OceanaGold Corp (OGC) 2017 Q2 法說會逐字稿

Good morning, or good afternoon, ladies and gentlemen, and welcome to the OceanaGold 2017 second quarter results webcast and conference call. (Operator Instructions) This call is being recorded on July 27, at 5:30 p.m. Eastern Standard Time. I would now like to turn the conference over to Jeffrey Sansom. Please go ahead.

Hello, everybody, and welcome to the OceanaGold Second Quarter 2017 financial and operating results call and webcast. Thanks for joining us today. My name is Jeffrey Sansom from the Investor Relations team at OceanaGold. On the call with me today in Melbourne are Mick Wilkes, President and CEO; I'd like to introduce Scott McQueen, Chief Financial Officer; we have Michael Holmes, Chief Operating Officer; and Edward Sit Woon, Corporate Controller. In Toronto, we have Sam Pazuki, Vice President of Investor Relations. Before we proceed, note that all references in this presentation that you're about to hear adhere to international financial reporting standards, and all financial figures are denominated in US dollars, unless otherwise stated. Also note that the presentation contains forward-looking statements which by their very nature, are subject to some degree of uncertainty. I'll now hand it over to Mick Wilkes, to begin the presentation.

Thanks, Jeff, and welcome, everybody, to our second quarter webcast. Happy to have you with us. I'll start on Page 3 with the summary of our results. Looking at production first of all, a steady quarter, 125,000 ounces and 272,000 ounces for the first half, putting us on track to achieve our guidance for the full year. Sales were stronger on the back of some increased drawdown of inventories of concentrate sales in the Philippines in particular. Copper production and sales were both strong, with first half having produced in total around about 10,000 tonnes of copper. And of course, all-in sustaining cost is good year to date, about $600 per ounce, putting us in line and on track for our full year guidance. Group revenue is $333 million, a decent gold price of $1,244 and an improved price of $257, and the net profit for the half year is $61 million after extraordinary items, so a $25 million profit in the second quarter. Turning on to page #4. And just to highlight the continued strong performance of the company in terms of financial metrics. Our EBITDA for the first half in terms of margin is almost 56%. Our earnings per share adjusted for abnormal items like impairment is $0.13 per share and a cash flow before per share of $0.28. And for the quarter, similar figures, a little bit lower than the second -- the first quarter. Our EBITDA is at 50% margins and adjusted earnings per share of $0.04 per share.

So as a result of those strong financial metrics, we continue to have strong return on invested capital. We are one of the few companies that's delivered that strong return on invested capital consistently over the past 7 years and that continues this year. The Haile optimization study, we did talk about this in depth when we had our Investor Day about a month ago, and it did demonstrate the strong economics of the project and the long-term economics of the project in particular. The reserves increased by 70%, up to 3.5 million ounces. And if you include the economic inferred resources within the mine plan, you get a 4 million ounce mining inventory, giving it an 18-year mine life with an average annual production of around 190,000 ounces per annum. It's significantly higher, well 60,000 ounces higher in fact, higher than the previous 43-101 reports. So of course, we've done at a lower gold price of $950 but nonetheless, the demonstration of the true economics of this project is now being revealed and with very strong cash flows emanating from the project based on a $1,300 gold price before tax cash flows of $1.8 billion.

Moving on to the topic of Haile and commissioning. Obviously, we put a lot of effort and time into rectifying the commissioning issues that we've highlighted which started occurring early in the second quarter. The mills have now been reconfigured with different grades and the distribution of load between the SAG mill and the bore mills is now being corrected, so we've got increased load in the bore mills and we're getting higher throughput rates. And importantly, we're getting stable, consistent throughputs in the last couple of weeks. Also complete is the putting the fine grind circuits into closed circuits. This is an important step to increase the load on the fine grinding mills to make them essentially work hard and as a result, have been successful in reducing the grind side down to the targeted range of 15 microns to 20 microns. So that's a very good news for us and we certainly keep monitoring that over the next weeks and months. The CIL piping system, this is the one that's where they're transferring the slurry from one tank to the other in CIL circuits. We did have a short-circuiting problem, quite a significant one in the second quarter as we've ramped up the throughput. We'll be getting slurry and short circuiting straight to the tailings, that's now largely been corrected. We have installed two launders, new launders which eliminate that short circuiting risk on two of the tanks. We will install another three over the coming weeks when we do our next shutdown. And we do expect that to be finished in the end of the -- by the end of August. The tank liners that delaminated a couple of months after we started up have all been -- the tanks have all been stripped and so there is -- there's no interference to the day-to-day operation of the CIL circuit because of these liners. We have -- we plan to recommence the lining of those tanks in the near future. I will make a point though, that these liners are therefore, the long-term protection of the tanks. And if you didn't have the liners in the tanks then you could easily expect them tanks to last 5 or 6 years without much risk at all.

So this is something that we intended to -- that we decided to do at the -- during construction. We still want to get it done and out of the way. We don't expect it will have a material impact on recovery as we take one tank off at a time throughout the rest of this year. And the control systems, we have done some improvements to the control systems to reduce response times and improve the operability of the process plant. We've made some significant progress there and that work will continue over the next months, throughout this year and into next year as well, but that is improving as well. On the subject of commercial production, we are ticking all the boxes, we just want to demonstrate the ability in the circuit and then be confident with the ongoing forecast for production in the plant. Now moving on to Page #7 and just some statistics there. Lower results of course, in quarter 2. You can see by the graph, the ramp up profile on Page 7 where the things started to go adrift in months 5 and 6. And now in month 7, we're on track to -- that being July to bring that back up again. The ore mine, comfortably feeding ore to the mills, we do have two pits operable and therefore, two sources of ore, so we can mix and match the ore feed to the mill. Waste mine which is in line with plan, the mill feed of 409,000 tonnes, of course, if you annualized that, it's at 1.6 million tonnes, slightly below the 80% target but that's on the -- we were looking for improved throughput in the plant beyond that. Head grade is expected year-to-date around 2.25 grams per tonne and slightly lower head grade in the second quarter. And recoveries is where we have underperformed in the second quarter as a result of the issues that I have talked about already, and we do expect those to rebound significantly in the third quarter and beyond. So I'll stop there and I'm obviously happy to take questions about Haile and other things at the end. I'll now hand over to Michael Holmes, our COO, to give you his presentation on safety and operating issues.

Thank you, Mick. Good morning and good afternoon, everybody. If we have a look at Slide 8, I'll talk to you about the safety and health. We are continuing and increasing our focus and engagement on health and safety in the organization by implementing a leadership safety behavioral program and a workforce safety behavioral program that has been developed this year. The leadership safety program is named the Gold Standard program, and this focuses on visible self leadership. As our leaders complete tasks such as attendance to pre-start meetings and completion of activities like stop and think task observations and hazard identifications in the field. There is also a renewed component to ensure that the job hazard analysis and the job safety analysis are completed to the required standards. The Gold Standard has been rolled out to the superintendent leadership level and above. And that includes ex [Gold] members and the board, and the board recently completed their Gold Standard activity during their site visit to Haile. The workforce safety behavioral program is based on the workforce and the opinion leaders within the workforce deciding to make the right decisions about safety in the workplace by the safety behaviors that they select and commit to. This program has been implemented at Waihi and Macraes and will be rolled out in Didipio this quarter and in Haile towards the end of the year and into next year. We're also focused on the quality of our investigations and the learnings from these with the dissemination and implementation of the corrective and preventative actions and learnings across the business.

As the graph in the bottom of the page shows, we made some great achievements in the total recordable entry frequency late indicators since 2011. With the trend unfortunately reversing in 2016 which is of great concern, we are currently tracking a total recordable injury frequency rate of 3.74 for the half year, down from 3.99 for 2016, with some further improvements to go from the proactive approach being implemented. Turning to Slide #9. As previously mentioned, we're extremely proud of the work we are completing with our communities and stakeholders in our operations, and the company's environmental, social and governmental performance. We remain strongly committed in this area and it remains an integral pillar of our company. In this slide, we've detailed only a few relatively small portion of the work that is being completed at all our sites. However, highlighting a few of the comments is the ongoing rehabilitation at all our sites and in New Zealand we are currently at greater than 740 hectares of rehabilitation. We are very proud to talk about our programs for the protection and restoration of significant cultural sites like the [Gaytans] cottage in Macraes which demonstrates the historical living conditions of the Chinese immigrants that came to the area for mining. We continue to have a strong community support which is reinforced in our yearly community surveys as well as the recent support in the consenting of the new Coronation North open pit which commenced mining in April in Macraes.

In Didipio, we still benefit from strong local and regional support and it just opened and handed over the new Eastern Nueva Vizcaya High School which was built in Didipio and can support up to approximately 600 students. This compliments the president's kindergarten to Grade 12, K to 12 program, as Didipio now has the facility to teach years 11 and 12 students. Previously, the children who wanted their education past G10 had to leave town to get further education. We've also commenced construction of the family health center and a water system within the community as well. On June 22, we had the official opening of the Haile Gold Mine which is an exciting event, attended by employees at our community and local, regional and state government officials. And at Haile, like our other sites, we continue to be focused on local employment and procurement. Moving to slide -- the next slide, Slide 10, looking at Didipio as an overview. Didipio's production was in line with expectations in the recently updated guidance, with the gold produced for the quarter at 42,900 ounces, and for the first half at 105,647 ounces. And copper production at 4,322 tonnes and for the first half, at 10,277 tonnes. Didipio's production decrease quarter-on-quarter was as expected and previously forecast and on the back of the lower head grade in ore fee. At the end of May, we completed the mining from the open point. And after that point, we supplement the mill feed with medium and low-grade material from the stock piles. The all-in sustaining cost for the second quarter was at $147 per ounce for the first half at $15 per ounce, again in line with expectations. So in Didipio, the first half the year will be stronger than the second half as we can commune here in the second half to process ore from the open pit stock piles which the stockpiles are around about $24 million tonnes of ore being stockpiled. And this will be at the lower grades of the ore stockpile, so we are guiding between for the second half, between 45,000 and 55,000 ounces of gold produced.

Moving on to Slide 11. At Didipio, the transition to underground continues to advance well, with the mining of the decline and the installation of the infrastructure. We have commissioned two surface extraction fans for the underground, with one currently in operation due to the ventilation requirements and the other to be put in use as we deepen the mine. The top pump station located on the services bench inside the pit which is going to be used for the life of mine underground dewatering system was also commissioned. We will continue to install the underground pump stations as we progress further down the mine. The ventilation riser is being installed in stages as we progress the vertical depth of the mine also. The decline which is the black line in the diagram is currently down to the 22 [AV] RL which is at the fill level which is the turquoise color between the green shaded blocks in the presentation on the Didipio underground sectional view. The pace plan is progressing well as shown in the photograph and that's for commissioning at the end of the year when the first ore is expected from underground. Recent further studies on the geotechnical considerations in the mine planning scheduling have progressed, with the new mine plan being developed by the end of the year. Turning to the next slide, Slide 12. At Waihi, we saw a steady quarter-on-quarter production with higher mill feed offset by the lower head grade from the mine. Additionally, the gold availability was higher in this quarter compared to the first quarter and the ounces produced for quarter 2 were similar to the ounces produced performance in quarter 1 at 25,560 ounces and 51,418 ounces for the first half. The all-in sustaining cost was higher in the second quarter due to the waste mine and the slightly higher New Zealand exchange rate. Looking ahead to the rest of year, we expect to operate with improved equipment availability. And having just recently transferred a redundant loader from Didipio to Waihi, and we also expect to mine from the high grade zones of the Correnso underground veins as well, Correnso mine. So as such, we expect the production to be slightly higher in the second half versus first half and the improved all-in sustaining cost in line with guidance.

Moving to Slide 13 for Macraes. As mentioned, we commenced the mining in Coronation North in the quarter, following the excellent community support through the consenting process. The production for the second quarter was slightly higher than the first quarter at 39,788 ounces and 78,328 ounces for the first half, with an all-in sustaining cost of $1,140 for the second quarter and $1,154 for the first half. Production in Macraes is expected to increase in the second half with the fourth quarter being the strongest quarter of production. The drivers for this increase is the inclusion of the high grade, higher grade ore from the Coronation North pit where we are currently focused on the pre-stripping of the overburden. We expect to mine ore toward the back end of the third quarter and we'll be ramping that up in the in the ore extraction format pit as the year progresses. I'd like to now hand over to Scott McQueen, the CFO, to go through the financial section. Thank you.

Thank you, Michael. Good morning and good afternoon to everybody. The next few slides will give a bit more detail on the financial results. Some of which were highlighted by Mick in the opening and certainly reflect the operational performance that Michael just outlined. Staying at the top line revenue, we had a first half revenue of just under $334 million, the Q2 revenue of $172 million, about a $10 million increase on Q1. The increase reflects about a 3% higher sales volume, largely drawn out of inventories as Mick mentioned, and a higher average gold price of around 3% across the quarter at $1,262 an ounce. In addition, we saw an increase in copper revenue based on the higher volumes and the drawdown of concentrates, 5,800 tonnes of copper sales, albeit at a weaker price despite current strength we've seen in recent weeks. The EBITDA line, we saw $186.4 million on the half as highlighted at the outset that's an extremely strong EBITDA margin of 56% (inaudible) margin. The quarter that translated to $85 million which is a bit of a step down on quarter one, that's quarter-on-quarter movement really reflects a couple of key factors.

And the second quarter included a higher proportion of New Zealand ounces in the sale which obviously, a higher cost material, plus as Michael mentioned, the completion of open pit mining in the first half of the second quarter was an end to our capitalization -- high capitalization costs at Didipio. We also saw a 30% quarter-on-quarter reduction in production while planned obviously increased the effective unit cost of production. We also, in the second half -- second quarter relative to quarter one, had an increase in G&A cost, mainly related to business taxes and employment taxes in the Philippines, the timing of some corporate IT projects and settlement in Q2 of all of the group's incentive programs. Q1 also was boosted slightly by a $5.6 million one-time gain on sale of marketable securities. The net profit line, obviously $61.4 million as stated at the half. The same drivers really quarter-on-quarter had an influence at the EBITDA line as they did at the net profit line. We saw higher G&A cost which is really just a reflection of the higher cost of goods sold, the G&A portion being released there as we start to draw down inventories particularly in the Philippines. Turning to Slide 15, with more information on cash flow. As you would expect with the EBITDA margins we've seen, a very strong operating cash flow with $141 million approximately on the quarter. The increase quarter-on-quarter obviously reflects the higher revenue with more significantly quarter-on-quarter positive working capital movements, again reflecting the drawdown in inventories sensibly concentrate to Didipio but also the commencement of drawdown of ore stocks.

And it's worth highlighting at this point that as Michael said, we've got 24 million tonnes of ore stocks. We will be commencing -- well, we have started commencing the drawdown of Didipio, that's $213 million that we spent previously, that we will now see while that will be released through the profit and loss account in cash flow, so that's definitely a trend we've seen moving forward with that money spent, and we'll get the positive cash flow benefits of that moving forward we will face through Didipio. We also had lower income tax payments in Q2 in New Zealand, with Q1 settlement of last year's tax results and we have a current situation where we won't be paying any installment this year, so that's a timing benefit. We'll see that reverse early next year. On the investing cash flow front, we spent $137.6 million. Quarter-on-quarter, it looks like we've actually stepped it up, but in quarter one included a benefit of $6.6 million on the same sale of equitable marketable securities I mentioned before. So actually, it was a very close like-for-like process, $72 million in the quarter. I guess the difference between the two is where we spent the money.

The quarter 2, a little bit less at Haile after capitalization and revenue certainly, and the increase as we continue the underground development, and we'll talk a little bit more about that on the next slide, delve in the capital in a bit more detail. The financing cash flow, pretty flat across the half. Quarter one, we drew down on our facilities of about $12 million. Whereas in quarter two, we had no further drawn down at our facilities. And $6.6 million negative there really reflects the payment of the dividend. No net change announced debt was (inaudible) drawn debt.

Turning to Slide 16, CapEx. This is a bit of a busy slide. And starting on the top left, essentially we've got the graph there that shows you the total H1 spend by location, if you like. Obviously, weighted towards the development situated at Haile and the underground at Didipio. The dark blue, although Didipio did include some material costs related -- planned material costs related to lift works there, not 100% underground. Moving across to the middle one, that's the same number obviously, and it really breaks it down by nature, with $95 million being non-sustaining, principally again Haile and Didipio underground. $35 million is sustaining and $13 million of nonsustaining. Below that, we take that $35 million of sustaining capital. In the bottom left there, we break that down a bit further, a bit more flavor on that. Biggest area of that spend is related to Macraes. The bulk of that or at least 1/3 of that being pre-stripped and other capital projects on site. Didipio was a bit less, obviously, $4 million and that was primarily road infrastructure works et cetera. And Waihi, $9 million was underground development capitalized mining costs principally. Moving to the right there, we break down the exploration, the $13 million exploration, just to give you an idea where it was mainly spent.

Certainly Haile and Waihi were the major focus as you would expect with the exploration activities there, but there was obviously some exploration around Haile and the projects we have under review at Macraes. Not too much happening in the Philippines as previously flagged. Just stated on the right there, we've got a breakdown of quarter 2. Just to give you a little bit more detail on that, as you can see, it's $72 million. It's about half of our spend, so quarter-on-quarter, it was pretty flat. Unsurprisingly, the highest numbers there again, relate to Didipio and Haile, with Didipio being the major consumer that quarter. Turning to Slide 17, shows our net liquidity position, a bit higher than it was last quarter. It's now at $127 million, very healthy $82 million in cash. Doesn't include the $72 million of marketable securities that we have at our disposal. We have $45 million of undrawn facilities, that means we have $285 million actually drawn, the same as we did last quarter. As I said previously, no further drawdowns across the quarter. Our total debt's sitting at $330 million, including $45 million for the equipment in the field. Our net debt position is $248 million which is a very comfortable net debt to asset ratio at 30%. A very strong position being at the half but some commissioning issues at Haile.

And with that, I'll turn it back to Mick to wrap up.

Thanks, Scott. Let's move on to Slide #18. And the point I wanted to emphasize here is as a company, our vision and our strategy is very much with a long-term focus and the decisions that we've made over the years have been based on investing in long life, low-cost assets and nothing has changed there. The EBITDA margins and the return on invested capital that we have achieved over the last five years have been demonstrated through the performance of the share price. So clearly, our strategy and our objectives have been yielding benefits. So we are a company that has a long-term focus and we are very much a company that's focused on returns to its shareholders and return on invested capital. So the year ahead, our focus is clearly on continuing to create value and delivering on our commitments. Our production in the second half of the year will be stronger than the first half on the back of higher production in New Zealand and Haile. And Didipio as we've said many times, we expect it to decrease in the second half. The development we will complete commissioning in the Haile process over the next few months and the expansion of Haile, the permitting of the expansion of Haile, we expect to commence by year-end. Similarly, we will complete the development of the first phase of the underground mine at Didipio in time for first ore from the underground at the end of this year which will see production levels start to rise again. Our exploration is continuing very well. We have strong results and progress at our Waihi mine. We have good drilling results coming out of Haile, and we continue to see opportunities for further exploration in other regions. And one of those is the commencement of a joint venture in Argentina. And so with that, I'd like to hand back to Jeffrey to wrap it up.

Thanks, Mick. At this time, we'll open the lines to take questions. For those of you who are seeking to ask questions, we'll be taking questions by phone only. We'll now pause for a few moments while we wait for calls to queue, and I'll turn the call back over to the operator to assist with facilitating this process.

(Operator Instructions) Your first question comes from Michael Gray from Macquarie.

A couple of questions on Haile and one on Macraes. At Haile, regarding the reduction at head grade, can you give us some color on what the main driver of this was? Was it related to differing grade itself, recoveries improved?

Yes, it's a combination of both, Michael. It's where we are in the pit and also what not wanting to throw good grade out to [sales]. So we are being -- we're not pushing the head grade just to produce gold, we're focused on the stability of the plant.

Okay. And are you happy with the block model grade reconciliation at this point or is that still a work in progress?

Well, we've only just started mining and as you well know, we need to get a large enough portion of ore mined through the mill before we can start to make some definitive comments about reconciliation. But we have -- we are confident in the model at this point in time.

And just shifting to the mill performance. Subsequent to starting up in Q2, it really improved both for throughput and recoveries based on the MD&A. Can you provide a little bit more color on the recent performance and expectations for Q3?

I'd rather not make any promises on that, Michael, other than to say we have seen improved recovery and stability in the process plant which will lead to increases in throughput.

Okay, fair enough. How about a breakdown in terms of oxide transition and sulfide feed in the second half of the year?

Well, we don't -- we're not treating any oxide at the moment and we don't plan to treat that in a material way throughout the rest of the year. Really here just focused on the (inaudible) itself on ores.

And final question, just on Macraes. Are you able to get a little bit more color on the grade profile in the second half of the year with the high grade coming in from Coronation North?

Well, I think you can back-calculate [itself], we have a -- we're looking to produce around 90,000 to 110,000 ounces of gold in the second half of the year. And so the mill's throughput is still the same at about 5.8 million or 2.9 million tonnes for the half year, so -- and the recoveries would be 82%. So I couldn't tell you exactly what that grade works out to be. But we have stated previously in previous presentations, that the Coronation North ore body is some 40% higher grade than what we've been mining so far. So it's in that kind of 1.4 gram range which we'll start to see in the fourth quarter.

Your next question comes from Michael Slifirski from Crédit Suisse.

Obviously, I think part of one of my questions was just answered there in your suggestion at Macraes recovery in the second half would be about 82%. So I guess the question underlying, that was the 80% in the half versus the 83% I think previously, and the comment about carbonates as ore being the issue. Does that relate to a specific pit or depth? Was it a surprise? Is it sort of pervasive than you've thought or is Coronation clear? Just trying to understand whether it's a metallurgical challenge that you'll overcome or just a spot in a pit. Any color around that would be useful, please.

Michael, I'd just ask Michael Holmes to comment on that level of detail.

Yes, thanks, Mick. Yes, so far it was basically we took an opportunity to treat some oxide material through the quarter. And that had a -- it was a high grade material that was treated but it had an impact on the overall recovery. We're blending it in and we'll -- at reduced rates, of course and it's -- so it was just really -- it was really an opportunistic while we still a bit of mill capacity to treat some high-grade oxide material. So we're not seeing that and we don't believe we'll see that in the Coronation or most of the primary pit material.

Secondly, with respect to Didipio and throughput. I think in the past, you've talked about a license terms I think of 3.5 million tonnes. You've done a fair portion of that in the first half, you talk about maintenance later. So are you still up against that 3.5 million tonne constraint for this year or has there been some movement on the license that might allay to do a little bit better?

So the license, the 3.5 million license is still in play. We're going through the process now of reviewing that. We've done all of the work to allow all the required pre-work to have that license amended. Now with the new Secretary, we're just basically waiting for the right time to reapproach the new secretary with regards to the request. So I think we're forecasting that it's going to be 3.5 continuing for this year. But if there's an opportunity and the right window opens, we will certainly put that in front of them.

And then finally, with respect to the comments on Haile about wanting to demonstrate stability before declaring commercial production. Is there anything in the work program ahead of you that has to be completed that would enable you to demonstrate stability? So when we look at what you've achieved, it sounds like a lot of what you hope to achieve in terms of mill grades overcoming the short-circuiting and so on has been largely completed. So how do we assess when you're going to get close to commercial production?

Michael, I think it's a sense of stability and continued consistent performance in the mill. We do want to demonstrate 80% throughput in the mill that can be consistently achieved. We didn't want to see recoveries at or near expected rates. So if we can deliver that performance over the next couple of months -- couple of weeks, I should say, then we'll be in a position to make that decision.

And just one sort of little semantic thing around wording. In the quarterly, under how you talk about mill feed for the quarter being 490,000 tonnes lower than expected. So that's mill throughput rather than mill feed. There's plenty of feed available, but it's throughput.

Yes, sorry. 490,000 tonnes for the quarter, not tonnes per annum.

Your next question comes from Geordie Mark from Haywood Securities.

Just a few questions to follow on from the two Michaels. On Haile, can you remind me what grain size you're down to now? Is it currently the 18 or 15 microns?

Well, we're in the of 15 to 20 microns, Geordie, and that (inaudible).

And on that Slide 7, you had the forecast ramp up for throughput on a monthly basis. On that next forecast for the second half of the year, you don't want to sort of pin any sort of forecasts on gold recoveries, do you, in relationship to that throughput increase?

Well look, recoveries expected this year to be around 80%, and we're expecting that sort of numbers in the second half [of the year].

And maybe just moving over to Didipio quickly. Can you remind me of the lag time between provisional pricing through proper concentrate sales and pricing and then the final adjustments and how we can expect that to move on given what we've seen in terms of that commodity price movement recently versus when those concentrate sales may have been put to sea?

Yes. We're subject to current prices effectively, Geordie. We do have a contract which stipulates that the buyer which is [Trapagora] has the option to choose either a three number or a one marked number pricing period. And I think this year, it's -- sorry?

(inaudible)

Sorry, it's one month this year. So there's not much exposure there and we're basically exposed to current prices.

And for Didipio in terms of how should we deal with the rehandling costs just for this half of the year coming through?

You mean the cost to rehandle the stock piles?.

Yes, what are we looking at there?

Michael, can you answer that question? If not, we can get back to you with that detail, Geordie. It's a dollar per tonne fee, but I couldn't tell you what it is.

Right, okay. And just one last one, sorry. You say that sort of a range was ore grade for the stockpiles for Didipio this half of the year. Any sort of forecast for the range for copper grades as well?

Similar to what they are at the moment. Our guidance for the full year is 18,000 to 19,000 tonnes of copper. Obviously impacted by lower throughput at the end of the year, but we do see a fairly consistent copper grade through the ore, even with lower gold grade. So I can't remember what the exact head grade of the copper reads. (inaudible) it's being around that 4% to 5% mark.

A bit higher but yes.

Your next question comes from Chris Thompson from Raymond James.

Just one of my questions has just been answered but just a quick question on Waihi. You mentioned that back half of the year, it's going to be higher production. Is that going to be entirely driven on grade or can we expect the mill throughput to step up a little?

No, it's generally driven by the grade so the way the mining method of the ore body is basically you have to go the extremities in the lowest points in mining. So you're actually mining lower grade portions at those extremities. And so we'll see as we're mining in the second half year, coming into sort of the high grade portion of the Correnso mine. But again, I suppose the throughput should be improved a bit with improved equipment availability and hence, the reason we got the redundant loader down from the Didipio to ensure that all the -- that will be the case.

(Operator Instructions) Your next question comes from Jeff Killeen from CIBC.

So I wanted to rewind a bit to Haile again, just thinking about the performance you've seen over the course of this month. Mick, without any specifics, would you be able to say that week on week, you've seen a consistent track higher in terms of throughput, in terms of grade and in terms of recoveries?

We're not talking many weeks here, Jeff. We just finished the reconfiguration of the mills and we've only just put the first two launders in the (inaudible) tank. So, yes -- and we've only just finished the closed circuiting of the (inaudible) grade circuit. So the signs are positive but I will stop short of saying that we've seen a trend.

Okay, very well. And then, thinking again, coming back to commercial production, you had mentioned what you're really looking for. I think you had outlined six criteria in the MD&A that you had to meet in order to get to that point. Would you be able to tell us what of those six that has been reached?

So as you said, we reported in the second quarter our recoveries are well below where we expected and I want to see that back up and the stability in the plants should allow us to achieve that. Costs are in line with expectations on the cost per tonne and mining costs and processing costs, et cetera. And grades in line with expectations. What we need to see is consistent, stable performance and therefore, consistent recoveries.

Okay, very well. And has that passover from the commissions team to the operation team happened yet?

Well, the operations group do have control of the plant. There are commissioning people still involved, assisting in that process. Construction people are still making the modifications necessary.

Okay, fair. Switching to Didipio. You had commented that there was a slight drop in throughput in the quarter. Some of that was due to harder ores, is that an impact coming from starting to process stockpile?

Yes, some of the stockpile, the lower rate stockpile is from the harder portions of the pit. So that will just be consistent as we go through in some of the sections. And as we start the underground, we'll be getting the (inaudible) type material. But generally yes, the grade profile with the lower grade material isn't some of the harder material that we have.

Okay and thinking about depreciation it being quite a bit higher in Q2 now that the pit is wound up. Would we start to see that decline going through the back half of the year? Or do you think that it still could be elevated relative to say Q4 or Q1 of this year?

Scott, can you answer that, please?

Yes, I'd expect it to be relatively stable for the sum for the year as we draw the ore through the stockpile.

Okay, great. And then lastly for me, just around Waihi. You noted that you had in a number of public consultations. Can you give us any insight on how those went? Were there any specific items that are being brought forward by the local community?

Well, we're not in a position to talk about those discussions yet but other than to say that everything's tracking to plan, Jeff. And we are confident that we'd be able to start the permitting process for the markup project at the end of this year.

Okay, apologies, one more for me. Then just switching to the Philippines again. I noticed that you're still going forward with the legal process in regards to the previous suspension order around Didipio. How do you see that situation unfolding or is it still a little opaque at this point? Do you think that you need to go through the final strokes of that legal process? Or is that something yet to be determined?

Well, we definitely have to continue that legal process because we still obviously want that suspension order that was issued under the authority of the DENR secretary at the time, so that process has to continue. But it's important to understand the politics of it, is that the President -- sorry, the new DENR secretary and the cabinet will make sure that there is no political sort of blowback on the President as a result of any decisions they make from here on. So we are very confident in our case. We know we have the support of the government in terms of following the proper due process, and I think it is just a case of being patient and let the government go through their processes.

Your next question comes from Tim [Moktaiv] private investor.

There are no further questions at this time. Please proceed.

That concludes the presentation for today. So on behalf of the team at OceanaGold, I'd like to thank you for your interest and participation. And should you have any further questions, please don't hesitate to contact any of us. Thanks.

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