OceanaGold Philippines files for P7.9-B IPO

OceanaGold Corp. (OGC), a Canadian gold mining company [link], has filed an application to the SEC to conduct an IPO for its Philippines-based subsidiary, OceanaGold Philippines Inc. (OGP). According to OGC’s press release, the deal is comprised of 456,000,000 secondary common shares priced at up to P17.28/share, for a total transaction value of P7.88 billion. OGPI owns OGC’s interest in the Didipio gold mine, which is about a 5-hour drive east of Baguio City, and is required by the terms of its renewed Financial or Technical Assistance Agreement (FTAA) to publicly list at least 10% of the company as a condition of its license to conduct mining operations, which started in 2013. The mine has a lifespan that will allow it to remain in operation until approximately 2035. It holds an estimated 1.1 million ounces of gold and 140,000 tonnes of copper, as established in FY23. The stock will be listed under the ticker “OGP”.

MB bottom-line: I haven’t had a lot of time to mine the prospectus for insights yet (ugh I’m so sorry), but even a quick glance at the configuration of the offer tells me that this is something that I don’t ordinarily give too much attention to as a potential investment. Leaving aside the horrendous performance of PSE IPOs generally, the thing that jumps out at me here is that this is a 100% secondary offer, meaning that all of the shares that will be sold to investors will be sold by OGP’s parent company, not by OGP itself. This means that OGP will not come out of the IPO with any fresh money that it can use to build, expand, or otherwise develop some kind of “growth story” that investment bankers always talk about with potential IPO applicants. Don’t get me wrong, OGP has a plan for expansion, but it isn’t going public to fund these plans. It’s going public to satisfy its contract with the government. That’s the second thing that jumps out at me: OGP comes off as a reluctant issuer. They’re not coming to market because they have a great idea and need to raise capital to inclusively generate new profits, like maybe a Citicore Renewable Energy Corporation [CREC]; they’re coming to market because they’ve been told to by the government, as a condition of its contract. In this way, OGP is more like Synergy Grid [SGP 7.56, up 0.1%], the holding company of a few holding companies of other holding companies that own 60% of the National Grid Corp. of the Philippines; NGCP was forced to conduct an IPO by the terms of its concession agreement. Like I said though, this is only a first blush take. A deeper read of the prospectus could get me excited about what’s to come in the future.

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Merkado Barkada's opinions are provided for informational purposes only, and should not be considered a recommendation to buy or sell any particular stock. These daily articles are not updated with new information, so each investor must do his or her own due diligence before trading, as the facts and figures in each particular article may have changed.