Eye on Earnings: Volume matters for mining sector

The mining sector did well in 2025. The aggregate growth of the sector, which consists of OceanaGold (Philippines), Inc. (OGP) and Nickel Asia Corporation (NIKL) in our coverage, yielded a 227% surge in net income year-on-year (YoY).

We attribute this growth to higher selling prices of gold, copper, nickel, and other products.

*4Q 2024 net income was extraordinarily low due to weather disruptions for OceanaGold and impairment recognition for Nickel Asia for its geothermal explorations for the Montelago Geothermal Project. 

The company saw net income rise 152% YoY due to investors shifting to safe-haven assets — evident with gold prices rising 65% YoY for 2025. Despite the earnings figure beating consensus, the company’s gains were offset by the slowdown in production and sale of ore.

Its product mix is primarily gold and copper, with gold volumes down 6% YoY and copper up 8% YoY. The decline was attributed to heavy rainfall, which delayed mining operations in the underground segment of its Didipio mine.

Management, however, is guiding for higher production in 2026 after having resolved the flooding issues, allowing the company to tap into the deeper levels with potentially more reserves of ore.

Despite spending to resolve these issues, the company’s all-in sustaining costs were only 0.4% higher than guidance. While operational and cost efficiency may improve production levels, the recent sideways trading of gold amid geopolitical noise could soften investor sentiment.

Still, expectations of US Fed cuts and high debt from the US-Iran war may spark investor demand for gold once again. Another plus for the company is its dividend yield of 9.4%, which remains attractive for investors looking for defensiveness. Thus, the call is to stay neutral until the gold outlook and production improvements materialize.

The company’s net income for 2025 was up 312% YoY due to the rise in nickel price from Indonesian production cuts, backed by a 9% YoY increase in nickel sales volume amid higher exports.

As a result, shipping costs increased by 23% YoY, but is at notable risk this year, as elevated fuel prices from the US-Iran war could potentially raise cost of sales. While the continuing cuts in Indonesian nickel production may induce upward pressure on nickel prices, the surge in demand for Philippine nickel could be tempered by the current oversupply.

Lastly, the company’s capital expenditure for 2026 is set to be higher by 25%, with 88% going into its renewable energy generation segment.

Despite a considerable dividend yield of 4.3%, the stance is to go neutral, given heightened cost concerns and the need for a greater earnings contribution from the renewable energy segment.

WILLIE KRISTOFFERSON YU is an Equity Research Analyst at Metrobank’s Trust Banking Group. His coverage includes utilities, telcos, mining, and gaming, as well as select offshore markets. He holds a Bachelor’s degree in Management Engineering from Ateneo de Manila University. He is currently pursuing industry certifications to better immerse himself in Financial Markets. Outside of work, he enjoys playing the piano and golf.