market has hopefully factored in most of the dilution that the earlier convertible notes will provide. 33 million shares on top of 275 million shares is about a 12% dilution.

I'm still not sure how quickly the convertible notes will be exchanged for shares, looks like it will be staggered. But at best the EZ share value equation should have been hamstrung by 12%, and maybe a bit more, but well less than 35%, and only if the market saw no positive effect on the share by having readily available cash with a low interest cost.

PoG = $1360 now, so OGC shares could be valued at (1360x0.8 - 660) /1.12, or CAD$3.82 at best, if the market is only interested in the dilution effect, but had already factored in the earlier convertible shares. Being really pessimistic, a full 35% dilution would give CAD$3.17, but I think that's not going to be the case, since many company reports included that data about the convertible notes, and the big players were well aware of it.

On Friday the price held solid around CAD$3.40, and looked to follow the gold price for a while. Going back to the OGC presentation from August, with a 5.9Moz M&I resource, a valuation of at least C$200/oz on EV (relative to peers) gives an EV (not the same as MCAP) of A$1180 million, or C$3.82 approx if fully diluted. (In fact, the suggested average was A$266/oz, but was heavily weighted by Medusa shares which have appreciated more since). As at 27th July 2010, it looks like OGC's estimate of current EV was almost identical to the shareprice multiplied by the issued shares, around AUD$3.50 x 228mill, or AUD$795mill.

Since Didipio will be producing within 2 years (nothing to stop it this time), and all indications are good for NZ exploration prospects to add to local production and resources, the market cap will increase from this level in the next two years, by a significant margin. Didipio will in addition insure the company against a lower gold price. Now we just need to see the number of fully diluted shares stay constant for awhile, to build up a bit of confidence.

[Piggy]

What do you guys think of the Technical Report for the Didipio Project? It looks good to me.

[elZorro]

What do you guys think of the Technical Report for the Didipio Project? It looks good to me.

Thanks for prodding me to properly read some of that report Piggy. The report PDF, from OGC website. (http://www.oceanagold.com.au/images/documents/files/101029_didipio_gold_copper_project_2010_technical_ report.pdf) Looks like 50% of the gold there is in just a few percent of the drillholes, as higher grades up to 50g/tonne. Mostly in the Bugoy Brecchia according to the report. There's some silver there as well, and the copper is recovered by flotation, the gold by mostly gravity after pulverising (although that's just my reading of it).

8% of any net return has to be handed across to the local original permit owners, several individuals. Part of the government agreement means that most jobs must go to local Filipino workers, and considering the remoteness of the site, accommodation will be built for the workers and managerial staff.

But here's a clause I didn't know about either:




21.5

Taxes



The current corporate income tax rate in the Philippines is 30%.

The Philippines imposes a 12% value added tax (VAT) on the sale of goods and services conducted in the

ordinary course of trade or business and on the importation of goods. OGC has not included VAT on the
operating costs. The total allowance of VAT in the initial capital cost is US$10.8M.
The Philippines imposes an excise tax on mineral products. The excise rate for gold is 2% on gross sales and
the excise rate for copper concentrate is 2% on copper gross sales less treatment charges, refining charges
and sea freight.
In accordance to the FTAA agreement the project “Net Revenue” shall be shared on a 60/40 basis, of which
60% of the net will be the Government’s portion and 40% will be that of the Contractor (OGPI). The Contractor
shall have a period of up to five years to recover its initial investment, after which period only shall the right of
the Government to share in the “Net Revenue” accrue. Contractor’s corporate tax, excise tax, royalties, free carried interest and other taxes shall be included in the 60% Government share.





Considering that the NZ mines are 100% owned by OGC and corporate tax is 28%, the main advantage of Didipio is the byproduct copper. There were a lot of deals being worked over Didipio for the last 20-30 years, and this is the diluted result. The report itself is very detailed, shows what a lot of planning and capital setup is required to get the throughput and reliability for some profit to be made. No question, this project will be up and running in two years.




But I have to ask: would OGC be more likely to find another large pile of gold in NZ on its permits, enough to provide a similar net profit boost?

[Vtrader]

Now we just need to see the number of fully diluted shares stay constant for awhile, to build up a bit of confidence.

Like what you have to say EZ, always have
V.

[elZorro]

Thanks for that Vtrader, I do try to be accurate..some call it nitpicking..
I like your new byline, I'm still buying when I should be waiting or selling, and vice versa.

[sheepy]

I would of thought a 9-14% dilution to gain 20% extra gold would have being ok in shareholders minds, with copper worth so much and the gold price still creeping up I am surprised with the drop in sp. Some people getting cold feet, well bargains for the rest of us. Oceana Gold still has a tiny market cap for a 400,000 ounces produced. I dont trust american dollars at the moment, gold definatley hasnt peaked. Im staying in.

[elZorro]

I would of thought a 9-14% dilution to gain 20% extra gold would have being ok in shareholders minds, with copper worth so much and the gold price still creeping up I am surprised with the drop in sp. Some people getting cold feet, well bargains for the rest of us. Oceana Gold still has a tiny market cap for a 400,000 ounces produced. I dont trust american dollars at the moment, gold definatley hasnt peaked. Im staying in.

Hi Sheepy, good points there, and it is interesting to see the range of goldminer valuations based on both their M&I reserves/resources, and annual gold production. Oceanagold has spent quite some time putting together charts and a report dated late July/August 2010 (http://www.oceanagold.com.au/index.php?option=com_content&view=article&id=66&Itemid=133)comparing themselves to their peers. If you look at the three valued lower than OGC in terms of EV/M&I resources (RSG, SBM, ALD) they have all done well, RSG and ALD quite well, since then. Medusa (MML) was at the highest valuation, and also rose strongly, but looks like a double-top (who am I kidding? I'm an FA person). But look at the range of valuations, 1155 down to 53 as a multiple. This makes me think that while it's an indicator, the market is looking at something else.

Basically the market mostly looks at cashflow from operating activities into the business. OGC's hasn't been changing except for the gold price adjustments, and the latest report covers increased recovery costs in NZ, and an indication that they will be at the lower end of the recovery range, which is still only 270,000 ounces. It's not 400,000 until that Didipio mine is up and running, and the market will respond when it sees that happening, closer to the time. So when OGC management sold off a lot of new shares (and percentage-wise, it's a lot in one year) there was only one way the shareprice was going to go, unless it was bracketed with some strong indication that the NZ mines would soon be processing a super-rich gold vein(s) which will increase the annual recovery in the meantime. Of course that could still happen at any stage, but not this year by the look of it. And that's why OGC will go up and down depending on the gold price, once the market has reacted to other news like the share dilution, recovery rates, prospects, and set a new base level. Maybe we should look at the EV (but need an accountancy degree?) and compare that to Mcap, then work back to the share price based on fully diluted shares.

I'd be interested to hear from any TA people who might be able to show us if the market started responding to a share price dilution effect before the capital raising news was out recently. Perhaps some of the major players would have known or suspected that Didipio would be funded by the classical method.

[elZorro]

I had a bit of time spare, so started back through these posts to see when Didipio was being mentioned again by OGC. A press release on 20 September about Didipio contained this clause:


Financing





The Company is currently examining a number of strategic options for funding the completion of


development of the Didipio Project. The Didipio Project is unencumbered, with no hedging, project debt or


off-take agreements associated with the asset, thereby creating maximum flexibility to pursue the most accretive path forward for shareholders.







Starting 4th October, just 14 days later, a monumental decision was made, 33 million shares would be issued at a discount to cover C$115 million needed by various projects. This was all completed by 20th October with the Aussie CDIs being listed. The timing was fairly clever too, because the convertible notes were about to be presented in a month or two, and that would have dropped the price obtained for this capital raising. We possibly have a double whammy on the share price between now and Christmas.



I have an issue with the statement "Didipio is unencumbered" as apart from within the mine technical report (not many will read that), there is no mention of 60% net proceeds going to the Phillipine Govt, once startup costs are recovered. I think it's fair enough on their part, it's in the mining regulations over there. But OGC shareholders have not been informed about it up front. If you look on the Oceanagold website, you won't see any references to capital raising filing notices, at least I couldn't find the recent ones, and the shares on issue are still as at September, 228 mill, and even the TSX still reports 228mill of shares on issue. Where is a simple table showing us how the convertible notes and other issues will be likely to appear as shares, the timing and the amount?




These are fundamental bits of information that are important to the market. We can dig them up, but they should also be there in plain view on the website I think.



This is the October 4 announcement of capital raising, and with hindsight I think it needs a scan again:






OceanaGold Announces CDN$115.5 Million Bought Deal Private Placement

MELBOURNE, AUSTRALIA, Oct. 4, 2010 (Marketwire) --

NOT FOR DISSEMINATION OR DISTRIBUTION IN THE UNITED STATES AND NOT FOR DISTRIBUTION TO US NEWSWIRE SERVICES.



OceanaGold Corporation (TSX:OGC)(ASX:OGC)(NZSE:OGC) (the "Company") is pleased to announce that it has entered into an agreement with a syndicate of underwriters, led by Macquarie Capital Markets Canada Ltd. and Citigroup Global Markets Canada Inc., pursuant to which the underwriters have agreed to purchase special warrants ("Special Warrants") and common shares in the Company ("Common Shares") available as ASX listed CHESS depositary interests ("CDIs") (together "Securities"), on a bought deal basis, at a price of CDN $3.50 per Security (the "Offering Price") for aggregate gross proceeds of CDN $115.5 million (the "Offering"). CDIs shall be purchased at the Australian dollar equivalent of the Offering Price. Each Special Warrant will entitle the holder thereof to receive, without payment of additional consideration, one TSX listed Common Share.




The Offering is expected to close on 20 October 2010. The CDI's will be freely tradable on the ASX the business day following closing. The Special Warrant and CDI placements are subject to certain customary conditions and regulatory approvals, including the approval of the Toronto Stock Exchange.




Special Warrants will be deemed exercised on behalf of holders, and without any required action or payment of additional consideration by the holders at the earlier of: (i) the third business day after the date of receipt for a final prospectus to qualify, in each of the qualifying jurisdictions the distribution of Common Shares to be issued upon exercise of the Special Warrants (the "Qualification Date"); and (ii) 4:59 p.m. (Toronto time) on the date which is four months and one day following the closing date.




The Company will use its best efforts to file and obtain a receipt for a final short form prospectus in the week beginning November 8, 2010 for the purpose of qualifying the distribution of underlying common shares issuable upon exercise of the Special Warrants.




The Company intends to use the net proceeds of the Offering to fund:

-- A portion of the capital expenditure requirements (estimated at US$140


million) for the development of the Didipio Gold/Copper Project in the

Philippines;





-- Future capital and exploration expenditure associated with extending

mine life at the Company's New Zealand operations; and





-- General working capital requirements.


In addition to the funds raised from the Offering, the Company is considering its options to finance the balance of capital expenditure associated with development of the Didipio Project.



This may include one or more of debt, internal cash flow or funding from the introduction of a joint venture partner.
In this respect discussions are currently underway with a number of parties.



For further details on the Didipio Project, please refer to the Company's media release dated 20 September 2010.



OK, so it looks like the Canadian special warrants will be getting listed in the week starting 8 November, to match the faster CDIs that are already on issue in Australia. Maybe then the TSX will show the correct number of shares on issue. Even scarier, OGC has not finished raising capital for Didipio, there might be more dilution, or perhaps another partner involved.

Sure, why not split it up even more?? Will there be anything left over for shareholders from all the capital input needed over there?

Perhaps this is all about being able to show that OGC is going to be recovering 400,000oz, and seeking SP revaluations based on that. But I think the market is far smarter than that, and it will all come down to the net profit being shown in each quarter. To get that higher, Oceanagold need to concentrate even more on the NZ mines, and fix any production bottlenecks and issues, while getting onto any higher ore grades they know about.

[GR8DAY]

..great bit of digging Elz, your'e putting a lot of effort into this so I hope it pays off for you in the long term........cos I don't think it's gonna be in the short/medium term. As we know Golds are just so damn volatile.....as I have recently found out. Profits and losses can happen fast and furious. At the moment I personally think OGC is just plain out of favour and thus support.....and that's how the market works. One day and suddenly that will change but at the moment I think the SP is more likely to continue South......... for a while anyway. For your sake and others I hope Im wrong.

[Phaedrus]

I'd be interested to hear from any TA people who might be able to show us if the market started responding to a share price dilution effect before the capital raising news was out recently. Perhaps some of the major players would have known.......I reckon that TA is wasted on you, eZ! You are so totally focussed on what I call "scenario" trading that you generally ignore market sentiment altogether. The OGC chart tells an interesting story and it would pay you to listen to it a bit more!

The chart below uses OGC Aus market data because of the much higher volumes traded there. This means that the plot jumps around a lot less giving more consistent, more timely and more reliable signals. I can assure you that the NZ chart depicts essentially the same situation - if you have any doubts about this, say so and I will post that as well.

OGC was in a strong, steep uptrend until, quite suddenly, multiple Bearish divergences appeared - and the shareprice has been falling ever since. Just one day after the divergences (you should know what these are by now!) the CMO triggered a Sell signal and the OBV trendline was broken the day after that. Those that missed all of these signals (or failed to act on them) could have sold when the confirmed trendline was broken on 21/9/10. This was pretty much the last warning.

Now consider the volume histogram at the bottom of the chart. Look at what the average OGC volume is and note the huge sell-down on 17/9/10. (Down-days are red bars, Up-days green) Big Money was getting out - and Big Money is assumed to be "smart" money. We don't know what they knew, but we do know when they found out! Who were they selling to? Mug punters with no inside information. Those with no TA knowledge. People "accumulating" OGC. Investors "buying the dips". Mugs. Note also the similar sell-down on 6/10/10. Again, I don't know who these sellers were or what they knew, but it is painfully obvious when they acted on their knowledge. I can't be bothered looking into the significance of these dates eZ but maybe you could tie them to some announcement or other. See, I don't care what the cause might or might not be - these are all Bearish indicators regardless of whether they have a known "explanation" or not.

Yadda, yadda, yadda...... who needs all these words? The entire story is here in picture form - all you have to do is look.

http://i602.photobucket.com/albums/tt102/PhaedrusPB/OGCau114.gif

[elZorro]

Thanks for the detailed reply Phaedrus, we hadn't heard from you in a while, I trust you were able to get your shares sold anyway..

On 20th September OGC was listed in a two/three major index funds, so those serious investors had to buy OGC to get their proportions right. I wasn't surprised to see massive sales just before that date, because I had used the vastly superior FA research (just kidding, don't start frothing P).

I did wonder who sold them their shares though. And they were the real smart ones. It looks like the 4th October announcement of another 33million shares to be issued spooked some more investors, who responded correctly within 2 days, while the rest of us were wondering if there might be some share dilution. Without the numbers directly to hand, it took a good 2-3 hours of internet searching to figure out what the worst case dilution would be.

I am now very wary of OGC press releases, and promos by OBR and Mr Chen. Watch funds like Baker Steel, who sold out of most of their OGC months ago. There have been plenty of better performing goldminer shares in the meantime.

OGC is not a great bet at the moment because they have entered a phase of more capital raising, but have not increased their income stream. Net result: shareholder dilution, which Phaedrus has been able to identify with TA. If I'd been a bit more careful with my scenario analysis, I'd have had that answer too. I'm sure the smart investors did do that work, and they wouldn't have needed TA analysis to do it. In fact they created the charts which Phaedrus reported on.

[GR8DAY]

....well put Elz and I guess Im one of the mugs P quoted.........thank God it's only money and not one of those important things like love, health and the average snapper size. Don't forget that a Past large holder like Baker Steel can now also manipulate a share like OGC downwards for their own benefit. (ie to but back in at some stage) It wouldnt take a very large stock pool to be able to do this when buyers are thin on the ground. It could well be happening now?

[Phaedrus]

I am now very wary of OGC press releases, and promos....Excellent - so you should be! Like any company report, such sources of "information" are, unfortunately, biased. It is surprising just how "creative" accounting can be! Keep in mind too that everyone has access to this stuff so it will not give you any competitive edge.


Net result: shareholder dilution, which Phaedrus has been able to identify with TA. Not really - the dates don't match closely enough - unless some people are very, very slow readers! Don't forget that TA identified technical weakness while the shareprice was still rising and well before any announcements were made. I neither know nor care what was causing that weakness.


If I'd been a bit more careful with my scenario analysis, I'd have had that answer too.eZ, you are still labouring under the illusion that, given enough time and effort, you can access and evaluate all facts pertinent to OGC. YOU CAN'T.


I'm sure the smart investors did do that work, and they wouldn't have needed TA analysis to do it. Right - they have got something even better than TA - INSIDE INFORMATION. That's why it is so important to follow what they do. The first obvious evidence of their actions was when they bailed out on 17/9/10, causing that huge red volume bar and an abrupt fall in the OBV.


In fact they created the charts which Phaedrus reported on.Only a couple of the more obvious features can be attributed directly to "smart investors". We have no way of knowing who or what caused that early technical weakness which was well before any "smart investors" showed their hand.


I guess Im one of the mugs P quoted.......You were buying OGC when :-
(1) It was in a downtrend,
(2) Just after multiple SELL signals had fired,
(3) When the big money was moving OUT,
(4) When the On Balance Volume was falling,
(5) When market sentiment had clearly turned against it.

The chances of that being a good entry point were practically zero.

[corporateraider]

Gidday eZ
Unlike P I operate largely on FA (yeah I look at the charts). I got out when the last quarterly came out and they made precious little money even with a great gold price. I thought the FA signs were there.

I can assure you however that I wasn't the big seller.

[elZorro]

Gidday eZ
Unlike P I operate largely on FA (yeah I look at the charts). I got out when the last quarterly came out and they made precious little money even with a great gold price. I thought the FA signs were there.

I can assure you however that I wasn't the big seller.

:D Yep, I just can't help wanting to see inside the business either. Charts can be useful, but without enthusiasm, shares are a bit boring I think.

I'm never too sure about the net profit reports. Everyone knows you understate profits to pay less tax..:cool:, even though OGC has tax assets at the moment. So I assumed there were one-off costs that reduced it to $13million for the quarter? Some others on Stockhouse were also disappointed at the profit, and they have only just found the 60% Didipio government levy clause.

Where I am most disappointed with OGC's performance, is that the NZ average ore grades are dropping. Sometimes it's because there has been a lot of rain and the machines can't get down the pits. Then they push lower grade stockpiles through the mill. Answer? get some extra big water pumping systems down there. Spend the money.

The only autoclave of its type in Australasia is running 24 hrs at Macraes, and if anything goes wrong with it, or it needs new bricks installed, all gold recovery stops. Answer: build a spare setup somewhere else, or allow for some redundancy.

Perhaps the new digger will help the miners get to the higher grades quicker, and that in turn will reduce the recovery costs per ounce, and increase profit a lot. I think they said some of the new Reefton gold won't need an autoclave, as they'll mine the rich seams at first, not the lower grade area around it.

But you're right: a company with a market cap of near a billion dollars reports a quarterly profit of $13mill, when gold is at an all-time dollar high? That can't be great.

OGC has filed a shortform prospectus (http://file.nzx.com/000/649/4311649.pdf) to hasten the 12 million odd Canadian special warrants along: first deadline 12th Nov. The TSX has a list of average shorts against OGC for the last few months, but I'm not sure what they mean..

QEII has helped OGC along today.

[mistymountain]

I'll stick with the last 18 month uptrend... Cheers everyone; your comments and wise words have been great to read. EZ you deserve a Gold medal one day...

[elZorro]

I've been thinking today that Phaedrus is more than likely right about a lot of things. It doesn't make his choice of system perfect, and without the background FA work that I know he also does, it might not be as good.

I can only spare the time to look at one company in full detail from an FA point of view, and I don't even cover the books properly. So if that one share isn't doing so well, I'm in idle mode when other shares are going off.

Phaedrus will not be surprised that I haven't done my homework on the TA method in the meantime, and base my purchasing decisions on market research from web promos, and share price and volume. I should (and will) at least use OBV or similar indicators.

I have a fair idea what depths OGC could plumb to in price (not too severe), and where it could get to within 2-3 years. In the meantime, TA people will (in theory) be able to make good returns on many other shares, without knowing anything much about the companies.

I'm still gullible to spin, but I did notice the uncanny timing of Mr Chen (on 12th October) reporting how good OGC's prospects were, just after a detailed one-on-one meeting with OGC upper management for 2 hours. Heaps of OGC shares sold at an improved price in the next two days (see post 427), but they continued trending down from there. We only know what we read, and I have been able to spot some poor quality reporting on OGC already.

I have no insider information, so will be looking for market indicators that might show up when OGC management make overseas trips, for more high-flyer meetings.

All the research that others have done, help to point out that gold producers are valued on their net profit and gold production stats. Not really their future prospects, although that might have an underlying effect. On a weekly basis, US$ gold price is the mover.

So just as well the gold price looks like breaking $1400 next week..

Slightly off-topic, check out EKM on the ASX, I don't own any, plenty of PR around but their grades are massive. Must be the Lucky Country all right.
Last quarter report. (http://www.asx.com.au/asxpdf/20101029/pdf/31tjpfr2crb8wz.pdf) Note the very comprehensive table of shares and options, no digging required.

Glass Earth also has up-to-date share records.

New press release to ASX on 8/11 (http://www.asx.com.au/asxpdf/20101108/pdf/31tr5zpgpc909k.pdf), A$55mill of funding is mostly rolled over to 2012, just $2mill to be reimbursed in December.

[elZorro]

From the 2009 Annual report: these are the $55mill Barclays notes, temporarily added to current liabilities, as they could have been due for payout.




5.75% Convertible Notes (Unsecured)


The Notes bear interest at 5.75% per annum payable semi-annually in arrears. The convertible note liability has been classified as current at December 31, 2009 as the note holder has the option to put the note for redemption to the issuer on December 22, 2010 at a price equal to its Accredited Principal Amount as at the date fixed for redemption together with accrued interest to such date. The Notes mature in 2012 and are redeemable at 109% of their principal amount unless converted to common shares prior to this date at the option of the note holder. The number of shares to be delivered upon conversion shall be determined by dividing the principal amount of the note by the conversion price of A$4.162 (subject to adjustment for certain specified events). Of the A$52.9 million (US$39.1m) net proceeds of the issue A$48.5 million (US$35.8m) was allocated to interest bearing liabilities and A$4.4 million (US$3.3m)..



Since only $2mill will be cashed in, everyone else ($53mill) wants to wait for either 9% extra, or will convert them to shares if the price gets over A$4.16 by December 2012. There's a very good chance of that, depending on how OGC does its fundraising from now on. If all took shares as payment, you'd need to add 12,734,000 to shares on issue. Meantime it becomes a long-term liability again on the books.

[elZorro]

Keep an eye on the TSX, it's a bit volatile there overnight, not in a good way.

The Oceanagold website now has the latest count for issued shares updated (hurrah). The TSX is still showing the old count, nearly 10% lower shares. I'd still like to point out the kind of table that should be easily accessible on the website, that would help investors (that's the website subdirectory we're in, after all). Glass Earth has done a good job of this, and it clearly shows a possible (but unlikely, for GEL) 44% dilution over the next few years. You can even see the history of capital raising, and could go back and look at the charts for that period.


Few opt to cash in Oceana Gold notes
By Simon Hartley (http://www.odt.co.nz/history/65) on Wed, 10 Nov 2010

Oceana Gold has maintained investor confidence, with just $A2 million ($NZ2.56 million) of a possible $A55 million in convertible notes being cashed in by investors.
Oceana had $A55 million of $1 convertible notes on issue, with an option deadline having just passed for them to be redeemed for cash next month.
Craigs Investment partners broker Peter McIntyre said the redemption of just $A2 million, or 3.6% of the total, revealed strong investor confidence.
"Only a small proportion have taken the opportunity for repayment, which is positive news for Oceana, as that funding line remains largely intact," he said.
Oceana hopes to reignite interest and finance for a mothballed development, the Didipio gold and copper mine in the northern Philippines.
While investors worldwide have been clamouring for bullion in the face of US and European economic uncertainty, the shares of some larger gold producers have similarly been underpinned by renewed investor interest.
Shares in Oceana, which tipped a record $5.41 in September, were yesterday trading up slightly at $4.79, having recovered from a steady decline which saw the share bottom out at just 22c in December 2008.
The remaining $A53 million notes held would mature in December 2012 and be converted into shares for the holders, Mr McIntyre said.
Oceana, which bought back its forward hedge contracts earlier this year and now sells 100% on the daily global market, easily raised $NZ151 million in early October, through warrants which will be traded on the Toronto Stock Exchange, where the triple-listed company maintains its principal listing.
Being totally unhedged, Oceana was able to make the most of escalating gold prices during its last trading quarter to September - the gold price peaked at $US1374 in October.

Simon, 2/3 of the $151mill was raised in Aussie and those shares are being traded now. The TSX ones (1/3) have still to be issued. A balanced article would have sought input from two sides, not just Craig's Investment Partners. Or am I just being picky?

[elZorro]

MEDIA RELEASE
15 November 2010


OCEANAGOLD APPOINTS VICE PRESIDENT OF EXPLORATION


(MELBOURNE) OceanaGold Corporation (ASX: OGC, TSX: OGC, NZX: OGC) (“the Company”) is pleased to announce the appointment of Dr. Michael Roache as Vice President, Exploration. Dr. Roache will be part of the senior executive team and will oversee all aspects of exploration for the Company with a near-term focus on New Zealand and the Philippines.


Dr. Roache is an industry veteran with over 23 years experience throughout Asia, Australia and New Zealand focusing on gold exploration and discovery. Previously with Metex Resources, Delta Gold and AngloGold, Michael led the exploration team at OceanaGold until late 2007 when he temporarily left the minerals industry. His experience crosses over a wide range of gold deposit styles, including extensive porphyry experience in Asia. He holds a PhD in Economic Geology from the University of Tasmania and is a member of the Australian Institute of Geoscientists (AIG).


Jim Askew, Executive Chairman commented “We are delighted to have Michael join the team and engage on our extensive suite of mineral tenements in New Zealand and the Philippines. The exploration program in New Zealand has already delivered significant increases in resources and reserves over the past 18 months and Michael will provide added expertise to these programs. In the Philippines, OceanaGold has gold-copper prospects immediately adjacent to the Didipio project and extensive exploration tenements prospective for gold-copper porphyries spread across the Philippines archipelago; Michaels’ expertise in porphyries and previous experience specific to these assets will translate into a running start to gear up our exploration program in the country.”


Ok, this should be good news, and OGC's table of Reserves and Resources has not been modified for a year. It's due to be updated at the end of the calendar year. Reserves figures are often a guideline for company valuations. Not much good recovering lots of gold if you only have 1-2 years of mine life left. OGC should be able to show even better long-term prospects by Christmas.

There's an open day at Macraes on December 4th, looks good. (http://www.oceanagoldopenday.co.nz/)

[elZorro]

A new corporate report (http://www.oceanagold.com/images/documents/presentations/ogc_november_2010_general.pdf)has just been lodged on the website, a rejigging of earlier versions. Quite a good overview of the company and its permits. The Resources table is not showing much change, but there's a strong indication that it will go up at least as much as it did last year, from the new exploration results. Shares on issue and the convertible notes are also mentioned, and in the fine print it says the current share price is roughly the same as their conversion price.


OceanaGold argues for investor re-rating

Tuesday 16th November 2010

OceanaGold argues investors are undervaluing its portfolio of New Zealand and Filipino gold-mining operations, and is predicting gold production from South Island mines of between 270,000 and 290,000 ounces in the current financial year.
In a sector where the average Economic Value-to-M&I resources ratio per ounces of gold is US$307, OceanaGold is trading at around US$135 per ounce, the company says in an investor presentation lodged with the NZX. Shares of the company have soared 163% in the past 12 months, as the price of gold advanced, and last traded unchanged at $4.63.
OceanaGold touts itself as a "100% unhedged producer" at prices of between US$555 and US$585 an ounce, and current gold reserves of 3.35 million ounces, 1.94 million ounces in New Zealand and a further 1.41 million ounces at its Didipio project, under development in the northern Philippines. The Didipio prospect also includes 170,000 tonnes of copper.
An annual production rate of 270,000 to 290,000 ounces of gold is producing market capitalisation of around US$988 million, while peers CGA Mining and Medusa were both achieving larger market caps on smaller resources.
CGA Mining sits at US$1.1 billion market cap, with similar production costs (US$541 per ounce), and estimated 2011 gold production of 213,000 ounces. Medusa's extraction costs are far lower at US$200 per ounce, but only 100,000 ounces is forecast to be produced next year, to support a US$1.18 million market cap.
With all mining and development costs able to be met from operating cash flows, the company argues it has "an exciting growth profile with low cash costs", and expects gold production to crack 300,000 ounces in the 2013 financial year, rising to around 350,000 ounces by 2015, with the first full year’s production from Didipio in 2013
Copper production is estimated to start at 35 million pounds in 2103, rising to 36 million pounds in 2015.
The revised outlook follows a year of exploration and mine expansion planning at Oceana's Macraes, Reefton, and Frasers Underground mines in the South Island, with US$10 million in drilling plans to extend mine life by seven to eight years. Proven and probable reserves have risen from 1.45 million ounces in 2008 to 1.94 million ounces in at December 2009.
An expanded programme for the Reefton mine is in place, with drilling in three "highly prospective" mine targets.

Businesswire.co.nz


All valid points of course. But investors like a balanced article.
OGC's Mcap 'bubble' on the chart does look bigger this time around, and the reason for that is there are more shares on issue, and more waiting in the wings. The latest report states annual gold production is likely to be at the lower end of the range, 270,000 oz. And again, no mention anywhere in press articles about the true nature of the partnership at Didipio. Long term, OGC will be getting less than 40% of the profits.

OGC is still a fine company. But in the near term, as an investor I'm interested in 'unlocking potential' over the next few months, and I haven't heard much about how that is being worked on in the meantime. New mines and prospects are great, but what is stopping the NZ mines from producing 10% more gold, i.e. an average grade improvement of 10%, or achieving a reduction in any downtime?

[elZorro]

Oceanagold will have a new CEO early next year (http://af.reuters.com/article/metalsNews/idAFWLF00490620101115). Again, copper-gold experience has been obtained, and this is a step-up position.

GR8DAY et al, are you still out there? It's a bit early to come up with an FA answer on the price of OGC's shares, while the number of them is steadily rising, with gold output static and the gold price dropping.

However the TSX has already discounted OGC back 22% from the old EZ equation, and if all convertible and other share options were taken, the worst it should drop to is a 35% discount. But the share price is not close to some of those convertible options now, so perhaps quite a few will hang on until 2012.

On the plus side, OGC's EV per gold ounce in the ground has always been low, and over the next few months the market should warm to their new cash-positive position. The easiest way management could help this along would be to produce a much better net profit figure in the next quarter. Something so positive that the Aussie journalists cannot help but be impressed ;)

[elZorro]

More news of the dilution kind. (http://www.asx.com.au/asxpdf/20101118/pdf/31tz94lcmtzs4b.pdf) So that's 33 million extra shares (14.47% more) introduced in just 1 month without prior market warning except to say 'funding options are being looked at for Didipio'. And they wonder why some shareholders are a bit brassed off..:mad ;:

[geezy]

thinkin of adding a lil more as the sp is showing weakness :)

[elZorro]

thinkin of adding a lil more as the sp is showing weakness :)

Hi Geezy, you're not alone in thinking that, I did get some at $4.25 yesterday, trusting that the gold price would go back up, and it did. OGC's share price is not showing weakness, it's dilution I think. On the TSX last night, no details sent over about the extra shares coming online. So we'll see which of the three markets update the share count first. When I looked this morning, OGC hadn't updated its site either.

Note, as at 1.30 pm today, NZX reports 261,897,612 shares, ahead of the OGC website and the ASX, both on 249mill odd. OGC's Mcap is well over 1.1 BILLION NZ dollars.

[mistymountain]

Firstly all my thoughts to the Coasters at this time of personal uncertainty.

_____________________________

this makes alternative reading

http://sovereign-investor.com/2010/11/11/world-banks-shocking-admission-and-what-it-means-for-gold/

[Vtrader]

I did get some at $4.25 yesterday

Good for you EZ, bit strapped for cash right now, otherwise I would have been loading also.
V.

[elZorro]

Good for you EZ, bit strapped for cash right now, otherwise I would have been loading also.
V.

Hi Vtrader: the last few days have been a bit up&down, and like anyone, I put any investment I did make, into the share I was most comfortable with. However, I don't expect OGC to have the same meteoric rises in 2011, that it did in 2010. But that depends on the gold price, and OGC managements' perceived need for immediate funds..

Mistymountain, like you, I'm very sad to see what is unfolding at Pike River, it's a desperate situation at the moment.

[elZorro]

The Crown Minerals site has an article on OGC's Fraser exploration (http://www.crownminerals.govt.nz/cms/news/2010/three-underground-exploration-programmes-underway-at-frasers), derived from the third quarter report. Note the good looking grades, multiples higher than the main Macraes pit.

It does look like the annual recovery will be near 270,000 oz, unless this quarter is better or worse than average. There was a small mention of Round Hill amongst other areas, we are overdue for a report on that. I'm hoping that all of this data will be provided along with a re-rating of the reserves/resources table at the end of the year. Reefton is still a big unknown, but lots of effort going in over there. The gold price doesn't look to be dropping away either.

[elZorro]

Well, maybe this is good news after all.

Looks like there has been some shorting of OGC on the TSX, but I prefer to see it as the natural result of a lot of new shares being issued. The maximum dilution from the old level of 228mill shares could be 35%, and some of those shares won't be issued (cash will be taken) or will only be presented when the share price rises, before 2012.

So assuming OGC won't issue any more shares without telling existing shareholders first, is anytime soon a good opportunity to buy OGC?

The EZ equation did hold quite well when OGC produced the same amount of gold as now (note OGC prediction is for bottom of the range output), gold prices about the same. So worst case:

CAD price (c) = (1380 x 0.8) -660 divided by 1.35 = 329c

The TSX has OGC at $3.27 at the moment. So all known future share options are factored in, and it's trading about even for that situation. With gold moving up quickly overnight, OGC must follow it within a day or so, IMHO.

Now all I need is for gold to reach $1420/oz and I'll be breaking even with OGC...because I held onto my shares, just like Mr Chen did, I'm sure.

By the morning of 25th November, the OceanaGold website still shows the out-of-date shares on issue from October (Financial page), and so does the TSX. But now the Canadians are not leading the market positively for OGC, as they did. If Australasia is bearish on the share, so is the TSX, and then some.

There have been consistent but unfounded rumours that OGC is being prepared for a buyout. Is this what it looks like?



Oct 24, 2010 (The Australian Financial Review - ABIX via COMTEX) -- Private equity groups are showing increasing interest in Australian-listed companies. Experts have identified the following companies as the most likely takeover targets: Insurance Australia Group, JB Hi-Fi, DKN Financial, Whitehaven Coal, and OceanaGold.
Publication Date: 23 October 2010

[elZorro]

I don't have a subscription to AFR, NZ Resources etc, so cannot follow up any rumours of a takeover. There was a small presentation (20 mins) in Auckland recently on Reefton's work, again not in the general press.. I'm also too miserable to buy a charting package, but I've added Phaedrus-style comments on some saved screens.

Note that in the last month, OGC followed the gold price well, except for during the last few days. I'm hoping some sellers are too pessimistic, nothing more to it. The 6 month pattern clearly shows the more overall pattern of 'bearish divergence' from the gold price, caused by share dilution.

Considering we haven't had a proper press release about NZ exploration, the resources table will be updated soon, there is plenty of cash in the bank, the share has been more than fully diluted as far as I can see, then OGC will follow gold if it heads up, and it might do better than that too.

BUT:
30th Nov report: not a lot of progress in this share. Have a look again at my post #454. On 4th October OGC management made a lightning raid on investors, effectively diluting their shares by 14% without advance warning to most holders. Now I defy anyone to find a reference to that transaction on the OceanaGold website. There is another announcement on 4th October, about new management. We're at the end of November, and the OGC Financial page still shows the outdated October shares on issue. Not good enough. I want to see a table of shares on issue, convertible notes due, etc, and this needs to be updated the instant it changes, not months later.:mad ;:

[elZorro]

Saved by the gold price - the TSX likes OGC again - 1.5 million shares traded at up to CAD$3.40. Finished at C$3.33 after selling, which is a scary result. It's the EZ equation divided by 1.35, exactly. If only we knew what the gold price would be doing in advance, but someone on Stockhouse predicted gold to rise after the Euro scare recently, like it did once before.

[Vtrader]

Is it time to count to 5 again?

Some indicators suggest so, time will tell all as always
V.

[elZorro]

Is it time to count to 5 again?

Some indicators suggest so, time will tell all as always
V.

Hi Vtrader, trust you are doing well. Do you mean we might be at the start of a 5-cycle EWT trend? I hope that means some big rises.

I have found it interesting to find out what changed the market sentiment for OGC. Unlike Phaedrus, I have not given up on using FA to predict a share's movements. Sure, retail sharetraders will pulse the share up or down, but the big money will soon chop through all that, and in OGC's case, management's need for cash had another huge effect. A gold producer with stable gold output and quarterly profits, with no need for extra cash, who is not looking for more mines to open, or getting taken over, would be really easy to plot against the gold price. And most weeks, that's what happens with OGC.

I had another look at the last quarterly report. OGC brings in the costs for overburden and stripping each quarter, and that has a small or large effect on the net profit, depending on what the result is: releasing new reserves, or a sign of ore exhaustion in that area. Similarly, explorers amortise exploration costs, bringing them into the annual books when/if the prospect is written down.

With Macraes grades dropping over the last year, not only is the recovered ounce total dropping as a trend, but the extra profits from the gold price are being eroded by the higher stripping costs. The new digger (on a long term lease I think) will help here.

Let's hope the geologists have also been earning their keep, and that's not a great stretch of faith at all. Should be some great reports out soon if that's the case.

[Vtrader]

CAD price (c) = (1380 x 0.8) -660 divided by 1.35 = 329c

Now all I need is for gold to reach $1420/oz and I'll be breaking even with OGC...because I held onto my shares, just like Mr Chen did, I'm sure.



The back of the EWT envelope today suggests it is possible for gold to reach USD1500 (can I count to 5?)
CAD price (c) = (1500 x 0.8) -660 divided by 1.35 = 400c

Given the anticipation of OGC performing well on NZ exploration and FA consistency as Didipio is now funded, should be some upside from here.

Hope you are in the money from here with OGC, some reward for your efforts.
V.

[elZorro]

The back of the EWT envelope today suggests it is possible for gold to reach USD1500 (can I count to 5?)
CAD price (c) = (1500 x 0.8) -660 divided by 1.35 = 400c

Given the anticipation of OGC performing well on NZ exploration and FA consistency as Didipio is now funded, should be some upside from here.

Hope you are in the money from here with OGC, some reward for your efforts.
V.

Hi Vtrader, I still think anyone using an equation needs to be very careful, but it does seem to be a useful indicator. Much consternation on Stockhouse on Friday, when gold ramped up again, but OGC didn't. The TSX hasn't adjusted the shares on issue figure to the correct one, and neither has OGC on their 'all singing and dancing' website. How about a revamp on that OceanaGold, can we afford it now?

Maybe a few traders have started using the correct numbers in their calculations. But as I say, all pending shares have already been factored into the price, unless OGC's primary valuation has dropped again because the annual recovery is at the bottom end of the suggested range.

Didipio news: still no clarification about more partners.. (http://af.reuters.com/article/metalsNews/idAFSGE6B502Q20101206)

[elZorro]

A big report on Reefton work has been put on the OGC website this morning:

http://www.oceanagold.com/images/documents/files/101207_reefton_exploration_update.pdf

The TSX market warmed up last night, seems to be all on from here.

[adamcz]

.... but when will that turn into an increase in M&I?

[elZorro]

.... but when will that turn into an increase in M&I?

Hi Adamcz - looks like some assays are still due, but the grades that are shown are all fine, not huge, but realistic additions. OGC seems to update their Reserves and Resources table only once a year, at the end. I did send an email to head office about that, last I heard was no change to that policy. OGC already has a big M&I total, it seems to have little effect on the share price. I've come to realise that we can't have OGC's price responding to gold movements immediately, and yet expect inground resources to make much difference. When the R&R table figures do get adjusted soon, I'd expect the share price to rise and then return to some sort of equation format depending on the gold price.

I will get really interested if OGC comes up with a cunning plan to increase the recovered gold from New Zealand mines in the shorter term, where we own 100% of the profit (apart from taxes of course). That would have a good lasting effect on the shareprice.

[Vtrader]

A big report on Reefton work has been put on the OGC website this morning:
The TSX market warmed up last night, seems to be all on from here.

All these indicators showing there is gold in them there hills.
I read mine life extension. And thus far OGC appears to be a well managed business. Good news, and less than desirable news as necessary, when was the last BAD news from OGC?
It would appear that OGC are playing the market smart, applying timely management or possibly a even a healthy dose of good luck. Release the undesirable news when the share price is high, and the desirable news when the share price is low.

Looks like gold has another rally underway, would not be too suprised to find a similarly favourable report from Macraes released in the near future...
V.

[elZorro]

All these indicators showing there is gold in them there hills.
I read mine life extension. And thus far OGC appears to be a well managed business. Good news, and less than desirable news as necessary, when was the last BAD news from OGC?
It would appear that OGC are playing the market smart, applying timely management or possibly a even a healthy dose of good luck. Release the undesirable news when the share price is high, and the desirable news when the share price is low.

Looks like gold has another rally underway, would not be too suprised to find a similarly favourable report from Macraes released in the near future...
V.

Yes VT, the NZ news should be good. I just read this on Stockhouse, if true, it explains the mixed messages about Didipio.


RE: Didipio-Prime acquisition target: 'SkyeCairns'

The chairman has indicated to investor groups that they tried to sell or JV Didipio but the offers were all low balling the price hence they decided to go on their own. I would like them to sell it but I'm just skeptical of their ability to do so. IMO

Someone in management bought 36,666 shares at AU$2.70 today (options), so total share count now 261,934,278. The OGC website was updated to this figure on 13/12/2010, a 5% increase in share numbers over the historic October figure it had been showing. Thanks for that, at least we know where we are.

NZResources have an article about Reefton, if anyone can access that, please post?


Strong new exploration results from Reefton


The reason why OceanaGold placed a big emphasis on Reefton at the AusIMM NZ Minerals Conference showed up yesterday with the release of positive drill results from within the Globe-Progress mine, on surrounding deposits, and the detailing of a new discovery.
View Article (wlmailhtml:{859F7BC3-BC06-49EC-89C0-293E8B5037B7}mid://00000009/!x-usc:http://www.nzresources.com/showarticle.aspx?id=1631) http://www.nzresources.com/showarticle.aspx?id=1631



Managed to read this one:


AUSIMM2010: Could the other half of Macraes be out to sea?


Ross Louthean — 3 December 2010

Otago University’s well known leading geologist Professor Dave Craw had geologists pondering the question of his paper at the AUsIMM NZ Minerals Conference – where did the other half of Macraes gold go?
The Hyde-Macraes Shear which hosts the Macraes gold mine, operated by OceanaGold Corporation, was formed under greenschist facies conditions in the Early Cretaceous.
Prof Craw said it is highly likely that more than 6 million ounces of gold were eroded from Otago Schist.
“However, there was no placer gold accumulation associated with these early sediments,” he said.
The “missing” gold from Macraes did not form placer deposits because it was too fine-grained and was not liberated from the host minerals.
His assumption was that the gold may have been transported offshore, possibly into the Great South Basin. Alternatively, the gold may have remains onshore where liberation and grain-size enhancement accompanied recycling of the sediments into Late Cretaceous sediments, such as the Blue Spur Conglomerate at Gabriels Gully.
If so, he said, similar Late Cretaceous deposits to Blue Spur Conglomerate in the Kaitangata area of south-east Otago may also be prospective for placer gold.
His presentation concluded that about 10 M oz of gold has been eroded from the Macraes gold deposit.
This gold occurred in up-dip extensions of the “observed deposit” plus a portion of the deposit that was excised by a post-mineralisation normal fault – the Footwall Fault.


Also this one on Reefton, free to view:

http://nzresources.com/showarticle.aspx?id=1591&gid=30001591


In gold Oceana trusts


Ross Louthean — 26 November 2010

The gold market and the Reefton goldfield and not the flagship Macraes operations were the themes of two OceanaGold Corporation papers yesterday at the AusIMM NZ Minerals Conference.
Who better to talk about the gold market for Oceana than its vice president for corporate and investor relations Darren Klinck who said while there had been speculation that the current high gold price may be a bubble, the gold sages he listens to say otherwise.
Oceana has benefitted greatly from the rising gold price, particularly in $NZ terms.
Klinck said that the gold price has gone up 18% in the past year and, in the past three years it has lifted by 60%.
The company was on course for its projected output this year of between 270,000-290,000 ounces with an expected average cash cost of $US585/oz.
He said Globe-Progress as separate underground mines operated from the 1880s until 1919 and what was not realised by many was that the town of Reefton was the first in the world to be electrified.
The Globe-Progress open cut has a mine life, based on known reserves, of another three years but Klinck said it was hoped active exploration would take it through for several more years.
The current resource was about 1.2 million tonnes at 2.5 grams/tonne gold and production – through a concentrate sent to the Macraes pressure oxidation plant – was between 70-80,000 oz per annum.
In his presentation on Reefton, geologist Hamish Blakemore said three of five targets in the goldfield have been drilled and assays should be known soon.
Blakemore said he was part of a relatively new Reefton team when Oceana stepped up exploration at both Macraes and Reefton after several quiet years on prospecting – due to the then gold price and other factors.
He said since start-up of the modern mining operation in 2006 Oceana has extracted 250,000 oz of gold.
“Several features of the Reefton goldfield suggest that it is highly prospective for additional gold resources of economic scale and grade,” Blakemore said.
Historically, miners only worked quartz lodes that hosted free gold, typically with grades in excess of 12 g/t.
Haloes of disseminated sulphide and refractory gold mineralisation could not be recovered by the oldtimers. However, said Blakemore, these haloes have produced significant volumes of ore since mining recommenced.
“Old records indicate 20-30% of the shoots mined historically had limited up and down-plunge extents.”
He said since the initiation of modern exploration in the 1980s 754 holes have been drilled in the goldfield. The majority of these are in the vicinity of Globe-Progress and are shallow in depth,
“As a result many geochemical-structural targets remain undrilled.”

[elZorro]

OGC has 40 staff working in brownfields and greenfields exploration around Reefton, up from just three, two years ago.

http://www.crownminerals.govt.nz/cms/news/2010/oceanagold2019s-big-exploration-push-at-reefton

[elZorro]

The OGC volume has been steadily picking up on the TSX. Are they buyers or sellers? Have a look at today's chart, not yet finished.

1.2 mill shares traded, but 640k of those were purchased in a short timeframe, with the price continuing to improve. My poor knowledge of TA is enough in this case. It's buying, parcels of over $1 million Canadian dollars each.

[Phaedrus]

elZorro, I fear that your enthusiasm for this stock has completely overwhelmed your objectivity!


The OGC volume has been steadily picking up on the TSX.Nah. Even with those 2 big trades, this was just another normal day of average volume.


Have a look at today's chart, not yet finished.1.2 mill shares traded, but 640k of those were purchased in a short timeframe....Are they buyers or sellers? It's buying, parcels of over $1 million Canadian dollars each.
'Fraid not. Look carefully at your chart and you will see that both of those large transactions forced the price down (the price bars are red) This is a big holder getting out. Selling.


(Intraday) the price continuing to improve. Nah. It was hitting obvious resistance at $3.54. I wonder if you are standing too close to the action and looking at too short a timeframe, eZ. Take a look at the chart below. OGC is in a very obvious downtrend that has run for 3 months, so far.

It's good that you are looking at volume though because this adds a lot of insight into market dynamics. See how volumes were above average and increasing as OGC was in a steep uptrend? That's bullish. See the Volume Climax in September? That's a blow-off top. A price/volume climax. A SELL signal. Note also the Double Top formation - you know that they are bearish. There was no need to draw a trendine to see that the magnificent uptrend had ended and it was time to get out.
See how todays high was lower than that of 5 days earlier. That's bearish. Note also the long upper shadow of today's candle. That's selling pressure.

Certainly today was an "up" day and OGC is in a short-term uptrend, but it would take a true zealot to see the overall situation as even remotely Bullish.
Is it possible that your boundless enthusiasm for OGC is misplaced?

http://i602.photobucket.com/albums/tt102/PhaedrusPB/OGCtse1215.gif

[elZorro]

Fair enough Phaedrus, I didn't notice the red colour this morning on the graph, that was a big error on my part. But surely you have to recognise the previous downtrend for what it is: simply dilution of the OGC shares. Its fundamental travel is still with the US PoG, now that the dilution has been accepted by the market. Part of the reason why there was no snapover in the OGC price when new shares were issued, is that management had no concise table on shares issued/due to be issued, and I think deliberately kept historically old data on the accessible part of the website. With the shares listed on three exchanges, they are all still catching up with the correct data, which was updated (finally) this week after I emailed head office about it.

So my contention is that if you are bullish on gold, then OGC should follow, from this point on.

[adamcz]

Im like elZorro, had a price I decided to exit at... and then got greedy and stayed in. Hopefully SP increases in the near term. Good to see that the price stayed steady today in all markets despite the fall in gold price. Although according to kitco this fall was predominatly due to USD strength.
Anyone know what development costs are paid in for Didipo (are payments going to be in USD?)

Hopefully they should be releasing a update to the Souvenir deposit in the next week. They mentioned that one would be due before year end (maybe xmas will come early!).

[Vtrader]

up 6 cps on TSX overnight
NZD equivalent $4.77

[mistymountain]

I'm still thinking bigger picture fundamentals and staying with a buy and hold stategy. I see the last 4 months of SP fluctuation being short term market revaluation based on share dilutions which is driven by a longer term company growth strategy. Resource upgrades and eventual Didiopio developments will put increased upward pressure on SP heading through 2011.

Patience methinks...

[elZorro]

Hello MM, you're probably right again. Overnight the TSX is going mad with OGC, latest equivalent price is NZ$4.93, a 4% increase today. Volume may be a bit higher than normal.
Apart from observing this, I cannot explain it, as the PoG has dropped a bit in the last 2 days. So is the market aware of something we aren't? I do note that the TSX has not updated the number of shares on issue figure yet, which could have a sudden 5% downward effect, or no effect at all, if it's already factored in.

[Vtrader]

Uptrend appears to be still on EZ
A defined downtrend break on NZX, low volume and therefore poor chart resolution.
Next few days will be interesting, especially with the christmas period approaching fast.
A bit off topic but...
Have you been into shops in Hamilton recently? madness. Apparently not reflected in other regions, but in Hamilton cow town it appears that the Fonterra payout is assisting Xmas retail...
V.

[elZorro]

Uptrend appears to be still on EZ
A defined downtrend break on NZX, low volume and therefore poor chart resolution.
Next few days will be interesting, especially with the christmas period approaching fast.
A bit off topic but...
Have you been into shops in Hamilton recently? madness. Apparently not reflected in other regions, but in Hamilton cow town it appears that the Fonterra payout is assisting Xmas retail...
V.

VTrader, I'm not too good at shopping, a bit like my shares, I don't always get a bargain. I have been flat out at work supplying goods to the rural sector, amongst others. Her indoors tells me the shopping outside the central area is busy, still OK later at night.

Here's the trading from the TSX for Friday. It's bigger than it was the day before. Possibly not a huge day, but fairly big, considering there were no indexes needing to add shares. I don't want to get told off for being inaccurate, you understand ;)

It does look like a big trader(s) had some fun from about lunchtime, buying up the shares with no news on offer, and then sold at a profit towards the end of the day, leaving OGC higher.

OGC is trading at about a 20% discount on the old EZ equation, at close of trade. At least it's renewed interest in the share. Have a look at this post from Stockhouse. But don't pay too much attention to bloggers, remember..



Griffen1:
I listened to the OB Research presentation that OGC made. I've thought that OGC would make a good takeover target. They have large reserves, steady production and nice opportunities in the Philippines. But they seem complacent with high costs. In the presentation their Chairman confirmed that they were nervous about being a target and were taking steps (?) to deal with it. Perhaps one of those steps was all the stock they dumped on the market this year. The irony was that the end of the same presentation shows 2 slides indicating the low valuation for the company. EV/EBITDA and EV/M&I. If I was an M&A clown, those 2 slides would draw me like a moth to a flame.

[elZorro]

VTrader and other OGC holders, I don't know about your thoughts, but this could be one of those rare trading moments that we should cherish as FA supporters. :t_up:



Mr P: I wonder if you are standing too close to the action and looking at too short a timeframe, eZ. Take a look at the chart below. OGC is in a very obvious downtrend that has run for 3 months, so far.



So yes, tomorrow may be a different day, but just for a short moment in time (oh so sweet), following the trends on a graph with TA didn't seem to provide the answers for the few days ahead ;)

Mind you, I've no idea why it's behaving as it is. Anyone the wiser?

[adamcz]

Im guessing either expectations of a nice upgrade in M&I or realisation that the December quarter should have before tax profits of $30m (have assumed that average price is around $150 more than prior quarter with production around 70k oz with all costs around the same).

Im just glad I stayed in and didn't sell up. i'm hoping for a new high before the year is out
:)

[adamcz]

Apparently Goldman Sachs Oz have initiated a recommendation today as a buy.

[Vtrader]

I count EWT 1-2-3, where a pessimist may extrapolate 4-5=NZD$5.20 or thereabouts.
Spot price of gold has completed a fairly robust 12345ABC, and has potential for another motive cycle upwards.
Should POG increase, then extended waves are possible thus terminating in a much higher OGC price for this motive cycle.

NB:
Vtrader and FA have not become friends yet, but perhaps it is time I explored a little.
FA / TA / this ride has been an EA for me, emotional analysis, and I have learned some interesting facts that are not at all relevant to this OGC thread.

[elZorro]

Cheers Adamcz. OGC still on the move up on the TSX overnight. It hit $3.90, but some red bars after big sales imply there are traders working there. VT: even Mr P does some FA analysis, and that is interesting for this situation. I don't have any reason for the sudden take-off of OGC. It's now at a much lower discount to the old EZ equation, and no press releases. I don't think the reserves table will be updated this side of Christmas. The gold price is moving sideways. There are lots of retail investors who will be happy to see this price rise, let's hope we don't come a gutser before Christmas.

Chart of OGC to US$gold: (http://www.infomine.com/ChartsAndData/ChartBuilder.aspx?gf=110575.USD.oz|112355.CAD.&df=20100514&dt=20100814) a bit old but OGC showing some gains there.

[adamcz]

I wasn't expecting one either but from the Reefton update:

At the Souvenir deposit, an infill and extension drill program was completed with significant mineralised intercepts (including RRC0088: 17.3 metres @ 11.98g/t Au and RRC0117: 13.2 metres @ 5.50g/t Au). This confirmed further down-dip continuation of mineralisation. An expanded pit shell and reserve is anticipated by year end.

Thought that would mean by 31 December we would get an upgraded reserve on the souvenir deposit.

[elZorro]

I wasn't expecting one either but from the Reefton update:

At the Souvenir deposit, an infill and extension drill program was completed with significant mineralised intercepts (including RRC0088: 17.3 metres @ 11.98g/t Au and RRC0117: 13.2 metres @ 5.50g/t Au). This confirmed further down-dip continuation of mineralisation. An expanded pit shell and reserve is anticipated by year end.

Thought that would mean by 31 December we would get an upgraded reserve on the souvenir deposit.

I emailed head office recently and obtained this reply about the reserves table:



The resources/reserves table is updated yearly following notification to the stock exchange. The next update will be reported in January / February which is the same timeline the company has been following for a number of years.

Regards,




Darren Klinck
Vice President, Corporate and Investor Relations




I was asking if they could update the table more regularly, doesn't look like that is on the cards.