Good morning, ladies and gentlemen, and welcome to the OceanaGold Corporation webcast conference call. At this time, all lines are in a 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 Monday, August 17, 2026. I would now like to turn the conference over to Brian Martin. Please go ahead.
Hello, and welcome to OceanaGold's conference call and webcast to discuss the exciting acquisition of Ausgold Limited. I'm Brian Martin, Senior Vice President of Business Development and Investor Relations. I'm joined today by Gerard Bond, President and Chief Executive Officer, Bhuvanesh Malhotra, Chief Operating Officer, and Keenan Jennings, Chief Exploration Officer. The presentation we will be referencing is available through the webcast and on our website, and we will take questions following the presentation. As we will be making forward-looking statements during the call, please refer to the cautionary notes included in this presentation. All dollar amounts discussed are in U.S. dollars unless otherwise stated. I'll now turn the call over to Gerard for opening remarks.
Thank you, Brian. Good morning, everyone, and good evening to those joining us from Australia. Today, we announce some exciting news that OceanaGold has agreed to acquire Ausgold Limited, owner of the Katanning Gold Project in Western Australia, for $549 million. This transaction will add to our existing growth profile with the addition of a high-quality fifth asset to our portfolio in one of the world's premier mining jurisdictions. In line with our growth strategy, we scan for opportunities at the right point of their life cycle for us to be able to add value, and Katanning is exactly the kind of asset we have been looking for. It is a conventional, relatively low capital, open pit development project with the potential for more than 100,000 oz of gold production annually over an initial 10-year mine life, with first gold expected in 2029.
It also comes with district scale exploration upside, providing a growth platform to continue to add value for many years to come. Building, commissioning, and operating mines are core OceanaGold capabilities. We believe that we can leverage the substantial expertise of our existing technical and projects team to realize Katanning's full potential. What's also important is that we are doing this transaction from a position of financial strength. We have a strong balance sheet with $655 million in cash. We're debt-free, and we have a good equity valuation multiple. That financial strength puts us in a great position to complete the transaction, fund the development of Katanning, continue advancing all of our existing organic growth projects, including the Waihi North project, and still invest significantly in exploration and still be able to return capital to shareholders.
Lastly, Katanning is expected to be accretive for OceanaGold shareholders, providing attractive returns across a number of key per share metrics in line with our strategy of creating value. Katanning is a natural addition to OceanaGold's portfolio. This slide shows our assets with Katanning included, a diversified portfolio of five assets, all in top mining jurisdictions. We already have a substantial office in Brisbane with a team that has deep Australian technical project development, planning, permitting, and exploration expertise, which is a real advantage as we seek to leverage that to advance Katanning. Both Bhuvanesh and Keenan, along with our existing technical team, are based here in Brisbane. I would also stress that Western Australia sits inside OceanaGold's existing operating day. Turning to the next slide, the transaction summary.
This is a lower risk transaction for OceanaGold, with a total transaction equity value of $549 million, and Ausgold shareholders owning approximately 6%-8% of OceanaGold post-closing. OceanaGold is acquiring 100% of the issued and outstanding shares of Ausgold by way of a court-approved scheme of arrangement. Ausgold shareholders will receive shares in OceanaGold with an option to receive the transaction consideration in cash, subject to a cash cap of $137 million. The scheme is unanimously recommended by the Ausgold board, who, together with major Ausgold shareholder, Dundee Corporation, own approximately 9.1% and intend to vote all shares held by them in favor of the scheme. Finally, the scheme is subject to customary conditions, and we expect it to complete in December 2026.
To further demonstrate our financial strength, this slide shows our current cash balance at the halfway point of the year, consensus free cash flow estimates over the remainder of this year and in the coming three years, and our current buyback commitments and current dividend levels. Together, this provides total projected cash holdings of approximately $2.1 billion at the end of 2029. It provides us substantial capital to fund the potential cash component of the transaction and the Katanning capital expenditures, whilst being able to continue to invest in growth and exploration projects across our business and continue to return capital to shareholders. I will now hand over to Bhuvanesh, who will provide a brief overview of the project.
Thank you, Gerard, and hello, everyone. As you have heard, Katanning is a well-advanced, technically straightforward, and relatively low capital open pit project in a tier one region, which is what makes it so compelling. Katanning is located around 275 km southeast of Perth in a region with well-established infrastructure, power and road access, and a skilled workforce. A deep labor, contractor, and services market exists in Western Australia, which will support the construction and operation of the mine. Work done by Ausgold to date indicates the potential for more than 100,000 oz of gold produced annually over an initial 10-year mine life. The processing plant, which needs to be built, is designed with a conventional carbon-in-leach circuit. Other site-based infrastructure required includes an accommodation village in the town of Katanning, which is under construction now. Offices, workshops, stores, water treatment, and tailings.
Katanning project is well advanced, and Ausgold has made real progress on three fronts. One, permitting, which is currently under public review following authorization by the Western Australian Environmental Protection Authority, a key step in the overall permitting process. Mining leases are already in place over the entire development footprint. Two, pre-development activities, where early works agreement have been executed. Detailed engineering and long lead procurement is advancing, and the 250-room accommodation village is currently under construction. And three, significant drilling is underway through a multi-rig drill campaign, which is focused on infill drilling and resource conversion in areas planned for initial stages of mining. OceanaGold aims to keep up the momentum across all three of these fronts while incorporating learnings from our due diligence process and our team's operating and development experience. This slide sets out OceanaGold's indicative work plan for Katanning.
The key to highlight here is that we are acquiring the project ahead of development, allowing us some time to optimize the project and de-risk the operational ramp-up. We will provide a more fulsome project update following close of the transaction expected in December this year. OceanaGold will conduct further development activities throughout 2027 and look to publish an NI 43-101 technical report in 2028. We are targeting a final investment decision and construction to commence in 2028, ahead of the first gold in 2029. Thank you, and I'll now pass the call over to Keenan.
Thank you, Bhuvanesh, and hello, everyone. As mentioned by both Gerard and Bhuvanesh, what's attractive about Katanning is the asset's multifaceted growth potential. Success through exploration remains core to how we create value at OceanaGold, and our track record speaks for itself. Our teams have consistently delivered exceptional returns through exploration across our existing asset base, and we believe we can deliver tremendous value through the drill bit at Katanning as well. Mineralization at Katanning appears over a 17 km strike trend with significant potential to both convert and grow resources. Drilling in the central zone, shown here, is focused on areas planned for initial stages of mining. A 54,000 m drill campaign is currently underway with near-term exploration focused on conversion and infill drilling, which will support mine planning and de-risk the production profile.
As shown, the deposits remain open down dip below the current pit shell, which points to further optionality and exploration upside. Recent drilling has returned good gold intercepts beyond the current resource areas. Finally, the acquisition of Ausgold brings with it significant greenfield potential via its large landholding of more than 3,000 sq km in a rather underexplored greenstone belt. The work Ausgold has done to date in identifying exploration targets signals exciting potential for future regional satellite deposits within a 100 km radius from the proposed plant. These are three regional trends shown here on the map running parallel to the known Katanning Shear. The Stanley Shear is a 20 km long structural corridor, approximately 30 km from Katanning, where initial drilling includes 8.5 m at 33 g per ton gold. The Nanicup-Zinger Belt, 40 km from Katanning, has shown gold mineralization over a 4 km strike length.
And finally, at Kraken-Yandina, some 90 km from Katanning, results have shown strong soil geochemistry anomalies, and results from initial drilling are pending. These three areas of growth potential together make Katanning an incredibly exciting project from a prospectivity perspective. Back to you, Gerard.
Thanks, Keenan. So as you've heard, Katanning is a fabulous fit for OceanaGold. It strengthens our growth pipeline in a tier one jurisdiction where we can leverage our expertise to create significant value. We're excited to build on the great work done by the Ausgold team to date, and we're excited for what lies ahead. We look forward to sharing further updates as the transaction progresses, providing a detailed update on our plans for Katanning at closing, and welcoming Ausgold employees and shareholders later in the year. Operator, we can now open the line for questions.
Ladies and gentlemen, we will now begin the question and answer session. If you'd like to ask a question, please press star then the number one on your telephone keypad. And if you would like to withdraw, please press star then the number two. Your first question comes from Wayne Lam from TD Securities. Please go ahead.
Yeah. Thanks. Morning, guys, and congratulations on the transaction. I was just wondering, as you've built up the balance sheet, were there other chunkier assets out there that you evaluated bringing in, or did this size of transaction make sense given the timeline to production and ongoing advancements at WKP? I was just curious, maybe some color on the evaluation criteria, if you're looking at more of a tuck-in acquisition here versus something larger, given the existing growth pipeline. And maybe just with the acquisition, do you expect a little bit of a slowdown here on the share repurchase program that's been executed over the past year?
Thanks, Wayne. Look, if I widen the lens on how we were approaching growth, which we've said for a long time now, we were looking at projects where we can add value in areas that we currently operate, U.S.A., New Zealand, Philippines, or Australia or Canada. This was a development project, which, as you can see from how developers trade in the market, sit at a discount. We were able to acquire this at a P/NAV in the order of 0.4, which is entirely consistent with developer discounts. We are paying a market clearing premium to get it into the portfolio, and we think by getting something at this price, at this stage of its development, we are able to add the most amount of value to OceanaGold shareholders.
When we buy something that is an operating asset, as you know only too well, it is very competitive and you can find yourself having to pay top dollar. So at this stage of a project's life cycle, we think we can add the most value, whether that be through the drill bit, through the execution thereof, of the development project, which is why we were attracted to it. In terms of what this means, it is, as you say, it is relatively small for us to acquire given the financial strength that we have, but it is meaningful as well. It is a 100,000 oz plus producer. That is anywhere between 15%-20% of our annual production in terms of what it represents to our total portfolio.
It comes online at a really nice time for us, three years earlier than what we are currently scheduled, the great kicker to our production profile that will come from the Waihi North project. So it gives us growth earlier. It gives us growth at a low capital cost. To the final part of your question, we think we can still maintain investing in our business, in the sustaining capital. We can still develop all of our other growth options. We can still pay dividends. We can still return capital to shareholders via our buyback program.
Okay, awesome. Thanks. Maybe just wondering if you can walk us through the outstanding items on the path to permitting, and the construction timeline here.
Well, they're well advanced in the permitting. We've got all the mining leases that have been granted. As Bhuvanesh said in his comments that the EPA process is well advanced. We're out in the public review period. And they're the big ones that remain. In terms of the construction contracts, again, as Bhuvanesh said, they're well advanced in procuring some long lead items. We've been through our due diligence process to get comfort with the good work that's been done by the Ausgold team, and we'll look to build on that in due course. I think if you look at their DFS that they had, first production was in 2028 sometime, and we're saying 2029. So we're giving ourselves time to optimize at the margin and do more drilling. But yeah, fundamentally, this thing is sufficiently well progressed for us to be confident in acquiring it.
Okay, great. Maybe just last one. I was just wondering if there's any read-through to the timeline for the first gold at Katanning coinciding with the decline in production at Macraes, as outlined in the most recent tech report. Just wondering if you saw the need to offset that decline or if those two things are completely independent.
Quite independent, Wayne. It's always nice to have an asset that's going to arrest the decline. But our view on Macraes is that there's plenty of life in Macraes yet. We just have to unlock it through the technical work that we're doing, the exploration work that we're doing, and watch this space. We think, as we said before, that we see a pathway to take the production of Macraes into the 2040s, and that's what we're very much focused on right now.
Okay, great. Congratulations on the transaction and best of luck in the months ahead.
Thank you, Wayne.
Your next question comes from Ovais Habib from Scotiabank. Please go ahead.
Hi, Gerard and OceanaGold team. Congrats on the transaction. A couple of questions from me. Actually, this is a question starting off coming from a lot of investors this morning, and maybe a follow-up to Wayne's question as well. The question that comes up is, does the build and timeline of Katanning delay the Waihi North build or time to first copper in any way?
Sorry. It was a bit fuzzy on the line. Does this timeline impact Waihi North? Not in the slightest. Waihi North is, we're in execution mode of that project. We're 200 m into the decline, the progress of the surface work. I go back to what we said at our Q2 results. That is progressing wonderfully and it's well-covered by our balance sheet. It's well-covered by our free cash flow, actually. We're funding it out of free cash flow. So there is nothing mutually exclusive about doing or progressing with the Waihi North project, Palomino underground, any of our exploration activity. As you have seen over the last year, as we saw in the first half of this year, we're able to invest in growth, still return capital to shareholders in dividends and buybacks, and we're still adding cash to the balance sheet.
No, there's nothing that's mutually exclusive here at all. This is genuinely in line with our strategy of scanning, in the areas of focus that we had, an asset or an opportunity early enough that comes to us at a point that allows us to add value in terms of getting this thing commissioned and built and operated in a way that gives a good return to OceanaGold shareholders.
Okay. Thanks for that color, Gerard. That's great. Then maybe a question for Bhuvanesh. You talked about looking at optimizing the project. Does that include any sort of scope changes in the meantime? Or is that dependent on the exploration program that's currently in the way? The second part to that question also is, how confident are you in the metallurgy side of this project as well, and how much work was done on that? Thanks.
I'll just start with the metallurgy side first. Yes, so there's enough metallurgy work done as our due diligence technical team had looked at, and we're pretty confident with the flow sheet that's been presented. In terms of the optimization work, I think there's always plenty of optimization opportunities that you could probably see through. Ausgold has done a fantastic job so far as well, and we just want to basically build on that work. So no scope changes, but we want to basically build on already the work that's been done and maximize the return through the optimization process.
Okay. Thanks for that, Bhuvanesh. That's it for me, guys. And congrats on the transaction. Thanks.
Thanks, Ovais.
Next question comes from Harrison Reynolds from RBC Capital Markets. Please go ahead.
Hi, good morning, Oceana team. Congratulations on the acquisition and appreciate the details so far. Building on that last question, when you look at the drill program and that regional exploration, how do you think drilling success could inform any changes to the project design? Or, is the drilling more looking at de-risking and then mine life extensions to this project?
Hi, Harrison. Good to hear from you. It's Keenan here. We're doing drilling on a number of different fronts. The early-stage drilling, the stuff that Ausgold is currently doing is very much de-risking the earliest stages of the envisaged mine. But that's just part of the story. I think the bigger part of the story is that there's huge upside to be played out in district and regional areas. So there's strike length to the north and down dip. So we're looking at expanding upon the existing resource, as well as de-risking the resource confidence. And then beyond that, this is a relatively underexplored domain of Greenstone. As Gerard has indicated, the exploration that we want to do is complementary to, rather than competitive with, what we're already doing elsewhere in our pipeline.
I think that this is a long-term play for us to gain confidence, improve the confidence in the existing resource, expand on that existing resource, and then go further afield to look at satellite deposits to feed the eventual plant.
Thanks, Keenan. Then maybe just taking a step back, can the team talk to the thought process behind the funding of the acquisition and the determination of cash versus stock in the mix here?
Sure, Harrison. You know only too well that gold price goes up and gold price goes down, and I look at the way our stocks have behaved in the last, say, month, has been broadly correlated. By offering the opportunity for a 100% scrip deal, we're allowing Ausgold shareholders to be able to get more or less consideration in line with the gold price. So they get a scrip that is likely to move with the gold price and eliminate that sense of regret as to whether they're taking a point of view on gold price at one point in time. It also allows them to continue to have ownership and exposure to the Katanning Gold Project through our ownership. It also allows them to get the benefit of the growth and the value that we see and many others see in OceanaGold shares.
The offer or the opportunity for up to 25% of that consideration to be paid in the form of cash is quite a common one in Australia. It just allows shareholders to take a portion of that in cash, typically, and not uncommonly, that's an option taken advantage by retail shareholders, and Ausgold has a retail shareholder base. If they don't wish to have, for example, or don't have the ability to have ownership on a TSX or NYSE-listed stock. So it gives them that flexibility, and it's about making sure our offer is attractive to all shareholders in a way that suits them. So they have a choice. So it'll be a maximum of $137 million of the $549 million will take the form of cash. It's an up to, and if there's any appetite for cash above that, then they will be scaled back accordingly.
It just gives flexibility, and it gives the maximum attraction to Ausgold shareholders.
Understood. Yeah. Thank you for the detail. Congratulations again on getting this deal done, and looking forward to seeing the team advance it.
Thanks, Harrison. Appreciate it.
Your next question comes from Fahad Tariq from Jefferies. Please go ahead.
Hi, thanks for taking my question. Most of them have been answered. I just wanted to ask about the cost environment in Western Australia, and as you were doing the due diligence, any thoughts on the tight labor market or just diesel costs, and just the overall cost dynamic going forward in Western Australia? Thanks.
Yeah, look, it's a deep market. So there are a lot of gold producers in this state. We tend to have, as we all do, a good line of sight as to the trajectory there. We've taken a view having regard to the study work. We've taken a view on the current market. We've made our own estimates as to how things will play out, having regard to inflationary pressures and the like. And we factored that all into our modeling and still find that this has an attractive rate of return for OceanaGold shareholders. In some respects, it does have a locational advantage.
A lot of people are drawn from around this area to go work in other mining parts of Western Australia, and we think we will be an attractive employer of choice for people that won't have to drive so far or won't have to fly to go find work in the industry. So again, there's plenty of people in the mining industry in W.A., but this is a very attractive jurisdiction for people to live in, and we're confident of being able to attract them to OceanaGold for this.
Great. Thank you very much.
Thank you.
Your next question comes from Jeremy Hoy from Canaccord Genuity. Please go ahead.
Hi, Gerard and team. Thanks for taking my question. Most of them have been answered, but did have another one come to mind. M&A always very topical with you guys, given the strength of the balance sheet, as well as the valuation. With this deal now announced, does the narrative around M&A change at all, or are you going to maintain what you described to Wayne earlier on in the call?
Yeah, it's funny, Jeremy. I was reflecting that on the Q2 results call just recently. It was the first time in many a quarter we didn't get a question on M&A, and not long afterwards, we pop up with an announcement on an M&A deal. So, maybe you guys will ask more often. This doesn't change our strategy. It certainly gives us something to put our energies into. As [Bhuva] has just said, this has been well advanced by the Ausgold team. They've done a great job. But we're very comfortable taking it forward from this point, applying our technical expertise, our balance sheet, and financial capacity, none of which will be stretched. And we will continue to look, but we've never had an imperative to do anything.
We look at a lot inside the guardrails that we've always spoken about, and we will continue to look, but with less imperative to do so. But we've shown ourselves to be very patient, and we'll only execute where we are highly confident that we can add value to OceanaGold shareholders.
Great. Appreciate that color. I think it slots nicely into the pipeline and looking forward to seeing you advance the optimization and regional opportunities. I'll step back in the queue.
Thanks, Jeremy.
There are no further questions at this time. I'll turn the call back over to Gerard.
Well, thanks everyone for taking the time. It's a very exciting day for OceanaGold. I look forward to sharing with you progress on the transaction as it progresses and, of course, share with you more of our thoughts as and when the deal completes. Thank you for taking the time today. Have a great rest of day.
Ladies and gentlemen, this concludes today's conference call. Thank you for participating. You may now disconnect.