Adding Things Up (Update)
BOTTOM LINES
YTD '13 YTD '12
Revenue $78,329,000.00 $46,618,000.00 $ 31,711,000.00 increase
Gross Margin $23,083,000.00 $ 9,383,000.00 $ 13,700,000.00 increase
Net Income $20,134,000.00 ($12,464,000.00) $ 32,599,000.00 increase
Adjusted Net Income $5,264,000.00 ($459,000.00) $ 5,723,000,00 increase
Net Income/share $0.15 ($0.09) $ 0.24 increase
Adj.Net Income/Share $0.04 $0.0 $ 0.04 increase
Operating Cash Flow $14,065,000.00 ($278,000.00) $14,343,000.00 increase
End Cash & Equivalents $14,346,000.00 $7,431,000.00 $ 6,915,000.00 increase
31 March 2013 30 Sept. 2012
Shareholder Equity $146,213,000.00 $125,814,000.00 $20,399,000.00 increase
Liabilities $135,205,000.00 $160,320,000.00 $25,115,000.00 decrease
In total over the last six months on balance share holders have gained $45,514,000.00 or $0.333/share in value. This gain in share value is more then half of the current market price of $0.63 today, 29 May 2013 .
While UMZ is operating profitability in Q2 most of the improvement can be attributed to EVBC and the new shaft.
Continued production improvements are forcast for the second half of 2013.
CASH COSTS
YTD '13 YTD '12
EVBC
Total cash cost (by-product) ($/gold sold) $805 $905 down $100
UMZ
Total cash costs (co-product) ($/lb) copper $2.23$3.61down $1.38
Total cash costs (co-product) ($/oz) gold $1,076.00 $1,587.00down $511.00
Total cash costs (co-product) ($/oz) silver $21.29 $33.00 down $11.71
OUTLOOK
Without reducing Capex or Opex costs, without increasing tons processed at EVBC, without increasing recovery rates at EVBC, without increasing recovery rates at UMZ, without accessing sulphide ores at UMZ, and without financial and derivative gains Orvana can stay at the current profitability level even with a 20% drop in gold prices from the average realized gold price, $1,616.00, in the last quarter with just an increase in grade at EVBC alone.
If gold prices dropped 20% from the $1,616.00 realized in the Q2 to $1,293.00 Orvana would stay at the same level of profitability as in Q2 if EVBC gold grade increased from the 3.01oz/ton obtained in Q2 to 3.61g/ton.
This is highly likely. In Q1 Orvana attained a grade 3.19oz/ton and this was in earlier going prior to the shaft being operational. Opex expenses and gold grade only dropped back fractionally in Q2 because of development efforts to complete the shaft and access higher grades. Orvana is now in a position to extract those higher grade ores in the next half of the year.
In the first two months of Q3 '13, April and May, the average price of gold has been above $1,293.00 at about $1,447.00. At this average gold price Orvana can maintain the same level of profitability as in Q2 if with an average gold grade of 3.33 g/ton
Orvana is not limited to just increasing gold grades at EVBC to stay at the same level of profitability, they have those other leverages.
The higher grades are there. Here are the grades from the technical report:
Effective at July 31, 2012, the EVBC Mine contained (i) proven reserves of 2,064 million tonnes at 3.05 grams per tonne gold and 0.71% copper and probable reserves of 5.835 million tonnes at 3.53 grams per tonne gold and 0.46 copper, and (ii) measured and indicated resources, including reserves, of 2.983 million tonnes at 3.98 grams per tonne gold and 0.78% copper and 5.486 million tonnes at 5.23 grams per tonne gold and 0.58% copper, respectively.
Grade Summary El Valle/Boinas/Carles (Cut off grade 0.2g/ton gold), pages 183 - 184 of technical report
Gold Grade (g Au/t) Copper Grade (% Cu)
Measured and Indicated 4.84 0.65
Inferred 4.88 0.39
Life of Mine Production (page 207 of last technical report for all years)
2013 2014 2015
Tonnes 720,619 711,771 690,086
Au Eq g/t 3.7 5.0 4.6
Au g/t 3.1 4.2 3.8
Cu % 0.5 0.6 0.6
Ag g/t 10.0 13.2 12.1
Notes:
1) Gold grade for first half of fiscal 2013 has exceeded expected 3.1g/ton. Fiscal 2013 year to date grades were 3.11 g/ton despite processing of lower grade ore from shaft and drift development. Gold grades are expected to increase in the second half of 2013.
2) Tonnages proceseed may increase with anticipated mill capacity expansion
ORVANA, A VALUE BUY(Orvana is trading at 58.9% of its $1.07/share book value as of its 29 May '13 share price of $0.63)
As Orvana only recently began hitting its stride as a producer the market has yet to price it properly.
A comparative with Silver Crest Mining that has been producing for a longer period of time shows that. Silvercrest's longer production period gave the market time to evaluate and price Silvercrest accordingly.
Silver Crest is a good yard stick to use because while it has a smaller share holding it is in the same relative ball park as Orvana as to outstanding shares. The net earning per share last quarter for Orvana and Silvercrest was $0.05 and they are both precious metal producers. Also, it has a similarily good balance sheet as Orvana. As of 28 May 2013 share price and as of the last quarterly reports:
Orvana Mineral Corp.Silver Crest Mines Inc.
Share Price $0.57 $1.88
Shares 136,623,171 108,593,200
Book Value $146,813,000 $94,430,711
Book Value $1.07/share $0.87/share
2013 Production
Au ounces 75,000 33,000
Ag ounces 850,000 625,000
Cu Million lbs. 18 nil
Revenue last quarter $44,301,000 $15,329,642
Net Earnings $6,483,000 $ 6,002,276
Net Earnings/diluted $0.05 $0.05
Based on these comparative fundamentals the market has yet to price Orvana appropriately. By all fundamental accounts the market should be pricing Orvana higher then Silvercrest as it has three times the production value, has a larger book value and has much better development prospects and yet it is Silvercrest that is priced 3.3 times greater in the market.
GOLD PRICE
For every action there is an equal and opposite reaction. Ever since the 2008 financial crisis we have seen numerous attempts to prop up the U.S. dollar while it was being devalued to cover off U.S. debts and every action to do that has been meet with a equal and opposite reaction to counter dollar debasement.
Commodity providers increased prices. Individuals, institutional investors, countries fled the dollar to safe havens. Countries began negotiating trade deals in local currencies. Countries devalued their currencies to compete. The Federal Reserve bought up trillions of U.S. debt to prop up the dollar.
We are now witnessing the latest action to prop up a dollar that is currently being debased at a rate of a trillion dollars a year. There was a gold raid on the COMEX on April 12-15 and a U.S. tacit acceptance of Japanese money printing.
What follows next is the next reaction. People are not going to stand idly by and accept a dollar that is being artificially inflated when in actual fact the dollar is being debased.
Reactions:
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