Oceana Gold's share price has slumped almost to its year-low, highlighting its predicament in drumming up further funding for its stalled $430 million Didipio gold and copper mine in the northern Philippines.
While its New Zealand operations in East Otago and the West Coast continue to operate strongly and remain on track to deliver up to a record 300,000 ounces this year, Oceana is still seeking to raise $US185 million ($NZ244 million) to continue with Didipio, the development of which was suspended in late-June.
Triple-listed Oceana's share price has been as high as $A4.35 and as low as $A1.07 in the past year, and yesterday was trading around $1.10.
ABN Amro Craigs broker Peter McIntyre said it was unlikely shareholders would want to provide more funding and the global credit crunch was placing wide-ranging constraints on refinancing across the entire resources sector in Australia and New Zealand.
Where once there were dozens of mining company floats in Australia, it was now at a trickle as risk-averse investors sought safer havens from shaken world sharemarkets.
Oceana confirmed earlier in the week it was in negotiations with unnamed parties considering funding options, which could include a merger or joint venture.
"New Zealand operations have been performing strongly . . . but there's not a lot of [investment] cash out there.
Didipio could one day be a cash cow, but that could be up to five years away," Mr McIntyre said.
A cashless merger with Sydney-based Climax in 2006, which gave it the Philippines development project, propelled Oceana into the lower end of the major mining tier with a market capitalisation of more than $A500 million.
"Not a lot has gone right for them since then; the political risk [in the Philippines], the cost blowout in May from $US155 million to $US320 million, inflation, taxes and currency swings," Mr McIntyre said.
With its share price slump, Oceana's market capitalisation is now around $A177 million and, (considering) the strong performance of its New Zealand assets, it could be considered "cheap" and subsequently "on the cards" for a takeover bid, Mr McIntyre said.
He noted, however, that all the major mining companies had their own funding issues in the present economic climate, and most were more likely to take a "wait and see" approach to eyeing up any play on Oceana.
"Right now [Oceana is] going to have to get over this funding hurdle to move on," he said.
In the short to medium term, a downturn in prices of commodities, such as oil and copper, appeared likely, and this would not necessarily assist Oceana, but in the long term commodity prices were looking good, Mr McIntyre said.
