RE:RE:RE:Earnings outBeluga2020,
With respect to the Orvana FQ3 2020 results,
My expectation of a significant reduction in mining cost happened. My model predicted $14.965 million dollars in mining cost. The actual number was $15.187 million dollars, so my model was pretty much spot on!
With respect to top line revenue, I assume that all production made in the current quarter is sold in the current quarter. But Juan Gavidia made the smart decision to only sell the gold and copper concentrate needed to break even with his cash flow and save the remainder of the production for future sales at much higher market prices.
IMHO, this was the correct decision to make given his existing forward sales contracts. So he merely minimized his hedging losses by selling 9681 ounces of gold holding back 2365 ounces of gold produced during the quarter. On copper and silver, Orvana only sold 2/3 of the quarterly production and held back on 1/3 of copper concentrates for the much higher copper and silver prices that are coming!
So Juan Gavidia banked $2.6 million USD in by product copper and silver production, and banked $5 million USD in gold production which will be sold in Fiscal 2021 at unhedged prices.
So therefore, the FQ3 AISC numbers are misleading, because they are based on the metal sold data, and one has to factor in the AISC that would have happened if all that quarter's production had been sold.
Three bullish items on the report:
1) Total all in mining cost dropped from $19.5 million to $14 million USD from the previous quarter.
2)The Company has a VAT receivable balance in EMIPA of $7.8 million related to 2018 and 2019 periods that expects to receive in the short term, subject to the favourable completion of the tax audit in progress.
Cash used in investing activities was $0.4 and $4.2 million used in the third quarter and first nine months of fiscal 2020, respectively, compared with cash used for $4.3 and $8.4 million in the third quarter and first nine months of fiscal 2019, respectively. Capital expenditures drive the majority of cash flows used in investing activities. Cash used in investing activities in the first nine months of fiscal 2020 is offset by $1.3 million proceeds from EMIPA’s assets sold. The Company has a program in place to sell additional EMIPA’s assets, mainly heavy equipment and related spare parts, that won’t be used for the Oxides Stockpile Project, and, subject to the resolution of the COVID-19 situation, the Company expects to complete the process in the last quarter of fiscal 2020.
3) Cash provided by financing activities was $3 million in the third quarter and $2 million were provided by financing activities in first nine months of fiscal 2020. All this compared with cash provided by financing activities amounting $1.8, and cash used in for $1.1 million, in the third quarter and first nine months of fiscal 2019, respectively. During the third quarter 2020, OroValle secured four loans with three Spanish banks for a total of 3.8 million Euros.
ganndolph