RE: Boartd question.....threecpxThreecpx....you asked: "How is it that IVW shares is not trending strongly with the lead price ?"
Ivernia is a junior company which evolved from exploration and development into first operating mode on October 1, 2005. The build-up of production and associated normal growing and operating-efficiency-improvements difficulties(including the open-air drying process and discovering undercapacity at mill(with reason) in Q2,2006 contibued to a markeplace "hesitation" IMHO.
Reaction to a poor Q2,2006 production performance, which included:
- drop in ore head grade from 8.0% in Q1,2006 to 7.7% in Q2,2006
- drop in recovery from 78.6% to 74.2%
- Only modest increase in ore milled 225.7K tonnes in Q2,2006 compared to 211k tonnes in Q1,2006(note Q3,2006 has been 301.8K)
- Lead produced in Q2,2006 dropped to 13K tonnes from 14.59k tonnes in Q1,2006(note Q3,2006 was 17.2K tonnes produced
- Revenues $12.98 million in Q2,2006 compared to $17.4 million in Q1,2006(note Q3 revenues were $20.02 million)
- Net Loss in Q3,2006 $3.76 million(incl one-time write down of $1.16 million for low grade stockpile) compared to Net Earnings of $1.55 million in Q1,2006 and $1.15 million in Q3,2006
- Operating cash costs per pound $0.40 in Q2,2006 compared to $0.36 in Q1,2006 and $$0.43 in Q3,2006
- Ivernia Recognized price per pound $0.46 in Q2,2006, compared to $0.58 in Q1,2006 and $0.68 in Q3,2006( note the respective LME average price for each of these quarters was $0.50 in Q2; $$0.56 in Q1; and $0.54 in Q3,2006)
These summary items perhaps help to outline why the marketplace has not yet accepted that Ivernia is undervalued IMHO at current price of approx. $1.50 per share. I expect that from around mid year 2007 onwards, when Ivernia will have completed it's production ramp-up and most of it's operating efficiency projects(such as gas instead of oil as energy source, filters in the drying process, etc...), Ivernia will trade somewhat more tightly linked to the price of Lead as a commodity
When the price of lead(approx. $0.77 per pound avg. in Q4,2006) and it's associated adjustments in Q4 revenues for Lead shipped in Q3, 2006 and the volumes of shipments and production during Q4,2006 are fully understood by the marketplace, I anticipate a run-up in marketplace capitalization. New reserves update can also help,
Peace,
Good Decision-making to All,
ElJ