Oceana Gold's new Didipio gold and copper mine, in the Philippines, will be a game-changer for the company, Forsyth Barr broker Peter Young says.
The Didipio project was close to completion and it was expected Oceana Gold, which operated the Macraes gold mine, would next month be processing ore that was now being mined.
"Not only does it add significantly to its gold production, but the copper by-products credits will push Oceana Gold down the cost curve, transforming it from a high-cost producer of gold to one of the lowest-cost producers."
Oceana Gold's full-year production guidance was for gold production of between 230,000 ounces and 250,000 ounces. With only 106,500 ounces produced in the first half, and indications third-quarter production had not lifted significantly, the company was under pressure to achieve the production guidance, Mr Young said.
The company was starting to mine the higher-grade ore at Macraes and it remained confident a "bumper" fourth-quarter production would see it reach the 230,000 ounce level.
Oceana Gold's share price had rallied more than 70% in the past two months.
"Despite that strength, we believe Oceana Gold is still trading around 35% below its peers."
Forsyth Barr had a buy on the company, with a valuation of $4.99 a share. The shares last traded at $3.88.
