Here's why gold miner OceanaGold Corporation plunged 19% this week

OceanaGold Corporation (ASX:OGC) shares plunged 19% this week. But is their further to fall after yesterday's shocking news?

| More on:
a woman

You’re reading a free article with opinions that may differ from The Motley Fool’s Premium Investing Services. Become a Motley Fool member today to get instant access to our top analyst recommendations, in-depth research, investing resources, and more. Learn More

On Monday the shares of Australian gold miner OceanaGold Corporation (ASX: OGC) finished the day at $4.75. Just two days later they have dropped almost 19% to $3.87 after it emerged that the Philippine government may be about to force the closure of its Didipio operation.

Yesterday afternoon the nation's Department of Environment and Natural Resources named the Didipio mine as one of 23 that may have their operations suspended due to alleged social issues.

According to The Australian, OceanaGold has been the subject of ongoing complaints from locals for several months now, with its planned exploration program seen as a threat to farmlands.

Management has stated that it has yet to receive any formal order from the department and is seeking clarification and further details. As things stand it is business as usual and both mining and processing activities are continuing at the mine.

If the mine were to be closed it would be disastrous for the company. Year to date its Didipio operation has accounted for 40% of the company's total gold production and 35% of its total copper production.

President and CEO Mick Wilkes had this to say on the matter:

"The Didipio Mine has a strong social license to operate. Our achievements since recommencement of construction in 2011 would not have been achieved without our steadfast commitment to the community and most importantly the strong endorsement from the residents of Didipio and the nine other communities in the provinces of Nueva Vizcaya and Quirino."

I would be quite surprised if the mine shut considering the estimated 1,764 Filipino nationals that it employs and the economic benefit it has provided of around US$70 million in taxes and royalties over the past three-and-a-half years.

But ultimately it is impossible to know what the Duterte government will do next. So with its shares still up by 48% year to date, investors might want to consider taking profits and looking elsewhere in the sector at Newcrest Mining Limited (ASX: NCM) or St Barbara Ltd (ASX: SBM) if they still want exposure to gold.

Motley Fool contributor James Mickleboro has no position in any stocks mentioned. The Motley Fool Australia has no position in any of the stocks mentioned. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Bruce Jackson.

More on ⏸️ Investing

A white and black robot in the form of a human being stands in front of a green graphic holding a laptop and discussing robotics and automation ASX shares
Technology Shares

Joining the revolution: How I'd invest in ASX AI shares right now

Advances in artificial intelligence (AI) could usher in a new industrial revolution. Here’s how you can invest in it.

Read more »

Close up of baby looking puzzled
Retail Shares

What has happened to the Baby Bunting (ASX:BBN) share price this year?

It's been a volatile year so far for the Aussie nursery retailer. We take a closer look

Read more »

woman holds sign saying 'we need change' at climate change protest
ETFs

3 ASX ETFs that invest in companies fighting climate change

If you want to shift some of your investments into more ethical companies, exchange-traded funds can offer a good option

Read more »

a jewellery store attendant stands at a cabinet displaying opulent necklaces and earrings featuring diamonds and precious stones.
⏸️ Investing

The Michael Hill (ASX: MHJ) share price poised for growth

Investors will be keeping an eye on the Michael Hill International Limited (ASX: MHJ) share price today. The keen interest…

Read more »

ASX shares buy unstoppable asx share price represented by man in superman cape pointing skyward
⏸️ Investing

The Atomos (ASX:AMS) share price is up 15% in a week

The Atomos (ASX: AMS) share price has surged 15% this week. Let's look at what's ahead as the company build…

Read more »

Two people in suits arm wrestle on a black and white chess board.
Retail Shares

How does the Temple & Webster (ASX:TPW) share price stack up against Nick Scali (ASX:NCK)?

How does the Temple & Webster (ASX: TPW) share price stack up against rival furniture retailer Nick Scali Limited (ASX:…

Read more »

A medical researcher works on a bichip, indicating share price movement in ASX tech companies
Healthcare Shares

The Aroa (ASX:ARX) share price has surged 60% since its IPO

The Aroa (ASX:ARX) share price has surged 60% since the Polynovo (ASX: PNV) competitor listed on the ASX in July.…

Read more »

asx investor daydreaming about US shares
⏸️ How to Invest

How to buy US shares from Australia right now

If you have been wondering how to buy US shares from Australia to gain exposure from the highly topical market,…

Read more »