OceanaGold Corp (OGC) 2017 Q3 法說會逐字稿

Good morning and good afternoon, ladies and gentlemen, and welcome to the OceanaGold 2017 Third Quarter Results Webcast and Conference Call. (Operator Instructions) This call is being recorded on October 26, 5:00 p.m. Eastern Standard Time.

I would now like to turn the conference over to Jeffrey Sansom. Please go ahead.

Hello, everyone, and welcome to OceanaGold's third quarter 2017 financial and operating results call and webcast. Thank you for joining us today. My name's Jeffrey Sansom from the Investor Relations team at OceanaGold. On the call with me today in Melbourne office we have Mick Wilkes, President and CEO; Scott McQueen, Chief Financial Officer; and Michael Holmes, Chief Operating Officer. Also joining us is Edward Sit Woon, Corporate Controller. In Toronto we have Sam Pazuki, Vice President of Investor Relations.

Before we proceed, note that all references in the presentation that you're about to hear adhere to international financial reporting standards and all financial figures are denominated in U.S. 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 turn the presentation over to Mick Wilkes.

Thanks, Jeff, and good morning and good evening to everybody, and thank you for joining us on this very busy reporting day, particularly in North America.

So the results for Q3 for OceanaGold are higher gold production of 9% -- by 9% quarter on quarter due to increased production at Haile and at Waihi. And I'm very pleased to announce to the market that the Haile project is back on track and we've had a rebound in production from there, with stronger production in August and September, which is continuing. We have had lower revenue and profit due to the timing of sales, particularly out of Didipio and the continued capitalization of Haile.

We've put in place some additional hedging for our Macraes operation next year and we've also hedged our copper production, or at least 80% of our copper production, for 2018 at a healthy copper price. We declared the second semiannual dividend of $0.01 per share which will be payable in December, and we made further repayment of debt, almost $14 million, including $12 million from our revolving credit facility.

Very pleasingly, we report the results from the initial drilling beneath the pit at Waihi, the Martha Project, with 18 meters of almost 8 grams true width and 11 meters of 8 grams.

Moving on to Slide #4, and just a summary of results year to date and by the quarter. So 136,000 ounces produced; sales of 131,000 ounces; year to date, 408,000 ounces produced and 387,000 ounces sold. Copper production is going well, 4.5 -- 4,400 tonnes of copper produced in the quarter, and 14,660 tonnes for the year to date. So we're on track to achieve our production guidance for the full year of 550 to 600 with a stronger quarter in the fourth quarter. All-in sustaining costs for the quarter based on ounces sold of $748 per ounce and year to date of $644.

Production, as I mentioned, at Haile up strongly by 94% quarter on quarter. Didipio was down as expected because of the lower grade of the stockpile ore that's being milled at the moment after the completion of the open pit.

Waihi production was up strongly by about 10,000 ounces because of the better grades in the areas we're mining at the moment, and that production is expected to continue into the fourth quarter.

And Macraes was down slightly due to some -- due to technical issues in the open pit, but the production at Macraes will increase in the fourth quarter as expected with higher production coming out of Coronation North.

Then the financial results on Page #5 -- just a summary of those. Revenue of $145 million; EBITDA steady at $74 million; net profit $22 million, fairly consistent on a quarterly basis over the past year. And reasonable prices received for gold and copper. Strong margin -- EBITDA margin continues in the business, 54%. Earnings per share $0.14 per share for the quarter -- sorry, for the year to date, and $0.40 per share for the cash flow.

Moving on to Page #6, our safety performance -- you will note from our -- the lagging indicator, recordable injury frequency rate that we've had -- enjoyed a good success rate in improving our safety up until 2015, and we have seen some increase in the recordable injury rate since then, largely as a result of commencement of higher-risk construction programs at Haile and at the Didipio Underground.

We are working very hard to upskill the workforce in both of those construction projects -- sorry, both of those operations, and our safety standards continue to improve. We focus our operation to identify specific risks at each operation and the history of exposures to drive accountability. So there is a program called the Gold Standard for leadership which has been rolled out across the company, which endeavors to change the behaviors of our workforce and improve the safety culture across the site.

On Page 7, just some comments about our environmental and social governance (sic -- see slide 7, "environmental, social and governance"), or ESG performance. It does remain an integral part -- pillar of the company, and recently very pleased to announce the appointment of Sharon Flynn as the Executive Vice President, Head of External Affairs and Social Performance. Sharon joins us with a very strong CV in this area, having recently worked with Rio Tinto and in South America and in parts of Asia and with various NGO groups. So we welcome Sharon to the executive team.

We won another award in the Philippines. We're the recipient of the Philippine Chamber of Commerce and Industry for Excellence in Ecology and Economy Award -- the use of green technology, wastewater management and contribution to the preservation of natural resources.

In New Zealand we've commissioned a Social and Environmental Contribution report which highlights the benefits of mining in New Zealand, which are very significant, and of course we are the largest gold miner in New Zealand by some margin.

In the United States we're doing some very good stuff with the propagation of endangered species and contributing to the habitat preservation as per our requirements under the agreements in the U.S.

I'll now pass over to Michael Holmes, who will talk to you -- give you some more detail on the operations. Thanks, Michael.

Thank you, Mick. Good morning and good afternoon, everybody. So on Slide 8, talking about the Haile operations, as Mick has mentioned, the increased production on higher throughputs and recoveries and the ramp-up is going well, following the issues that were described in the last quarter and the resolution of those issues.

We're still working through the -- one of those remaining issues, which is the PLC control issues, which is not impacting the mine at the moment, and it's just a matter of reviewing and upgrading [those] over the period of the next year and a half.

The solid quarter 3 performance of 31,374 ounces produced -- you can see there the increased ore mined tonnes, waste mined tonnes -- a good sort of increase in the mill feed, and that continues into this month, as well as the boost of the head grade, and we'll be looking at improving on that head grade in the fourth quarter.

So the process plant ramp-up and fine-tuning, as I mentioned, is going really well, as well as the expectation for a better fourth quarter.

Going on to Slide 9, looking at the growth, still exploring around the Haile, focusing on the Ledbetter and the Mustang and the Snake areas and currently drilling the Mill Zone. So the 2 pits that we're currently mining at the moment is the Mill Zone Pit and the Snake Pit, and that exploration is advancing very well. That's getting rolled into, as well as the works and the studies, as we progress for the permitting application for submission, so looking forward to submitting that application.

Next slide, Slide 10, looking at Didipio. As Mick made mention, a bit of a softer quarter there, and that's based on the -- just the processing of the stockpile ore that we have. And so ounces produced of 31,887 for the gold and 4,387 tonnes of copper. We'll still be mining and processing from the stockpiles for the fourth quarter, with the grade sort of softening during that period.

So as mentioned, the pit has been finished in quarter 2. There were some cleanup costs of the bottom of the pit and their establishment of the watering process, which has been added in the cost of the quarter and therefore the year to date costs are a bit higher. But you see there that -- yes, no ore has -- or waste has been mined, and it's just a matter of feeding through the mill at the slightly lower grades.

On the next slide, Slide 11, Didipio Underground is still advancing exceptionally well and as per expectations. The decline is down to the 2662 RL as of the end of September, which is about 320 vertical meters beneath the surface. That's beyond, I suppose, the first panel, and we're mining and developing the decline into the second panel.

The infrastructure projects are progressing really well, with the surface batch plant being commissioned, the paste plant being 80% complete and tracking to plan, and that's a picture of the -- on the slide there, of the paste plant.

We're -- commenced the construction of the underground primary pump station at the 2270 RL, and that primary pump station there is being upgraded below pumping area to 450 liters per second, which is in line with the installed capacity that is higher in the mine, to handle the inflows of water as we mine the ore body.

So moving towards -- to the next slide, Slide 12. Waihi -- a very strong quarter there. Produced 35,904 ounces for the quarter, and that's on the back of some better grades coming out of the Correnso ore body and the sequencing of those -- of that ore body, and we believe that sequencing and the position should continue for quarter 4. So a steady and similar quarter for Waihi, still focusing on, I suppose, the mining and the mining costs and managing that, and the ore mined for the quarter was increased. Waste mined increased as well. And then the mill throughput and the grades, you can see there, all increased for the third quarter.

Exciting -- so the next slide, with regards to the Martha Project, has been mentioned. Some very exciting hits which we've mentioned, averaging about 8 grams per tonne and true width of between 11 and 18 meters. So that's coming out of the 800 drill drive, where we've set up 2 rigs to drill out of that drive, and then we'll commence continuing development of that drive further along, advancing along the strike length.

The 920 drill drive is continuing to be mined, and we are expected to drill from that RL in the fourth quarter. So some exceptionally encouraging results, and the program we have there is an 18-month to 24-month drill program to have a look at all those targets.

If we go to the next slide, Slide 14, Macraes -- so a bit of a softer Macraes quarter at 36,878 ounces. As Mick said, just a little bit of mine scheduling and plan difference with regards to some geotechnical issues with one of our pits, and just working through that as well as some weather-impacted delays. We will have an increased fourth quarter with the mining of Coronation.

So in the third quarter the sort of narrower mining from the FRIM and the startup mining at Coronation North was the reason for the reduced sort of mined ore tonnes. We will continue with the opening up of the Coronation ore body, and that's where the grade and the tonnes will come through on the fourth quarter. So an average grade of about 1.2 to 1.4 is expected out of the Coronation North with stronger recoveries. So overall, a solid third quarter and tracking to -- on a consolidated basis, to achieve our guidance for the year.

I'd now like to hand over to Scott McQueen, the CFO, who will go through the financial results.

Thank you, Michael, and good morning and good afternoon to everybody. And obviously, full details of the financial results have been included in the accounts in the -- a bit more detail in the MD&A released overnight, so we'll just cover the highlights over the next few slides, starting on Slide 15.

The revenue -- at first glance it looks somewhat concerning, but (technical difficulty) I'd characterize the quarter as relatively consistent quarter on quarter, and there's a bit of accounting noise, I guess you could say, in amongst the results this quarter, with the continued capitalization of Haile.

But the revenue line, you can see there on the right, and you recall from a prior slide that said sales were pretty much flat, slightly up on the quarter. Prices were relatively flat; a slight increase, but not material. So the changes you're seeing there in the revenue line is really the shift in ounces from Didipio across to Haile, where we've seen the improvement in Haile's performance, with all of those ounces being capitalized and not reported in the revenue line.

In addition to that, we were impacted late in the quarter with some timing of sales. We had a 5,500 ounce shipment of gold out of Didipio that was due right -- late in the month, that was delayed due to typhoon weather in the area; couldn't get the gold offsite, and so that also impacted our revenue slightly quarter on quarter. But adjusting for those, I would describe the revenue, relatively flat.

The EBITDA line continued strong performance, as Mick mentioned earlier. We're still above the 50% for the quarter. Obviously the lower revenue line does flow down on a gross quarter by quarter comparison. We've seen a slight pickup with lower overall G&A costs. That's going to be a continued focus moving forward for me, to keep control over our G&A costs, and we'll keep trying to drive those down.

And that net profit line -- again, the impact on revenue slides all the way down, but we did pick it back up, I guess, relative to the revenue line, with some lower D&A in this quarter relative to the last quarter. And you'll recall last quarter, those who were on the call, that we had slightly higher D&A associated with the wind-up of the open pit mining in the unwind of the pre-strip at Didipio. We've probably come back to a bit more normal sort of run rate now, this quarter, and that gave us a little bit of a boost relative quarter on quarter. But overall, I think steady results with a bit of noise around the accounting side.

Turning to Slide 16, similar results. You'll see a surprisingly low-looking operating cash flow that -- it obviously represents the same factors that I mentioned on the previous slide, that none of the operating cash flow or revenue from Haile appears in that line. It's all netted off in the investing line. So that's one major factor as why we appear to have a much lower operating cash flow quarter on quarter. We also had a fair movement in receivables.

As I mentioned, we had some inventory build at Didipio with the gold not getting offsite. We also across the quarter had a build in concentrate at Didipio. The timing -- we'll see that unwind in quarter 4. And in total, I think our receivables and payables had a net increase of $23 million across the quarter, so a fair bit of cash buildup there to unwind early in the fourth quarter.

And the investing cash flow -- a bit of a reduction quarter on quarter as we finished the major spend early in the year at Haile development. And obviously the major projects that we're still continuing on -- the Didipio underground project, and ongoing expansion in sustaining capital around the various sites, which we'll cover in more detail on the next slide.

The financing cash flow -- we repaid $12 million of debt in September. Subsequent to the quarter end results, we've also actually paid another $30 million off that debt this week. I'll mention that and I'll cover that a bit more in the next slide. And so overall, it's, I guess, a steady quarter, cash -- in total cash flow terms, with cash flow per share pretty flat across the quarter, when you adjust for all those accounting movements.

Turning to Slide 17, a busy slide showing various views of our CapEx. The top left doughnut chart shows the total spend by location. As you'd expect, the -- probably the major uses of our capital over the year to date have been Haile, the development and the continued expansion work going on there, plus the Didipio underground, plus some other projects there. But still a fair commitment to spend at both Macraes and Waihi, associated primarily with the life extensions that we've been talking about there.

Down on the left corner there is a bit more detail on the growth CapEx, $65 million year to date at Didipio. That includes the underground project, obviously, but there are some other fairly significant projects in there -- the overhead power line; we had some TSF work, lifts, in there as well.

The $50 million on Haile is -- it's really a bucket of a number of factors. Obviously, the completion of construction -- development construction in Q2. Subsequent to that, the continued commissioning period. We've been -- we've got an added revenue and OpEx capitalized into that number. We've also got capitalized into that number the ongoing growth projects and development and expansion projects that have been previously flagged, plus what will -- elements that will be reclassified as working capital, now that we've officially commenced commercial production.

And sustaining CapEx -- as you see, a fair bit at Macraes. That's primarily pre-strip and underground development, about $25 million of that $36 million, and some other major projects earlier in the year in particular with the autoclave upgrade, and we're running the equipment very hard at Macraes, so quite a bit of spend planned there around the rebuild of equipment over time.

At Didipio, $7 million year to date. That's a lot to do with our regional infrastructure program that we're committed to there, and helping development program -- social and environmental and community development there.

And Waihi, obviously quite a bit of money being spent there on infill drilling to continue to drill out around the current underground plan, plus some equipment we -- including a bogger, earlier in the year there at Didipio, going pretty much according to plan.

The exploration side, as consistent with the opportunities that have been mentioned throughout the year, quite a bit of a commitment at Waihi in regard to developing the 2 underground drill drives, and obviously seeing the good results of that effort now, and we've got a commitment there also which includes greenfields development and greenfields drilling around the WKP and other areas of the Coromandel.

In terms of Haile, that $7 million includes the underground drilling around the Palomino and Horseshoe areas within the site as well as some regional targets that have been identified.

Not a lot spent around the Didipio area year to date in terms of drilling.

And still a material amount of work being done at Macraes, with $5 million spent year to date, primarily around drilling out the opportunity to (inaudible) longer-term there also.

Turning to Slide 18, it's a summary of the cash positions at the end of the quarter, total liquidity sitting at $118 million after the -- after and including the $12 million repayment of debt. That's excluding the $70 million of marketable securities that we have, which we aim to keep as a strategic asset, that does offer a liquidity option if required. Undrawn facilities of $57 million gives us a total debt position of $273 million of drawn facilities and $43 million of equipment leases.

As I mentioned previously, subsequent to the end of the quarter we paid another $30 million off the debt as our cash position allowed us to, and that reduces our debt carrying costs obviously. The remaining $43 million will be settled towards late December and will be comfortably met through operating cash flows between now and then, and allow us to remain -- maintain a liquidity position at the end of the year that we believe is adequate for our requirements moving into 2018.

With that, I'll hand back to Mick to wrap up.

Thanks, Scott, and thanks, Michael. So ladies and gentlemen, just looking ahead and recapping on the quarter that was, we can expect a strong fourth quarter with increased production out of Haile and Macraes. With the continued ramp-up and a full quarter of production out of Haile, higher throughputs in better recoveries consistently through the quarter, we can expect strong production out of Haile in the fourth quarter. And with Macraes, of course, we mentioned the Coronation North deposit coming online very shortly.

So on the development front, expansion of the Haile project, the permitting for that is progressing, and the planning for it. We do expect to commence that early in 2018; as similarly with the Martha Project in -- at Waihi, where plans for permitting the life-of-mine extension at Martha are progressing well; as, of course, is the drilling, as we've highlighted in this report. And thirdly, the development of the underground at Didipio is progressing well and we do expect first ore at the end of the year.

On the exploration front, a lot of activity happening there. We've got drilling -- intense drilling at Waihi and at Haile. We've signed 2 joint ventures in Argentina, where exploration will commence, or has commenced already. And we continue to focus on creating value through the drill bit over the next -- over the medium term.

Our guidance for the full year is maintained. We're on track to achieve that guidance of 550,000 to 600,000 ounces, and copper production of 18,000 to 19,000 tonnes of copper at an all-in sustaining cost of $600 and $650 per ounce.

So now I'll hand it back to Jeff.

Thanks, Mick. At this time we'll open the line to take some questions. For those of you who are looking to ask questions, we'll be taking them through the telephone only. We'll now pause for a few moments while we wait for calls to queue up, 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.

Let's start with Waihi, the drill results from Martha underground. Can you give us a little bit more context and color, whether that was infill drilling or step-out? And was the very thick vein intercepts a surprise or not? And to what extent is this open to depth?

All good questions, Michael, and probably a bit premature to answer them succinctly, but we're very pleased with the results. I guess the width of the intercepts was a bit of a surprise, but we are drilling extensions of the ore body that was sitting beneath the old open pit and extensions of the underground workings. So it's a good start to the program. Good, thick intercepts, true widths. I would venture to say that they are step-out. There hasn't been drilling in that area previously. So -- and as to the depth extension of these, there is obviously, from the picture that we showed, there's a plan to drill at depth over the next 24 months. So we do expect these intercepts to continue at depth.

Okay. No. Thanks for that, Mick. And a couple of questions on Haile. I know in the past you said that probably it's towards the end of the year you're going to start disclosing a bit more on the block model reconciliation vis-a-vis the RC grade control program. Is still that -- is that still the case or are you able to provide a little few insights right now?

Well, it's just suffice to say that there are no concerns with the reconciliation of the model at this stage, and our geologists like to have a fair percentage of the ore body -- a reasonable percentage of the ore body mined before they'll make any definitive statements about the reconciliation, but there are no concerns at the moment. And we'll look at -- we'll address that in the new year.

Okay. No. Thanks. And final question -- still on Haile, are you able to provide recoveries for each month of the third quarter and a breakdown of the oxide and sulfide feed mix?

You're getting a bit technical there, Michael. I think that it's -- suffice to say that we are seeing recoveries above 80%, and the 77% average that you see in the third quarter is heavily affected by the poor performance that occurred in July, which is the first month, third quarter, when we were still experiencing significant losses of gold (inaudible). So August and September were good months, and October is continuing in that vein.

Okay. And any comments in terms of the oxide/sulfide breakdown of the feed?

Yes. Well, it's all sulfide, Michael.

Your next question comes from Marcel Slifirski from Credit Suisse.

I think that might be me. Not Marcel, but that'll do. Slifirski's correct. First of all, WKP -- that's that nice hole there -- some context around that. Is that sort of confirmatory of that historic drilling, or where does that sit? I wasn't quite sure.

Yes, we -- it is a confirmation of historic drilling, Michael, but it's not a parallel drillhole. It's a step-out drillhole. And it's basically confirmed. We've targeted that East Graben vein with that hole, and we hit it as expected, so it's a very good start to that program.

Okay. Thank you. Secondly, with respect to copper during the period, copper rose steadily. Was there any [QP] benefit in the results?

We have a month -- I think it's a 1-month closure period on our copper.

Ed, do you have any details on whether we benefited from the mark-to-market on copper?

Not really, because in a month of (inaudible), the more you sell, that's what you get.

Okay. So no. The answer is no, Michael.

Okay. Thank you. With the situation at Philippines seeming to perhaps be resolving itself quite nicely and logically, if you get resolution, is there anything that you will do differently or would you just sort of remain very, very cautious? Having had one big surprise, do you remain cautious about your sort of longer-term Philippines strategy?

We'll remain cautious, Michael. We have a very defined business plan for Didipio we continue -- that we will execute on. We continue to explore the near-mine environment of Didipio, where we do have our exploration licenses. We're cautious about being optimistic on getting further exploration licenses and whether we'd have proper access to those areas. So no plans to expand in the Philippines at this stage, although we are committed to the Didipio project and operation and the exploration around there.

Great. Thank you. And then finally, the comments around Didipio depreciation, saying that the quarter was sort of a more normalized amount -- how do we think about that, then, in the context of the underground coming in, and how that might change things?

Scott, would you like to have a crack at that?

Oh, to be honest, I'd have to take that one (inaudible), Michael. I haven't really looked forward to plan how the underground amortization will unwind once we get through the development or when we go into production, but it's essentially going to be the disclosed capital, and then divided over the life of --

Over 12 years.

Over (inaudible) life of mine, which is [very] units-of-production basis.

Yes. So it's $140 million over 12 years, roughly.

Yes. I guess I get a little bit confused in terms of, we haven't had a clean quarter to add that amount to. Presumably the quarter we've just seen has still got some unwind of the open pit contribution.

Yes. And that open pit contribution continues through the life of -- as well, a life of mine too. It's -- essentially we're just drawing down from stockpile. So the amortization rate you've seen come through over the last quarter is pretty clean in regards to just being what's coming out of stockpile. And so that'll continue through the life of mine and then the -- obviously the underground will layer over the top of that.

And that stockpile is capitalized at about $10 a tonne, so that'll be amortized to each quarter.

Okay. Terrific. Thank you very much.

Your next question comes from Jeff Killeen from CIBC.

I'd like to start at Haile if I could. Just to clarify one of the statements I think you made during the prior section, you had suggested that grades at Haile would increase in the fourth quarter. I'm assuming that what you mean by that is just mine grade would increase. But in terms of the output from the mill it sounds like throughput would increase, recoveries would be higher relative to Q3, but would you expect actual head grade to increase or would that be relatively flat Q on Q?

It would be relatively flat. We are seeing consistent head grades at the moment to Q3, and I wouldn't be scheduling for higher grades going forward. We obviously have plenty of capacity to mine more ore than we mill, so there's always that opportunity. But at this stage we're looking, just focusing on throughput and recovery, Jeff.

So with that in mind, and given your previous comments on recovery increasing into October, do you think Q3 would be a fairly representative quarter for the asset going forward or do you still think there are some moving parts and more looking to Q1 2018 as a benchmark?

Well, Jeff, as we -- as I mentioned to Michael Gray, Q3 included July, which wasn't a good month for us. But the run rate at Haile is around 40,000 ounces a quarter, and that would be a reasonable expectation.

Okay. Thanks. Then switching to Didipio quickly, I just noticed one statement in the MD&A about some of the delays with your inventory was due to some transport permits. Is that something that has been rectified or is there any concern that that could be an issue in Q4 going forward?

No, it has been rectified. It's not uncommon in the Philippines for these permits -- these transport permits to be delayed for rather minor issues, and it's just the bureaucracy in the Philippines. But those permits have been granted and the concentrates have been shipped already.

Okay. Great. Now switching to Waihi, obviously you're pointing some pretty good intercepts from the exploration drilling this quarter. Is any of that material being thought of as possibly being accessible from underground, or is this all really to support the restart of the open pit -- that concept?

No. The Martha Project, Jeff, is the ore that sits beneath the open pit. The concept is a combination of both a modest cutback on the pit and the rest of it being taken from the underground. So about a 70-30 or a 60-40 split, with the higher proportion coming from underground. So we obviously have access to those underground areas from the existing underground operation, and the cutback that's proposed is -- would only be on land we currently own.

Okay. Very well.

It wouldn't impact the (inaudible).

And pointing to some conversion of resources to reserves with the infill drilling, do you have a goal in terms of replacement or growth in mind for 2018?

We've got a macro goal. So we call it the 1-million-ounce target. We have a -- we can't put that in a JORC resource or a JORC reserve until we drill it, but we have a strong conviction that those -- the -- from the geological information that we have from previous drilling and previous mining, that there is significant amount of gold there. So over the next 2 years we'll progressively build up that inventory as we update resource models.

Okay. Thank you. Then lastly, going to Macraes, I think you mentioned in the commentary that you had an issue with one pit during the period and had some stability issues. That's not the Coronation North pit, is that correct?

No, it's not. It's called FRIM. So it's the area between the Frasers and the Innes Mills Pit. And we had some instability on the footwall which caused us to stop mining there and let it settle down. So that would have -- that held up some production out of that pit in the third quarter. But the ore is not lost; it's just that we've had to reschedule.

Okay. And then lastly from me, obviously a fairly material jump in the output in Q4 is going to be needed at Macraes in order to get to your guided range. It would seem that you are pointing towards an increase in the head grade -- a slight increase, perhaps, in recoveries. But it would seem like you'd have to have a fairly significant increase in throughput as well. Would all of -- you expect all of those numbers to move higher in Q4 versus Q3?

No, throughput would be the same. It's just grade-related. We'll probably end up at the -- achieving the guidance that we gave for Macraes will be a struggle, but we're still expecting a very strong production quarter.

(Operator Instructions) Your next question comes from Justin Stevens from Raymond James.

Most of my questions have been crossed off but I've got a few left here. So at Haile, are you guys expecting throughput to stay around the 3/4 mark or are you guys expecting above that 7,500 short tons per day mark?

So we currently -- the third quarter, we ran it -- our rate is about 1.9 million tonnes per annum on an annualized basis, and we'll improve on that in the fourth quarter, which we ramp up to nameplate, which is 2.3 million tonne per annum. So we expect a steady improvement quarter on quarter.

Sounds good. And switching over to Waihi, are you guys expecting the grades to stay up there or should we expect them to start drifting back towards reserve levels?

No, we're expecting fourth quarter grades to be steady.

Sounds good. Moving over to Didipio, you guys are -- you're saying gold grades will probably slip down a little. Are you expecting them to slip down below 1.2 or will the weaker quarter primarily be just throughput-driven?

Sorry, was that Didipio?

Yes.

Yes. Grades will slightly come off as we're into the stockpile there. So production out of Didipio will be slightly lower in the fourth quarter.

Should we expect the throughput to flip as well, based on the -- sort of, the planned maintenance and a couple of other factors there?

There will be a lower throughput level. We are constrained to the 3.5 million tonne limit until we get the permit to increase that throughput.

Right. And just on the inventory build there, I'm assuming those are probably the later-in-the-quarter ounces and copper tonnes that didn't make it out. In terms of just the cost profile, should we expect those to be coming booked next quarter at about the same cost as what we saw sold for the third quarter?

Yes, I believe so.

Okay.

Yes. (inaudible)

And just, do you guys have a rough ballpark for Macraes for the tonnes out of Coronation North you're expecting in the fourth quarter here?

No. We'll just -- we wouldn't give that level of detail, Justin.

Okay. And just last question at Macraes. Should we expect for recoveries to sort of hang out in those low -- that low 80s mark, like, or is most of that [pre-graben] ore going to be an issue going forward, or is that mostly done?

Well, Macraes has been going for 28 years with pre-graben ore, so I imagine it'll continue. But yes, Coronation North is similar to -- is -- what we've been mining at Coronation, so the low 80s is consistent, yes.

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

That concludes the presentation for today. On behalf of the team at OceanaGold, I'd like to thank you for your interest and participation. Should you have any further questions, please don't hesitate to contact us directly. Thanks, and good afternoon and good evening.

Ladies and gentlemen, this concludes your conference call today. We thank you for participating and ask that you please disconnect your lines.