Q1I just read through the Q1 financial report as posted on sedar.com and wanted to note a few points:
IPT is one of the only juniors, if not THE only junior, that has been able to report net earnings with a production rate of less than 300 tpd. Some of the others are reporting positive cash flow, but I cannot think of another that has net earnings. Considering that the company has an impressive growth rate for the production numbers in just the 15 months that it has been a producer, I am encouraged to see how the costs will continue to decrease and the earnings should grow.
One consequence of strong financial performance is that the working capital position is stronger. This could increase further this year, since IPT will be the recipient of additional money from JV partner YLL as it works to earn in on the 4 Zacatecas properties and must pay a cash (or shares) fee. Also, there are about 3 million warrants outstanding that expire in July, and that will contribute a further $1.5 million to the treasury if all are excerised.
During my visit the mine, the company was producing from a wide stockwork zone in the Guadalupe Mine, located right at the foot of the mill. This zone was easy to mine and extended up to 15m in width. So the production from this area should grow and the costs will be low. Look for this contribution to hit the bottom line Q2 and Q3, with even greater total production, and lower mining costs.
The company reported a net gain on foreign exchange last year of $34K and a net loss this statement of $46K. The CDN dollar has continued to increase sharply in value so I would estimate that the losses in future quarters will amount to more than $50K. However, the earnings statement also shows a net interest gain from the cash in the treasury of $34K for this statement and that will also grow in future quarters as more money comes in, so it will help to offset the foreign exchange losses.
The percentage of total revenues from base metals was increasing in Q1. However the base metals did not begin to recover in price until late in the quarter, and the metals have gained even further since the end of the quarter. So I look for increases in the Q2 revenues as a result.
Overall, I think IPT is going the same direction as the sister company EGD. Fred Davidson likes to run a tight ship that is self-financing, and report a string of quarterly earnings. From my notes above, I believe that this strong performance will only improve in coming quarters. I also believe the emphais on exploration drilling (with 10,000m scheduled for the rest of this year) will bear fruit, and IPT has shown a remarkable short turnaround time to convert exploration success into production. So we could look forward to continued production growth right through the end of the year.
Higher metals prices, lower costs, and rising production rates, will all contribute to greater earnings. IPT is a conservative company, and the share price is perhaps not the firecracker that some other juniors can boast, but I do think the company will be a strong, steady performer for a long time to come, and a very low risk option in a risky sector.
cheers!
COACH247
Voluntary disclosure: IPT is one of the largest holdings in my PF, and the advertisement has not been posted yet, but IPT is a paid sponsor of my website.