Well, good afternoon again, ladies and gentlemen. My name is Brian Quast. I'm one of the research analysts here at BMO Capital Markets, and it's a great privilege for me to introduce our next company today, which is OceanaGold. Joining me on stage today is going to be Gerard, the President and CEO of the company. I would remind everybody that after he gives his prepared remarks, we'll have a bit of a conversation afterwards. Feel free to put your questions in via the app, and I will be able to relay those. While you're on the app, please participate in our polling area. It's under the Audience Response tab. We do compile a research report that comes out of that's a fairly interesting reading, particularly when you compare it year-over-year.
With no further ado, Gerard Bond, please come to the stage.
Thank you, Brian. Thank you, BMO, for a fabulous conference. Thank you everyone for turning up today to hear why at OceanaGold, we say we are about performance, growth, and returns. Before I begin, I'll just draw your attention to our customary cautionary statements. For those of you not familiar with OceanaGold, I'll start with the highest flyover possible. We are a very simple company to understand. We have four operating mines in the very attractive jurisdictions of the USA, New Zealand, and the Philippines. The first pillar of our corporate strategy is about safely and responsibly maximizing the generation of free cash flow and generating returns to our shareholders. As I think I'll show a little later in the presentation, we've been very successful in doing that.
At the end of the year just gone, we had reserves of just under 6 million ounces and a further 2.5 million ounces of gold resources. The company's been operating for 35 years. It has a tremendous track record of exploration, development projects, and operating. This isn't a results call, but I can't let the results of last week go by without mentioning them again, because it was a year, 2025, of tremendous achievement, where we delivered on our production, capital, and cost guidance, and together with the gold prices that we experienced, an average of $3,500 an ounce for the year, generated some record returns.
Each of those profitability metrics and the free cash flow metrics were records and just showed that we were able to convert a lot of the strong gold price to the bottom line. It was also a year where we advanced our growth projects. In addition to the fabulous exploration results that we put out, really pleasingly, just before Christmas, on the 18th of December, we got all the permits necessary for the Waihi North Project, which is our key development project in New Zealand. It's one of the world's best undeveloped gold mines, and we're really excited about that project, and I've got a slide on it a little later. We generated $543 million of free cash flow, and we added to the balance sheet, which is in, like, a best-ever health.
We ended with $477 million of net cash. We have no debt. We returned capital to shareholders in 2025. At the start of the year, we doubled our dividend, and we executed $175 million of buybacks. Looking forward, 2026 is a year of production growth. Our production growth, if I use the midpoint of guidance, is 12% higher year-on-year. Our all-in sustaining costs are projected to be 12%, sorry, 7% lower year-on-year. We are operating in a time of gold prices that are 50% higher than what they were on average last year. Higher gold prices, higher production, lower all-in sustaining costs is another year of tremendous free cash generation.
You can see there on the slide that our largest producer is the Haile Gold Mine in South Carolina. It's going to represent 45% of our production in 2026. It's also the primary source of our growth in 2026. Haile is producing 35% more gold in 2026 than it did last year at an all-in sustaining cost that is 25% lower. It's a materially significant producer at a midpoint of around 245,000 ounces at an all-in sustaining cost, if I use a midpoint, of $1,600 per ounce, which means it's going to, again, generate a lot of free cash flow this year. Each of the other assets is going to produce around the same amount of production in 2026 that they did in 2025.
The Didipio, I should say also at around the same cost, with the exception of the Didipio, where the lower, sorry, the higher copper price is going to result in a lower all-in sustaining cost for it. This slide lists some of the key catalysts. Firstly, as it relates to technical reports, each of Haile, Macraes, and the Didipio will shortly release a technical report, which will update the flight path of production, cost, and CapEx for the foreseeable future. At Palomino, we are 60 meters into the drift towards that new ore source that will come into production in 2028.
I'm going to cover the Waihi North Project in detail a little while longer, but I should say that we have a doubling of the permitted drill rigs. You can expect over the course of the year a very frequent and hopefully very exciting updates as it relates to exploration success there. As it relates to the corporate side of things, on the seventh of April this year, we are going to list on the New York Stock Exchange, which we think will be a great boost to the liquidity in the stock.
We know that comparable companies of our size who have a U.S. listing have far higher trading volumes, and we think it's also going to make it a lot easier for investors in the world's largest capital market to invest in OceanaGold, who hopefully are attracted by the fact that 50% of the company's production is generated out of the USA. Waihi North Project, as I said, on the 18th of December last year, we got all the permits necessary to develop this project. That's all the permits for life of mine, which is a reflection of the new regulatory regime in New Zealand. It's a super exciting project for us. It is our primary source of medium-term growth.
This ore body is spectacular at 1.2 million ounces at 9 grams a ton. There's plenty more drilling to be done. Historically, we've only ever had about 10 drill pads that we can operate from. We started last year with 2 drill rigs. We got the 3rd drill rig operational in the June of last year. This year, we're going to have SIX rigs operating. We have had a doubling of the number of drill pads that we can drill from. That's going to allow us to improve the siting of those drill rigs. We're really excited about unlocking the resource conversion to reserve, growing that resource over the course of the year and years to come.
It's at 9.2 grams per tonne reserve and 16 grams per tonne, 17 grams per tonne resource. There's plenty of potential here. We often look down to Waihi, down the south, where we're presently operating. That's a district that has produced 8 million ounces in its life, and we have a number of targets around Wharekirikauponga that we can also look to drill. We're also hopeful that along the way, that we can see where the planned portal is. That portal is being prepared today. In the second quarter of this year, we're going to start the commencement of that drift towards, that 6.5 kilometers towards the Wharekirikauponga underground, and we have a number of targets we intend to drill from that tunnel as well.
Watch this space. It's a super exciting project for OceanaGold. Very much focused on per share metrics at OceanaGold. I'm really proud of the free cash flow and operating cash flow growth that you can see that we've been able to generate on pretty constant production per share. That's obviously a reflection of the rising gold price, but also the fact that management has operated the assets with a sharp attention to cost management, a sharp attention to capital allocation, improved maintenance practices, improved procurement practices, all of which are delivering results. From a return on capital perspective, we measure and show this two ways.
On the left-hand side, that's free cash flow, which, given that we don't have any debt, that's all the free cash flow available to equity holders. We divide that by the average market capitalization over the year, and you can see a very healthy 15% return. Then on capital employed, the EBITDA over it is a very healthy 18% return on... Again, that's on a $3,500 gold price. This is actually my favorite slide of our deck. It shows you how we allocated capital last year. It shows you how we intend to allocate capital this year. This is the operating cash flow from our business. You can see in the year just gone, about a third of our capital was invested in sustaining the business.
A lot of that was, waste removal at the open pits at Haile and at Macraes. Yeah, in the year ahead, it's a little less because we completed that, waste removal program at Haile, and that gives us the, access to the fresh ore that is powering Haile's growth this year. You can see a, a big lift in growth expenditures, from, just under $100 million- $280 million in 2026. $150 million of it is on developing the Waihi North Project. 2026 is our peak year of capital expenditure. It, it then, goes down, to a lower amount next year and a lower amount the year after.
This is a year that we're investing in the, the drift, the water treatment plant, the services trench from the process plant to the portal, and electrical upgrades, and so forth. You can see an increase in our exploration expenditure. It's, it's the smallest wedge here, but that's a 50% increase in exploration expenditure from what we did last year. We've got exciting drill programs at all of our sites, because we see the potential for further resource addition, reserve conversion at them all. This depiction is at a $4,700 gold price, and if that was to prevail, or higher, you can see that we're still going to be able to add cash to the balance sheet.
We have this ability to invest in our business, both sustaining and growth, continue our program of exploration and success, add cash to the balance sheet, the shareholder is going to get double, more than double the amount of cash returned to it in the form of dividends and buybacks, as we have announced a tripling of our dividend and a buyback program of $350 million this year. Last year, we started with a program of $100 million and upsized it to $175 million, which we completed in the year. In summary, before I go to the fireside chat with Brian, you know, the company's in excellent financial health.
We have a tremendous suite of assets. We have near-term growth coming out of Haile that's largely been de-risked as a result of the waste removal program that was completed last year by the end of the third quarter. We're very much focused on shareholder returns and look forward to being once again able to deliver on all of our commitments as it relates to guidance and execution of that capital return program.
Thanks for that, Gerard. I we've got a couple of prepared questions here, but I was reminded a couple of days ago by one of your coworkers that last year, when you were standing up here, you mentioned that you were extremely good at stripping. What you've done is you've gone through Macraes and Haile, you've gone through those stripping campaigns, and as you've shown on the, on the slides there that, you know, you have a free cash flow inflection that happened very recently, and you have put in the higher dividend, you've put in. What should we think about if gold prices remain where they are, and you had a fairly nebulous grey bar there just to show what could happen?
Should we expect perhaps higher, capital returns, another increase in the buyback, perhaps another increase in the dividend, even though you are in a relatively, on a relative basis, a higher CapEx portion, but still plenty of free cash flow?
Well, thanks, Brian, and thanks for the coaching on my use of Australian language for waste removal. We have, if I follow how the flight path occurred last year, you know, we need to deliver on that production guidance that generates that cash flow. Should we get into a position where if prices are materially higher than the $4,700 that I showed, and the business is performing well as we expect to, then that choice exists for the board to increase that buyback further, should we decide to do so, or further increase the dividend. I think we've shown that we have a strong orientation to shareholder returns.
I think we've got that balance right, and if I look at that pie chart of investing in the business, growing the business, further strengthening the balance sheet, which has its own benefit for creating growth optionality and increasing the returns to shareholders, we will look to do all of them.
During your prepared remarks, you also noted that, you know, a lot of the exciting growth stuff that people talk about is coming out of Wharekirikauponga, but Haile is the more immediate growth that's coming from the company in this year and next year. It seems to have turned a corner, through 2025 with the, you know, the stripping campaign finished. What can we expect to see there sort of more in the medium term in terms of catalysts?
Well, we'll put out our technical report at the end of March. We did highlight that we've made a decision as it relates to the next phase of Leadbetter. It was going to be an open pit in the last technical report. That would have resulted in us having something like SIX years of waste removal, and, you know, at our overburden removal rate of 6- 1. Sorry, 9- 1. That was going to result in a lot of earth moving, a lot of PAG storage facilities. The average grade of the ore for the whole of Leadbetter would have been around 2 grams a tonne, and that would have required, you know, more in the way of tailings lifts and so forth.
Having regard to what the drilling confirmed, which was, you know, a location of a higher grade zone and also some pods outside of that pit shell, we determined to take that mine phase underground, and that will allow us to, you know, get an average of 3.5 grams per tonne to the mill and save a lot of that material movement, save on those PAG cells , save on those tailings lifts, make a better business. Together with Palomino, that comes into production in 2028, we see Leadbetter underground coming into production in 2029. Haile will become a 3 underground mine mining complex. That will make it more weatherproof. I think we've shown that we can underground mine there at Haile.
But at surface too, to take your, you know, the wider lens, I mean, the team have done a lot of work on improving plant performance. About this time a year ago, we were talking about some challenges with processing harder ore. I think, you know, we've upgraded, done some lining repairs in the SAG mill. We've done some upgrading of the crushers, some screening. So we've in the final quarter, you will see our milling rate there is reflecting that investment, and we expect that to continue. I think we have a super strong team there, the probably the strongest we've ever had. They are winning, they are generating an enormous amount of free cash flow, and they've got this near-term de-risk growth that they're all excited about.
I think we've got the team, I think we've got the facilities, we've now got the access to ore. Yes, we really are entering a great period for Haile. The technical report, last time we had one, had a very much a surge mentality to get to in 2026, gold production of around $300,000 an ounce, and then it fell quite sharply, to below $200,000 an ounce. What you see in the next technical report is, you know, the guidance of this year of around 245,000 ounces, and then a much lower moderation to a consistently above 210,000 ounces for about five years, six years.
That's an exciting future 'cause it just presents as a more predictable, reliable business. The final piece in the puzzle is exploration. I mean, we, in our technical report, it does not reflect the inclusion of Pisces, which we have, during the course of last year, released drill results that were, you know, showing intercepts in, you know, 10 grams per ton range. We also have Clydesdale to drill and potentially add to resource. We still have, we're open to depth at Horseshoe. We have exploration upside, we have, I think, a lower overall cost base future and more predictable production at Haile ahead.
Maybe sticking with the technical report theme, you've got a technical report coming out in the coming weeks here at Macraes. You've added 5 years of mine life there. Do we see further upside? Just to dovetail on one of the questions here that that's in the app, what's the impact of the higher gold price at Macraes?
Well, the only reason we're doing a technical report update at Macraes is because we increased our reserve price from $1,750 at the end of 2024, up to $2,200. That seemed like a prudent assessment back in about April, May of last year. If I look at where gold prices have gone. There would remain the opportunity to, you know, add more reserve ounces and more reserve life if we were to use a gold price for that purpose higher than $2,200. There's no shortage of mineralization at Macraes. We have 30 kilometers of strike. We're very active in mining Innes Mills open pit. We have a mine plan there that this year is about mining phase eight.
In the technical report, you'll see us mining phase 9 and phase 10, and also Coronation, one of the Coronation pits. Outside of that, we see the potential to add reserve or resource and reserve life ultimately by further cutbacks at Innes Mills, that's 11 and 12, but also further cutbacks in the Coronation pits and further drilling. We are last year, I think we spent about $8 million of drilling at Macraes after a period of time when it was very minimal in terms of drilling expenditures. This year, we're going to spend $12 million, I think with this, you know, this land package of known mineralization, we will look to drill, add to the mine plan.
Again, if this year's, we extended its reserve life by five years, if we can do the technical work and the permitting work necessary to get, Innes Mills 11 and 12 and have success with exploration, we see a future of taking Macraes into the 2040s.
Maybe sticking in New Zealand, you mentioned that you've ramped up the number of drills and the budget for Wharekirikauponga. One of the things that you also noted is that you've got a lot of money being put into the decline. Do you expect that as you push that decline there's some areas of known mineralization that would be further delineated as part of your exploration slash drill programs that you're going through there?
No, for sure. Our, our geologists have identified a couple of targets along the way. I could have an attempt to try and pronounce one of them, but I would fail miserably. It's within a couple of 100 meters of once we get into that drift. You know, and so we do have restrictions on how many drill pads we have at surface, but we're free, to execute drilling from underground along that way. That's 6.5 kilometers in a highly prospective area. Yes, we'll take that opportunity, with the balance sheet we have, with the excitement we have around the area, to see what's out there.
I know you touched on it briefly, but I have a question here, and it has also come up on the app. Maybe I'll just ask this as succinctly as it's come up on the app here is: Why the New York listing?
We're one of the few companies in our peer group that doesn't have a U.S. listing, and we observe that they have far higher trading volumes. I did meet a shareholder today who said that they added to their position last December, but it took a few days because the liquidity was not as high as it would be otherwise. We're very attracted to the idea of being a more liquid stock. There is a buying universe, and I've met them, who have mandates that restrict them to being listed on a U.S. exchange, so we'll become more accessible to them.
For retail shareholders, and we have a strong retail base already, we think, particularly with the Haile Gold Mine being in South Carolina, we have a flag that could attract more buyers to the OceanaGold story.
Maybe, going back to the operations here, so Waihi production has increased from where it was a few years ago. Is this a momentum that continues to build, or is this a more a sustaining level before we get into WKP?
It's a really good story, Waihi. I mean, a few years ago, I'd be standing up here apologising for its it being around the low end of its guidance range. You know, we did have an intervention, a very systematic program of getting back to basics on the mining. The team responded exceptionally well and had a really successful year of, you know, moving from 50,000 ounces to 75,000 ounces. You can see that our confidence in them, and they have the confidence, too, of sustaining that higher mining rate is reflected in our guidance for this year of, you know, 65,000-70,000 ounces or so. I think it's 60 to 75.
Along with exploration success inside the Martha Underground mine, we can see the potential for that mine to last longer as well. We replaced, through exploration, all of what we took out of Martha Underground last year.
Just to make sure we cover off all of your assets, just wanted to talk about Didipio briefly. You've had the Filipino listing. How has the liquidity been on the Filipino exchange? How are you having additional conversations you're having with emerging market funds that are looking maybe more specifically at Didipio? Related to that, you've got a study coming out in H1. What should we look for there in terms of anything that's maybe going to, maybe not surprise, but be different from how people are currently imagining the operation?
We've got a bit on the second question, we've got a bit to fill in. 2021 was the last time we put out a technical report. It's timely for us just to give a refreshed flight path. There have been a number of things that have changed there. You might, you know, we have altered the way we are mining the high-grade breccia zone. That stretches that high-grade ore out over a longer period. We have a strategy of increasing the underground mining rate. We have some equipment and capital required to achieve that, and then the timing thereof. It just allows us to refresh. I don't think it's going to be anything revolutionary at Didipio. It's a fabulous mine.
It produces its gold at our lowest cost, just a shade over $1,000 an ounce, and generates a lot of cash. We also have some prospective land around it that we are drilling. Hopefully won't be in this technical report, in future technical reports, we might be able to have some further mine life extension. The listing in the Philippines was a tremendous success. I mean, the stock is up, I think, 3.5-fold from the time of listing. That's, you know, been very good for the local shareholders that bought in. Also the emerging market funds offshore that bought in. It doesn't trade all that much. Trading has improved. It's been a high dividend payer because we pay out 90% plus of our free cash flow to it.
It's been a high dividend yielding, and strong-performing stock, benefiting from both gold prices and the copper price.
I think that takes us completely to the end of our time, unless somebody has an urgent but brief question? Please join me in thanking Gerard for his time today.
Thanks, Brian.