RE:2nd quarter reportfirecracker74,
Nice to see you posting on the Orvana board.
I think that your revenue and cost estimates are fairly close to my revised numbers. I had expected the fiscal Q3 revenue to be closer to $45 million USD based on ore grades at EVBC being at least 3.0 g/t. Instead, it looks like management is accepting a higher ore dilution factor and optimizing volumes mined. Almost all of the mine production was high copper low gold skarn with the ore being hoisted up the 420 meter shaft. Next year, I expect half of EVBC production to be high grade gold low grade copper oxide ore with gold production at least 60 percent higher than in the current quarter.
The way to think about Orvana in Americas Silver terms is to realize that Don Mario produces the same revenue as both of Americas Silver mines in their present configuration. EVBC revenue in the current quarter is approximately equal to Americas Silver revenue once San Rafael is in production, San Rafael should boost Americas Silver revenue from $15 million per quarter to at least $25 million per quarter at current silver prices.
The other thing to wrap your head around is to realize that the oxide ore stockpile at Don Mario contains 130k oz of gold, 200k ox of gold equivalent in copper, 3 million ounces of silver. So that is 330k oz of gold equivalent.
Teranga Gold's stockpile of 11.8 million metric tons of low grade 0.75 percent gold ore which makes up 60 percent of Teranga's 11500 tpd daily mill feed contains 280k ounces of gold, so Don Mario's stockpile is worth more than Teranga Gold's stockpile.
Don Mario has three flotation lines talc, lead, and copper, and oxide ore used to be processed through the leach precipitation float process where copper oxide ore was treated with sulfuric acid produced at the sulfuric acid plant on site. The sulfuric acid plant was decomissioned and the CIL plant has been restarted. Don Mario has its own natural gas fired power plant which generates power, and unlike Americas Silver which only produces zinc, lead, and copper concentrates containing silver, both Don Mario and EVBC have equipment for producing gold and silver dore along with copper concentrate containing gold and silver.
What makes this stock a must own in one's portfolio is the Samsung off take agreement which covers copper concentrate produced at Don Mario containing gold and silver, and ALL gold and silver dore produced at El Valle. We don't know the detailed terms of that agreement.
However, Avino's CEO disclosed that Samsung uses a metric ton of gold per month in its electronic manufacturing operations, and that is 29,000 ounces per month. The current quarter's combined gold production from Avino and EVBC is 15,700 ounces of gold which is enough for 53 percent of one month's production at Samsung!
No wonder Avino is expanding their MRP from 1500 to 2500 tpd, and starting up a gold mine in BC, and both Orvana's mines are running at max throughput with Samsung funding the underground development at EVBC necessary to increase production. Samsung also bankrolled Avino's expansion in a similar fashion. Avino's offtake agreement with Samsung covers copper concentrates at Avino, and gold silver concentrate from San Gonzalo.
Here's my predicted results and what I think actual results for Orvana will be, and my projection for America's Silver results. Both USAS and ORV reported production results on the same day, and I expect that Americas Silver will report the same day as ORV within the coming week.
