@tradeahead @Tradeahead ....about not seeing the forest for the trees - a quick look at NVO's news, future cash flows and value:
When starting a new mill tons of things need to be tested, adjusted, aligned, replaced (liner), etc. Initial material used for run-in was tailings from previous BC milling operation, i.e. waste material ALREADY stripped for gold was the first input. Other material used was low grade material from the area which has to serve as future tailings deposit. Grade control drilling is as of yet unavailable due to assay labs being backed up. Each area mined will by its very nature have a different grade relative to the next area.
Obviously, neither investors nor management can assess grade yet due to these factors. Attempting this now would be a futile exercise. Wait 1-2 quarters, and when the mill runs at steady state, optimized, with grade control, using a multitude of different feeds, then start to make your initial assumptions from there.
When assessing the financial aspects, please remember that in order to bring a new mill online, a lot of initial/one-off operations have to be performed. For that reason, ONLY time passed since the first pour has any relevance at all to economic calculations projected into the future. Ramp up period before does not apply. Anybody not understanding this has never started a complex business or project in their life. Lets have a look a that. 72 days of operation brings in revenue of 7.391 GoldEq. ounces sold: 16.814.525 AUD. That is 233.535 in revenue per day.
When looking at this number, remember that the mill is not running steady state, the liner had to replaced with probably a couple of days of downtime, no quantitative grade control as of yet, so a future number will certainly be higher. Also mill only running approx. at 67% of capacity currently, not yet optimized, period likely somewhat affected by low grade material from tailing area, etc.
So what could we reasonably expect in terms of improvements in revenue relative to past 72 days vs. say Q4 2021???
+33%% derived from a 33% increase in throughput of the mill to full capacity.
+60%% derived from targeted mining using active quantitative grade control, rather than current guesswork and old tailings material. (a guess!! - this number could be much higher. The conservative estimate is on purpose. QH agrees on an expected increase ref. his Crescat video comments)
+19%% derived from an increase in the sales price of gold, since we are at bottom of a correction and gold will this year be at 2100 USD, on its way to much higher prices later,
+2.75%% derived from an expectation of 2 down days for the replacing of the liner.
+5%% for optimizations related to metallurgy/recoveries and experience acquired operating the mill.
+??%% for future higher grades, ore sorted concentrates brought in, other projects. (as of yet impossible to estimate).
------------------------------------------
119,75%% revenue increase seems to be a reasonable projection, or a rough estimate of 513.193 AUD revenue/day.
187 mio. AUD/yr. in revenue. With a cost structure of 12 mio./mo. @ 144/yr, that is a 43 mio. profit. (would be excellent, in particular because BC is only one very small part of NVOs value, see HH's excellent breakdown of the parts).
With 14.000 m2 of prospective landholdings some of which has already been ascertained as containing alluvial gold of reasonable grades, one should not expect a finite life of this "mine" any day soon. It may sustain a century for all we know. This implies a 20x multiplier on the free cash flow, and if the above is a reasonable expectation, it implies 860 mio. CAD in value, without taking into account much of the novel higher grade prospects of Egina, Karratha, ore sorting, or the holdings in other mines and companies, such as NFG, organic growth in general, potential gold at depth, etc. Add all of this up, and you have at least a 1-2 billion dollar value proposition, trading at 543 million CAD. + much potential further upside as additional information becomes available.
So, NVO went from having 0 dollars in revenue, to now having 83 mio. and shortly perhaps 187 mio. AUD/yr. That is cause for massive celebration in its own right. It is on the tangent towards "success", not "failure".
(Even in the current timeframe, right now, QH's astute purchase of NFG, increased in value by 3,53 per share for 15 mio. shares, or 53 mio. CAD in profits over the very same 72 days. Which means that also right here and now, NVO has been extremely profitable. Rather than bash QH for neccesary if unexpected dilution, you should thank him for value creation with upwards of 100+% ROI on this investment since first pour at BC, adding 53 mio. value)
I bought more on the news release. It looks to me that you can buy BC at below fair value, and get a future mining conglomerate thrown in for free.
@Tradeahead @fabrix72 Whats the 1st thing you do when starting a new/refb. mill? You run it in. NVO used old tailings from the test mining project at BC, that is already gold depleted material, already processed in test mining. What is the 2nd thing you do?: You mine the area below which your new tailings deposit it to be placed (since you cannot access it later!). Where do you place the tailings deposit? On the lowest grade area available, anything else would be stupid. Consequently, the 2 first areas mined are the lowest grade material areas available. And Consequently only a fool would care to determine the grade based on the run-in period. So to answer your question: What the head grade is, nobody will know for a while yet to come. But what we DO know from a logical standpoint, is that it will be quite a bit higher than in the run-in period.