Ramp in high grade oxides at El Valle At the bottom of page 1 of the Q1 2018 MD&A, there is the following report on the oxide ramp up at El Valle.
El Valle – Ramp up of oxides production continues: The proportion of oxide production
delivered to the mill from the El Valle Mine increased to 37%, up from 24% in the second half of
fiscal 2017. However, overall mining tonnage decreased due to fleet availability and a mechanical failure in the mine’s ventilation system that has since been resolved. As a consequence of the greater proportion of higher gold grade oxide ore processed, the mill experienced a build-up of inprocess gold. A number of geological and geotechnical process changes in the mine, metallurgical process changes to improve recovery of in-process gold and maintenance investments are expected to allow El Valle to attain its stated production guidance for the remainder of the fiscal year.
One of the reasons for my trip to Toronto to attend the AGM was to find out how the shift from 20 percent oxide ore throughput to 50 percent oxide ore throughput is affecting the gravity circuit and to find out whether there was adequate capacity to handle up to 70 percent free gold
and native copper present in the high grade oxide ore.
So What is the status at El Valle? Well, Orvana's COO in Spain, Mr. David Duncan, had flown in to Toronto to attend the AGM and this is what I learned from him:
- The goal at El Valle is to mine 6000 to 6500 ounces of gold per month with 50 percent of the ore coming from the high grade oxide areas.
- That goal is achievable and in recent days daily production has been at record levels with gold grades above 5 g/t.
- To supplement underground production, they have applied for a permit to take 50,000 tons of ore from the bottom of the open pit at Carles, and are awaiting that permit.
- The cost of hauling Carles open pit ore back to El Valle is only 4 Euros per metric ton, so that open pit ore from Carles will lower the overall mining costs this summer.
- The inspection of the new power line installation at Orovalle was supposed to happen within a week or two of the AGM, and so the mine should be on stable grid power now which should lower costs for fiscal Q2 2018.
- In the past several weeks, they also did a ball mill cleanout and recovered a significant amount of gold from behind the ball mill liners. That gold will boost the Q2 2018 production numbers.
- They did 1,424 meters of advance into the oxide areas in fiscal Q1 2018, and the target is 2,500 meters per quarter for the remainder of the year.
In short, the ramp up in oxides production at Orovalle is in progress as disclosed by the fiscal Q1 2018 MD&A. However, for those traders, investors, and posters who still insist on maintaining a bearish stance on this stock, please disregard this post!
Every $100 USD increase in the POG = 3 cents in Orvana EPS. Mr. Hillis stated that 25 percent of their gold production is hedged at $1320 USD, and 75 percent of gold production
is unhedged. Every 1 g/t increase in gold head grades at El Valle adds 4 cents to the EPS.
Here are a few links with information on the gravity concentrators used at El Valle.