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Last edited 6 months ago

05-Jul-19:  OceanaGold Corporation (ASX: OGC) is not a gold producer that I've ever owned shares in, and that's got a lot to do with where their gold mines are located, being in the Philippines and on New Zealand's south island.  A number of Australian companies have made truckloads of cash from operating gold mines in places like Thailand, the Philippines, Africa, Indonesia and South America, but a significant number of them have had a whole bunch of trouble with the various authorities and governments in those countries. 

The trouble tends to occur when the gold price is high.  It seems that people start thinking about all that profit, and want to keep more of it for themselves. 

The types of issues that seem to occur regularly include security issues, governments and authorities moving the goalposts or attempting to renegotiate existing agreements, or refusing to extend or rollover expiring agreements.  That sort of thing.  New Zealand isn't into that sort of thing.  New Zealand is just not Australia.  I just prefer my gold producers to have at least one main mine in Australia, and preferably most of their gold mines in Australia, so they can benefit from the Australian dollar depreciating against the US$ as well as from the US$ gold price rising.  Don't like the Philippines much as a place for ASX-listed companies to operate gold mines.  I lost a fair chunk of cash on RED 5 (ASX: RED) a few years back - when they were 100% located in the Philippines.  Did OK from Medusa Mining (ASX: MML) about 10 years ago when they were on their way up to $8+, but glad I don't still hold them - they are now 64 cents.  They call it "sovereign risk" and it can take a company from hero to zero in a pretty short period.  OGC isn't at zero yet of course, and they've still got NZ, so they won't be going to zero, but they could easily halve.  You can read their latest annoucement here, and the following are a couple of links to articles about their issues there at Didipio:

She's a risky business.  The term "gold mine" has become a common term to describe a situation where there's easy money to be made, and lots of it, but not all gold mines are created equal.  Those located in countries like the Philippines, Thailand and Indonesia - particularly those that are majority owned by people who are not from those countries - are certainly riskier propositions than many other gold mines are.  Caveat Emptor!


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