Good morning, ladies and gentlemen, and welcome to the OceanaGold 2018 fourth quarter results webcast and conference call. At this time, all lines are in listen only mode. Following the presentation, we will conduct a question and answer session. If at any time during this call you require immediate assistance, please press star zero for the operator. This call is being recorded on February 19th at 4:30 P.M. Eastern Time. I will now like to turn the conference over to Mick Wilkes. Please go ahead.
Thank you. Good morning, good evening to everyone, welcome to the OceanaGold full year 2018 results webcast and conference call. It's a pleasure to be here with you today to discuss what was another successful and profitable year for OceanaGold. I'm joined on the webcast today with Scott McQueen, our Chief Financial Officer, who will discuss our financial results. Scott and I are actually at Waihi, with the board visiting this fantastic operation. Just moving on to slide two, the cautionary note, cautionary statement. Before we proceed, note that all references in this presentation adhere to International Financial Reporting Standards, all financial figures are denominated in U.S. dollars unless otherwise stated. Note that the presentation contains forward-looking statements, which by their very nature are subject to some degree of uncertainty.
There can be no assurances that our forward-looking statements will prove to be accurate, as future results and events could differ materially. Please refer to the disclaimer on the forward-looking statements in our presentation. Slide number three, the results highlights. We had another solid year of operating and financial performance, I am very pleased with our consistent performance of generating strong free cash flows and delivering strong returns. We achieved these results despite severe storms and sustained heavy rainfall at Haile. There are ups and downs in mining, having multiple operations gives us diversity of production and cash flows, which reduces risks of meeting our goals. In the fourth quarter, it was a solid performance at Macraes, which posted its second highest ever production. In 2018, we generated approximately $121 million in free cash flow after all capital investments.
The back of that strong free cash flow, our cash balance increased 55% quarter-on-quarter, while our net debt decreased 38% quarter-on-quarter. Over the course of 2018, we increased our gold guidance twice, even despite the lower than expected production for the fourth quarter. We delivered on our production and cost guidance. This marked the seventh consecutive year that we have delivered on both our production and cost guidance. Our operational performance culminated in record annual revenue of $773 million, while adjusted net earnings for the year was $124 million. We are also very excited about receiving the permits we need to transition the Martha Underground Project into an operation. This is an exciting outcome for OceanaGold, for the town of Waihi, and indeed New Zealand, as it significantly extends the mine life of the Waihi operation and will deliver significant socioeconomic benefits.
We're now focused on implementing the project while continuing to drill extensively to add resources. On the back of the strong performance in 2018 and the cash flows we've generated, the board of directors has approved our first dividend for 2019. However, our dividend policy is a modest one. We are committed to delivering returns to shareholders, this represents an important part of our capital allocation practices. Moving to slide four in the results overview. On a consolidated basis, our operations produced 533,000 ounces of gold and 15,000 tons of copper for the full year, while all-in sustaining costs were $767 per ounce on sales of 532,700 ounces for the full year. We reported record revenue at $773 million for the full year, EBITDA of $364 million, full year net profit of $124 million.
For the quarter, our earnings per share before accounting and financial derivatives were $0.03 per share, while cash flow per share was $0.12 per share before adjusting for working capital movements. This compares to the analyst consensus of $0.11 per share for the quarter. Moving to slide number five, solid margins and returns. For the 35th consecutive quarter, we delivered a positive return on invested capital, making us the only company to have delivered a positive ROIC every quarter back to 2010. This speaks to how we run our business and how we allocate capital. In fact, when you compare our cash flow generation and earnings over this time, it has been one of the least volatile in the gold industry. That is in an industry that has seen wide ranges of results over the past decade.
We strive to deliver consistently positive results over a long period of time, like we have for many years. This focus of ours is unwavering. Meanwhile, our 2018 EBITDA margin was 47%, which again was one of the highest in the industry, we expect to continue delivering strong margins. I'm very pleased with our results. However, we have some work to do to enhance our performance and drive further efficiencies at our operations, particularly at Haile, where the safety and productivity rates are opportunities to drive further value. Slide six, the operations overview. I'll spend a few minutes going through our operational performance for the fourth quarter. I'll also spend some time going through the outlook we expect for each operation this year. Slide number seven, health and safety.
Our health and safety performance in 2018 was slightly higher than the previous year, it was still in line with industry averages. The safety performance is always a focus for us and of critical importance. The Didipio operations performed well for the year with very strong health and safety performance. Macraes continued, demonstrated year-on-year improvement with very strong second half of the year, much stronger safety leadership at site being the driving reason for this achievement. Continuing to embed our workforce safety behavioral programs, which is designed to drive a safety awareness, particularly as we continue to ramp up our Haile operations and Didipio underground operations. Many of the incidents in 2018 could have been prevented as they were hand-related. As such, we've implemented hand injury prevention programs.
We continue to also focus on our principal hazard management plans with reviews and regular audits, which has resulted in a reduced number of high potential near-miss incidents at our sites, which could cause potential serious harm. What was pleasing to see through the final quarter of the year was the excellent site preparedness and weather event management at Haile and Didipio operations during the multiple severe storm events. During these weather events, we had strong safety and environmental performance with zero uncontrolled discharges and no incidents. Moving to slide eight, talk about Haile. It has been well documented now. We had a very challenging fourth quarter at Haile with multiple severe storm events and sustained heavy rainfall. The first storm was Hurricane Florence, which dropped 16 inches of rain on site.
Despite this amount of rain over the course of 2 to 3 days, we safely resumed milling operations and mining operations from the Snake Pit. The Mill Zone pit, however, required a few extra days of pumping water out of the bottom of the pit before we could resume mining there. That was our expectation. However, the rain didn't stop and then Hurricane Michael rolled through with more rainfall. This type of weather persisted for the quarter, throughout the quarter. All in all, Haile received approximately 40 inches of rainfall from September through to the end of the year. As a result, our mining operations were significantly impacted. We were forced to mine and mill low-grade ore from stock from Snake instead of some higher grades at the lower zones of Mill Zone.
Productivity was down, the clay material just below the saprolites created an even more challenging mining environment. As mentioned, however, the inclement weather in the fourth quarter wasn't all negative. We were very pleased that we managed our environmental risks and sustained no injuries. We have learned a lot from these weather events and are implementing some changes to our operating procedures during these types of events. Also, in the fourth quarter, the mill operated well with utilization rates continuing to increase and now greater than 95%, which compares to 90% in the third quarter. We were achieving throughput rates which annualized up to 3.2 million tons per year. This achievement, along with plant expansion, positions us well to mill 3.2 million tons next year, which is for the full year. Sorry, this year.
We expect to increase in throughput rates to between 3.5 million and 4 million tons in the years ahead. We have resumed normal operations at Haile despite continued wet weather at the start of the year. We are establishing additional dewatering bores and drainage through the first half of the year. We now have a contractor assisting with mining of the clay material, which is roughly 4 million to 5 million tons a year over the next two years. We remain very focused on driving mine productivity at Haile. Unit costs at Haile are higher year-over-year with increased mining unit costs associated with a portion of our mining being contracted out. We continue an intensive recruitment process geared to upskill our workforce. What I can tell you is that we are now drawing some good talent from Western mining states in the U.S.
This year, we will also begin replacing our existing fleet of haul trucks with larger Komatsu 730E, and our digging fleets with Komatsu PC3000 and PC4000 units. This is a staged replacement, but one that should drive productivity improvements and lower mining unit rates. Mining costs, I should say. Over the past two years of mining at Haile, we've had both positive and negative reconciliation. However, through our infill drill program, we continue to better understand the complex geology and can more effectively forecast tonnes and grade. With all the changes we're implementing, we are confident that mine productivity will increase while unit costs decrease. This year, we expect increased production at Haile compared to 2018, and this is driven mainly by the higher throughput rates. We also expect stronger grades in the second half of the year.
Plant expansion works continue this year with the commissioning of the upgraded regrinding circuit, an installation. Well, that's the upgraded ultra-fine grinding circuit and the installation of some additional equipment to achieve a higher throughput rate. Moving on to slide nine and the Haile expansion. We continue investing in the expansion of the Haile process plant, and the investments we've made have yielded positive results already. Since 2017, we have already nearly doubled the throughput rates and have done so with capital costs at or less than what was forecast in the NI 43-101 technical report. We're currently upgrading the regrinding circuit to achieve finer grind sizes that are designed to enhance gold recoveries, particularly at the higher throughput rates. The tower mill is now installed and commissioned, and although early days, it has performed well. We're currently completing the punch list associated with the IsaMill installation.
We'll commence commissioning of the IsaMill very soon, and I expect to have it fully commissioned in a couple of months. This year, we expect to invest $10 million-$15 million on upgrading the tailings thickener, installing a third cyanide destruct unit, putting an additional tailings line and some ancillary works, and then that represents the main equipment we believe we need to achieve throughput rates between 3.5 million and 4 million tonnes per year. Permitting of the larger open pits and the Horseshoe Underground continues to progress well with the U.S. Army Corps of Engineers, having filed the notice of intent before the end of last year. We anticipate receiving these permits this year, and once they are in hand, we'll mobilize our in-house development team to build the underground.
The project director for the Didipio underground has already been transferred to Haile for the front-end engineering design work. Over the course of the next few years, Haile gold production is expected to steadily increase. With the Horseshoe Underground in production, which again, we believe it to be in 2021, and ramp up of underground operations thereafter, production at Haile is expected to be north of 200,000 ounces per year. Costs are also expected to steadily decrease year-on-year, and by 2021, our major capital investments should come off. On the next slide 10, there's some photos of the Haile expansion, showing the construction of the tower mill and the IsaMill at Haile. Moving on to Didipio on slide 11. In the Philippines, we had another strong quarter and year of health and safety performance and production from the operation.
We also continued to manage our environmental risks during the two super typhoons near Didipio in the quarter. Production at Didipio in the fourth quarter was lower than in the third quarter. We had expected this, and it's related to the mill feed, where we're limited by our permit and can process, processing up to 3.5 million tonnes, which we achieved in early December. You may recall that Didipio's original guidance range for 2018 was 80,000 to 90,000 ounces. Through the course of the year, we increased the guidance to Didipio twice and delivered on that guidance. Another strong year for Didipio. Underground mining continued to ramp up well. We mined approximately 630,000 tonnes from the underground last year, which was higher than what we had originally expected. Mining costs were slightly higher than in the previous quarter.
However, as underground operations ramp up, we'll see these unit costs drift towards the $36 a tonne that we had initially planned. Hopefully, through further efficiencies, such as optimizing mine plans and stope sizes, like what we have done already, we can achieve lower costs. We've also implemented our digital strategy with tele-remote operations from surface, where we can remote bog over shift change, which will increase productivity and reduce costs. Looking ahead, Didipio is expected to have a stronger year of gold production in 2019, mainly related to higher grades coming through from the underground, where we expect to mine 1.2 million-1.3 million tonnes this year, which is double the rate of 2018. We also expect higher grades coming through in the second half of the year.
The all-in sustaining cost at Didipio is higher this year. As we have indicated in our recent news releases, the main driver for the higher reported cost is the inclusion of production taxes, which were previously reported as corporate costs in the all-in sustaining costs. These taxes, including excise, business, and property taxes, we have been paying for the past few years. In previous years, as I said, we reported as the corporate G&A, and excluded from our all-in sustaining cost calculation at Didipio. Going forward, we will continue to report them as corporate G&A, but also include them in our all-in sustaining cost calculation. For 2019, production taxes at Didipio amount to approximately $15 million. Didipio is expected to continue generating strong cash flows as it has for the past few years, while delivering significant socioeconomic benefits to the people at Didipio, in the communities, and the provinces.
Moving on to slide 12, Didipio underground. We currently have over 19 million tonnes of stockpiled ore on surface, which we blend with the higher-grade ore from the underground. At the end of 2019, we had approximately 70,000 tonnes of breccia pit stockpiles, which we expect to fully process this year. The development of Panel Two in the underground is progressing well. Once it's completed and ramped up, we expect to be operating at a full underground mining rate of 1.6 million tonnes per year. As I mentioned, at these higher rates and through further efficiencies, we expect our unit cost to decrease. We also have great potential at depth beneath Panel Two , which we will start focusing on and drilling on in the near future. Moving on to Waihi, here in beautiful New Zealand.
The Waihi operation had a good quarter and a strong year, with production coming in just under 84,000 ounces of gold at a strong tier 1 all-in sustaining costs. The main story at the moment for us at Waihi, which we're very excited about, is the receipt of the consents for the Martha Underground Project. The Martha Underground will significantly extend the mine life at Waihi, which is a great outcome for the town of Waihi in New Zealand and our shareholders. With the receipt of these consents, we will proceed to implement the Martha Underground with a dedicated project team to execute on its development. We'll put together management plans including noise management, vibration management, and detailed mine plans. In the meantime, we'll continue our extensive exploration program along the underground drill drives to further prove up additional reserves and resources.
This is a transformational year for us at Waihi, with mining taking place in lower-grade zones in the Correnso Deeps. Production is expected to range between 60,000 and 70,000 ounces. Exploration will be a key focus for us. As I've just indicated, that includes WKP, where we've had very good results and have doubled our exploration budget. Moving on to Macraes. Macraes had a solid fourth quarter, producing a very nice 58,000 ounces of gold and over 200,000 ounces for the full year with an all-in sustaining costs of less than $900 per ounce. A fantastic performance by Macraes last year. In fact, Macraes' 2018 output was the second highest production on record that it's achieved in its 28-year history. It truly is a world-class operation with a world-class workforce.
Macraes' safety performance continues to improve and demonstrates that with the right leadership and persistence, strong safety culture can be successfully established. There's still some more work to do to drive continued improvement. We continue to explore at Macraes and seek ways to adjust our mine plans to extend the mine life beyond 2021 based on a $1,200 per ounce gold price. As part of the mine life extension focus, there is the potential for a standalone underground operation now, following the successful exploration last year at the Golden Point deposit, where drilling results have demonstrated good grades in lower zones of the ore body. We will continue to investigate the technical and economic viability of this opportunity to unlock further value. I should also point out that Macraes has a large resource with lots of leverage to the gold price.
When the gold price returns to $1,500 per ounce, which shouldn't be too far away now, we would then have over 3.5 million ounces currently in our resource that could be economically viable to mine. With that positive note, I'll now turn it over to Scott McQueen, our CFO, who'll discuss our financial performance. Thanks, Scott.
Thank you, Mick. Hello, everyone. It's pleasing that despite the challenges that Mother Nature threw at us in Q4, particularly at Haile, as Mick mentioned, our diverse asset portfolio still delivered solid Q4 results, but more importantly, completed what was a strong year of financial performance for the company. Turning to slide 16, here we see a snapshot of how that performance has further strengthened our balance sheet at the end of 2018. I'll draw your attention to the right side of the slide, which outlines the change in our cash position and debt levels. Across Q4, our cash balance increased 55%, sit at $108 million at the end of 2018. That's a 47% increase year-over-year. That includes us paying $50 million off our revolving credit facility that was not due until the end of 2019.
The prepayment of that debt is reflected in our total liquidity of $158 million, which now includes that undrawn $50 million component. It's worth noting that this also excludes about $55 million of market value in marketable securities at the end of 2018. Moving down, you can see our total debt, including leases, sat at $176 million. Relative to our cash position, that gave the company a low net debt position of $69 million at the end of 2018, which reflects an almost 40% quarter-over-quarter and nearly 60% year-over-year reduction. Moving to slide 17, we get a snapshot of our financial results. The top-line revenue for the fourth quarter was $183 million. This is a slight decrease from the previous quarter, due mainly to lower gold and copper sales volumes. The full year we posted revenue of $773 million.
This was up on 2017, with Haile contributing a full year to the result, but that was partially offset by about 3%-4% lower year-over-year average gold and copper prices, as noted. Nevertheless, as Mick noted, the 2018 top-line revenue is a record for the company. EBITDA margins remained strong at approximately 47% across the year. Fourth quarter EBITDA was slightly lower than the previous quarter, which really reflects a change in the sales mix, with a higher contribution from Macraes, slightly lower copper sales, and also the weaker Q4 operating performance at Haile. Net profit for the fourth quarter was $17 million before unrealized gains and losses on derivatives, and $124 million for the full year. The slight decrease in net profit reflects the same key drivers that impacted EBITDA that I mentioned previously.
Moving on to slide 18, a quick overview of our very strong cash flow results. Operating cash flow in the fourth quarter was $96 million, reflecting a quarter-over-quarter increase of almost 50%. That increase largely reflected positive working capital movements relative to the prior quarter. On a full year basis, the operating cash flow remains strong at $346 million, reflecting the high EBITDA margins the business enjoys. Investing cash flow was pretty steady quarter-over-quarter, with the key focus areas being the continued plant expansion at Haile that Mick covered, and also the ongoing development of Panel Two at the Didipio underground. Year-over-year, our investing cash flow decreased around 13%, reflecting that 2017 included the completion of the primary build-out at Haile. I'll touch on the capital spend a little bit more on the next slide.
In terms of financing cash flows, there was a material decrease quarter-over-quarter, given the prior quarter included the payment of the $0.02 dividend and also the $50 million discretionary debt repayment that I mentioned earlier. All in all, our 2018 performance and cash flow generation has allowed us to meet our objectives of continuing to invest in our organic growth opportunities across operations and expand our exploration efforts while still reducing debt and finance costs, paying dividends to shareholders, and enhancing our balance sheet strength. Moving to slide 19. Here we've got a little bit more detail on the capital investment across the quarter. For the full year, we invested around $213 million, excluding closure costs at Reefton. This was at the low end of our guidance range of $210 million-$255 million.
For the quarter, we invested approximately $54 million, which, as you can see, was broadly in line with the previous quarter. In terms of growth capital, it was predominantly spent on the plant expansions at Haile, which Mick covered. They're advancing well and consistent with our cost estimates. Also at Didipio, where we continued to build out the Panel Two underground, and that'll progress further through 2019. The bulk of the sustaining capital was tied up with pre-strip at the open pit operations at Macraes and Haile as planned. Importantly, you can see we continued to invest materially in exploration, which we see as a key opportunity to create value, as demonstrated by our positive results across 2018. I'll hand back to Mick to wrap up the results.
Thanks, Scott. Just close off the webcast, spending a few minutes to discuss the corporate outlook for 2019. If we could move to slide 21, where we talk about guidance for 2019. You see our guidance to 2019, which we released a couple of weeks ago. Production in 2019 is expected to be similar to that of 2018, while costs are slightly higher. We do expect to generate solid free cash flows this year while we continue to invest in our business heavily and pay dividends. At Haile, we expect higher production year-on-year, with increased throughput being the main driver. Our investments in expanding the plants and upgrading the regrinding circuit is delivering positive results. At Didipio, production is slightly stronger year-on-year, mainly due to grades. We see higher grade underground material coming through, particularly in the second half of the year.
At Waihi, we're in this transitional year, but again, we're expecting to return to historic production levels over the next couple of years as we ramp up the Martha Underground. Finally, Macraes production is expected to be slightly lower from what we had a very strong year in 2018. Nonetheless, a very good year expected for Macraes as well as we endeavor to extend the mine life there beyond 2021. Moving to slide 22 and the capital guidance. To spend a bit of time talking about our program for capital. We do pride ourselves at being good custodians of capital, which has been allocated in a prudent manner and generated strong returns on the capital we've invested, as we've demonstrated. Our capital investment program is designed to invest in our future by creating value, through either expanding our operations and/or extending the mine lives.
Our four operations have sustaining capital requirements for maintenance purposes, for pre-stripping, so that we can access the gold-bearing ore and underground capitalized mining. This investment typically ranges from $80 million-$100 million a year for the four operations. This is what our sustaining capital investment has been historically, and we expect to invest a similar amount each year going forward for the foreseeable future. Our exploration investments have steadily increased since 2014 as we have good ground in which to drill and are focused on delivering resource expansions. Something that I know the market has been focused on, the good news is that we've delivered on this, particularly at Waihi. We've increased exploration investments at Waihi, Craig Feebrey and his team seek to further add significant resources at the Martha Underground and WKP.
We have allocated a budget of $8 million-$10 million for drilling at WKP, which is double what we spent in 2018, and this increase relates to our confidence in that new deposit. We've also signed more joint ventures with junior exploration companies in Nevada and have an opportunity to earn in up to 75% on these projects with modest annual investment. Finally, on growth capital at Haile, the Haile 43-101 technical report back in 2016 or 2017, stated a pre-expansion capital investment of almost $250 million. This number included $50 million to purchase new fleet. However, we're moving ahead with leasing this equipment, which is how we typically source our mining fleet. The 43-101 also included $50 million in downstream lifts of the tailing storage facility in 2021, which is not how we expect the timing to play out.
As is more typical, this will be done progressively over several years, like it has been done at other operations, like Didipio as being a recent example. The 43-101 also called for $65 million to be spent on the plant expansion. We spent $40 million last year on the plant expansion, and we expect to spend another $15 million-$20 million this year. In total, this remains consistent with the original budget, albeit the timing of that spend was moved forward. Through these prudent investments, we are well on the way to transforming Haile from a circa 150,000 ounce a year producer to 200,000 ounces a year or more. At Didipio, the remaining growth capital is to complete the build of Panel Two of the underground.
At Waihi, it's related to the Martha Project, a value-creating project that didn't exist two years ago, and is the realization of our stated vision to deliver significant mine life extensions at that operation. We are very happy with our business and are confident that we're reinvesting our strong operating cash flow into the value-accretive opportunities that will generate sustained value for shareholders well into the future. With the Underground at Martha permitting behind us, we can hopefully start getting the value of that for the operation. It's no longer a two or three-year operation at Waihi. Moving to slide 23, just finally. As we have done over the past several years, we again are focused on delivering on our commitments.
We had a strong 2018, when I look back to this time last year, many investors and analysts had a negative reaction to our guidance and said 2019 would be our year. Well, 2018 was a pretty good one for us. We increased our group production guidance twice and again delivered it.
We also managed our capital program prudently, coming in at the bottom of our capital cost range. We expect that 2019 will continue to be a year where we generate strong cash flow, invest in the long-term future of the business through the numerous and exciting organic growth opportunities we have, and provide returns to shareholders. With that, I'll hand it back to the moderator. That concludes the formal presentation, we'll take some questions over the phone. Thank you.
Thank you. Ladies and gentlemen, we will now begin the question and answer session. Should you have a question, please press the star followed by the one on your touch-tone phone. You will hear a three-tone prompt acknowledging your request, your questions are polled in the order they are received. Should you wish to decline from the polling process, please press star followed by two. If you are using a speakerphone, please lift the handset before pressing any keys. One moment, please, for your first question. Your first question is from-
Do we have any?
Yes. Your first question is from Michael Gray from Macquarie. Please go ahead.
Michael, are you there?
Hi, Mick and team.
Go ahead.
Hi, Mick and team. It's Mitch Schroeder here. Just two questions. First, can you please clarify the treatment of the excise tax at Didipio? Is that going to be taken out of the cost line on the income statement and included in the G&A? Is that what the treatment is looking like at the moment?
There's actually no change in the presentation on the financial statements. You'll see that is actually called out separately in the financial statements under the G&A indirect taxes. The only change was that line previously wasn't included in Didipio's all-in sustaining costs. It is now being included as part of the calculation of Didipio's all-in sustaining costs, but it won't change the presentation here. In terms of your modeling, you do need to be careful that you don't just increase Didipio's all-in sustaining costs and then leave it in the G&A as well, because you'll be double counting it effectively.
Yeah. Okay. That certainly helps. My other question is on the extent of the negative grade reconciliation at Snake in the quarter. What was the % negative reconciliation, and is there increased confidence in the deeper zones in terms of the drilling and geological modeling at Snake and the Mill Zone?
Yeah, thanks for that question, Mick. We did have some negative reconciliation at the top of the Snake ore body. It seems as though there was some old drilling that was done prior to the previous. Drilling started back in 2018. Sorry, 2008. These are half a dozen RC holes that were drilled back then, and there was some errors or sample bias with that. That created a bit of a model inconsistency at the top of the ore body. We have been drilling the ore body at depth, and we're seeing much more positive results. It is a complex ore body, Haile. That's long been known, and geologically it's complex. The more we drill, the more we mine, the more we learn about it, the more accurate our estimates are.
We had some strong positive reconciliation in the Mill Zone pit last year. There are some swings and roundabouts with this ore body.
Okay. Thanks for that. Are you able to just let us know what the drill hole spacing is on your grade control for, say, the Snake and the Mill Zone?
For grade control, we use the blast holes for grade control at that. I think it's about 10 meters or less.
Okay. Excellent. Thanks for that. That's all for me.
Thank you.
Thank you. Your next question is from Daniel Morgan from UBS. Daniel, please go ahead.
Thank you. A question on Haile. Obviously, it was impacted by a lot of weather through Q4. Just wondering if you could update us on how that's progressing this quarter. Is the operations back to full steam, or is Q1 still gonna feel a little bit of disruptions? Just trying to get a feel for how the year might go.
Yeah, look, the rains only persisted through January, into January, and we're still recovering from it. This quarter will be soft again. We stick by it. We're confident in the forecast for the full year. We're putting a lot of resources to get it back on track.
Yeah. The guidance was put out with the knowledge of the January weather.
Yes.
Thank you.
That's correct.
Thank you. Your next question is from Dan Rollins from RBC Capital Markets. Please go ahead.
Yes, thanks very much. Mick, just wondering if you could provide a little bit of color on what you're thinking from an M&A standpoint. Obviously, I know you've been looking for a while for a potential another asset. I also do understand that you have a lot on your pipeline existing. With potential non-core asset sales coming out, potential for earlier stage exploration projects, where's the team's current focus? If you're looking at that type of transaction, sort of what are the broad strokes that you'd be looking at from a production base, if you're looking?
Well, obviously, we remain interested in opportunities in the market, there's certainly a certain buoyancy about the gold market at the moment following the two major transactions. We remain disciplined about what we're looking for, quality assets, things we can add value to. Production which is of sufficient size to be meaningful, something that feeds into our vision of having six or seven mines, basically getting up over 1 million ounces a year as a company. We remain disciplined in our focus on that. We've got a lot to do with our current portfolio, as you mentioned. We're very focused on the expansion of Haile. We're very focused on now getting on with Waihi and really getting the full potential of that started to daylight. Of course, the ramp up of Didipio's underground.
We've got a lot to do ourselves, we've got a very good team now in corporate development based in Denver who are actively reviewing opportunities in the market.
Just on Waihi. Obviously, still probably going through the mine planning and setting up the reserve resources. What do you expect, obviously this year, you guys had mentioned this during the site visit that it was going to be a transition year in 2019. What should we sort of be looking at a magnitude increase over the next couple of years as you start to bring on the Martha project from a production base? Also on that point in time, do you expect costs on an AISC basis to be similar to what you've currently forecast?
Yeah. Well, this year, next year, we're mining the last of the reserves at the Correnso deposit, the current underground. We'll be going flat out to develop the new Martha Underground. It's too early to give you a definitive projection on when the ore will be mined from the Martha Underground in a substantial way. We certainly expect that to occur over the next 12 to 18 months. We're learning a lot more about the resource. We're finding a lot of gold. We're finding different veins. We're finding about 70% of the target resource is in virgin ground. That's going to be a focus for us to development to get into that first and really maximize the resource recovery from this whole area, which is very exciting.
Perfect. Thanks very much. Good luck this year, guys.
Thanks. Thank you.
Thank you. Your next question is from Reg Spencer from Canaccord Genuity. Please go ahead.
Thanks. Morning, Mick and team. Just a quick question around Didipio. Last year in 2018, the processing rates were higher in the first half. That tailed away in the back half. You've previously discussed your annual throughput limitation rates based on your permitting. How should we think about the processing profile, if I can call it that, throughout 2019? Will you look to put more through the mill in the first half and then tail that off in the second half, or will it be level throughout the course of the year? Just a couple of comments on that, please.
Yeah, I think it's similar profile to last year, Reg, is the best answer to that. We live in hope that that permit, that the application will be granted for increasing the throughput rates above the 3.5, it doesn't make that much difference to the overall performance of the operation because obviously you're treating incrementally lower grade material for any additional tonnes through the plant. In your models, I'd be assuming the 3.5 million tonne for the full year.
Okay.
We use that time productively in December, and have done for the last couple of years, with maintenance and people taking annual leave and that sort of thing.
Is the suspension order still in place? Has that been lifted? Is there any visibility on when we might get clarity? Not that it's obviously impacting your operations, but perhaps optically, it would be great to have that issue removed.
Yeah. It is still in place and as it is for nearly all of the other companies that had an order placed on them. I think I've mentioned it previously that it is a very political subject in the Philippines. We continue to engage and work closely with the MGB and the DENR, and we have a very good relationship with them. I am afraid to say, it's business as usual in the Philippines.
Thank you. Just one little quick question on your credit facility. That $50 million reduction in 2018, that was originally scheduled for 2019. Are there any planned reductions in that facility throughout 2019, or will that be pushed out into 2020?
Let Scott answer that, Reg.
Yeah, Reg, the $50 million step-down is scheduled to happen on the 31st of December 2019. Obviously, we've already prepaid that. Whether we do any further prepayments, we'll monitor our liquidity as we go through the year. There's no requirement for us to pay anything more this year, no.
Okay, great. Thanks very much, guys.
Thanks, Reg.
Thank you. Your next question is from Raj Ray from Desjardins Capital Markets. Please go ahead.
Thank you, operator. Hello, Mick and team. Good morning and good afternoon. Just a couple of questions. First on Waihi. How should we look at sequencing the phase four pit within the Martha Underground mine plan over the next five years? What's your expectation for the ramp-up at Martha Underground in terms of how long do you think it's going to take?
I'll answer the second question first. I think it'll be a couple of years before we get it up to full production, I expect, but it's early days in that prediction. Remember, we've got this consent probably earlier than we expected, which is a very positive thing. Now, we're still drilling. We've only drilled 57% of the targeted resource. We've increased the target significantly. The mine planning is a moving object. It's difficult for me to put a definitive timeframe on the ramp-up. The main objective here is to maximize the reserves and the recoverable resource from what's been discovered. On phase 4, phase 4 open pit is the cutback on the North Wall, which is to recover the 70,000-odd ounces that sit in the base of the pit, as a result of that pit wall failure that occurred in 2015.
That'll be scheduled in over the next few years. Any further cutbacks on the pit are subject to further permitting.
Okay. For the open pit, do you have an estimate of what the strip could be for the phase 4?
Ooh. I'll get back to you on that, Raj. Sam can fill you in on that detail. I don't have it off the top of my head.
Okay, no worries. A quick question for Scott, maybe. The NZD 25 million provisional income tax that was deferred to 2020, is that a one-time payment in March? Do you expect any other taxes payable over 2019 for the New Zealand operations?
Thanks, Raj. Effectively, what's happening is you defer the payment of provisional tax through an approved pooling system in New Zealand, you only end up paying the final installment. We have a final installment due this year based on our prior years of about $15 million in the first quarter of this year. There'll be no payments after that, we'll make a final payment again in March the following year. What we're doing is getting out of the provisional tax treadmill and only paying on final assessment.
If I got it correctly, you're saying there's a $15 million payment this year and another NZD 25 million next year?
The next year's one will be dependent on the finalization of the tax return. I don't have that exact number offhand, but it'll be a similar level to this year, broadly, I would suspect.
Okay. Thank you. That's it from me.
Thank you, ladies and gentlemen. As a reminder, should you have any questions, please press star followed by one. Your next question is from John Tumazos from John Tumazos Independent Research. Please go ahead.
Thank you. I'm sorry if I might have missed some of the earlier discussion. This morning, AngloGold mentioned they were putting a couple mines up for sale and a discovery up for JV. There must be 20 or 30 producing mines for sale these days, or good deposits. Could you give us a refresher on how much your firepower is for acquisitions and your point of view now that all these majors want to give away properties?
Well, John, thanks for that question. Yeah, you're right. There are a lot of assets that would appear to be coming up. Although, there's nothing definitive at this stage other than the ones that have been mentioned. Look, we run a strong balance sheet. We run a low level of debt. We have a good cash flow from the operation. We have a very good banking facility that's sitting right behind us. Our philosophy has always been to build partnerships with the bankers and with the debt providers, build partnerships with our investors such that they come on the journey with us as these opportunities present themselves. The focus has to be on the quality of them. If everyone's bidding for the same thing and it's average quality, it's probably not a good time to be at the auction.
We remain disciplined, we remain focused, and we remain engaged.
Could you give us a flavor for a maximum size or what regions of the world you're willing to venture into and how much you're willing to not spread yourself thin and whatnot?
We're not going to blow our brains out with any major acquisitions and big development projects or anything like that. We are in three jurisdictions now. We are focused in Australasia and North America, and we do have an eye on South America as well, but we're not established there at this stage. We remain open to those regions in the Americas and in Australasia. In terms of size, we're looking at things that can produce us in the order of 200,000 ounces a year and with high margins and low costs.
There are maybe too many things put up for sale too soon, and there could be some properties where the major doesn't want to work on it, so to speak, where there's a reclamation reserve and forgetting something like Pascua that's a problem they can't fix. Are you willing to assume liabilities in situations where the upfront payment might not be so large?
Look, we look at each opportunity on its merits, that's certainly one that we wouldn't be too keen to take on, depending on the size of it, of course.
Sure. I'm sorry to pester you with I just am amazed when I hear the things people are selling.
It's a very interesting time in the gold market that we're very focused on our business and our vision and our strategy. We're working very hard to deliver on that. Thanks, John.
Thank you.
Thank you. There are no further questions. You may proceed.
Okay. Thank you, everybody. That concludes our webcast and conference call. Excuse me. There will be a replay available on our website later today. On behalf of Scott and the rest of the team, thank you for joining us. Should you have any follow-up questions, please don't hesitate to contact our excellent investor relations team. Bye for now.
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