OceanaGold declares Q4 div with 14% annualized yield

OceanaGold Philippines [OGP 16.00 ?3.0%; 213% avgVol] [link] declared a Q4 dividend of $0.01/share (equivalent to P0.58/share at the current exchange rate), payable on April 1 to shareholders of record as of March 6. Based on OGP’s pre-announcement share price of P16.50, which was near an all-time high for OGP, this dividend had an annualized yield of 14%. While OGP noted that it was able to “take advantage of today’s strong gold prices”, it also explained that Q4 gold production was 29% lower q/q (54% lower y/y) due to flooding caused by “multiple severe weather events impacting the site over an intense 20-day period” which caused flooding in the mine and power outages at the mill. OGP guided that it expects to produce 85 kilo ounces (koz) to 105 koz of gold in 2025. For reference, OGP produced 97 koz of gold in 2024 and 138.5 koz of gold in 2023.

MB BOTTOM-LINE:  I know there are quite a few traders who considered OGP to be very seasonal and who were skeptical of OGP’s ability to deliver dividends through the stormy “off-season”. I also know of another large group of traders who couldn’t care less about that and who were simply looking at the short/medium/long-term potential for the spot gold price. This dividend announcement has a little something for each of those groups. For the skeptics, it validates the concern that mining activities would be disrupted by weather. OGP lost a good chunk of Q4 to flooding (both from the rains and from the natural groundwater flows in/around the lower reaches of the mine), and it expects water management to potentially suppress mining activity for the coming year. For the gold bulls, the spot price of gold did better than even they could have expected, and the dip in production was “saved” by a massive uptick in the sale price per ounce. Add it all together and you got a dividend with an annualized yield well beyond anything achievable in the REIT space. This dividend’s annualized yield is nearly 17.5% for those who bought the stock at IPO, and it’s 18.7% for those who bought it in the days after the IPO when the price sagged. Sure, the annualized yield here is not 20.9% like it was back during the Q3 div, but 14% is still very good and not at all problematic from a price perspective. Are there risks? Of course! You see them now. Mining operations are directly impacted by severe weather, and sales are impacted by price. If you think the price of gold is headed for a dramatic fall or operations are at risk of severe disruption, then this price is probably still too high for you.