Thoughts about ORV fiscal Q4 2019all,
If you go to Page 20 of the 2009 AIF, you will see the following resource estimate on the Las Tojas gold deposit at the bottom of the page:
"The Las Tojas deposit measured and indicated resource estimate is more than 27,000 ounces of gold contained in 387,000 tonnes of material with a grade of 2.2 grams of gold per tonne. The resource estimate was effective December 19, 2008, which was prior to mining. The deposit also has an inferred resource estimate of 4,500 ounces of gold contained in 78,000 tonnes of material with a grade of 1.8 grams per tonne. The mineral resources are contained by a pit shell based on a $1.20/tonne base mining cost, are above 1 gram per tonne cut off, have not been adjusted for metallurgical recovery.
The Las Tojas mineralization has lower grade, but the same mineralogical characteristics as the LMZ ore. Due to the modest size of this mineralization Orvana did not prepare a N1 43-101
compliant reserve estimate for Las Tojas."
From what we know so far, the new Las Tojas deposit consists of three additional deposits along the Las Tojas gold schist trend. So since Orvana Minerals has not disclosed the average gold grades at Las Tojas, I am assuming the same grades for the new LT deposit, and further I am assuming in my model that 50 percent of the fiscal Q4 gold ore at Don Mario
will come from Las Tojas II. The remainder of the ore will come from the last benches of Cerro Felix at an ore grade of 1.2. g/t. With these assumptions, I expect the average gold grade milled at Don Mario to return to 1.70 g/t with total fiscal Q4 gold production of
9660 ounces.
At orovalle, 300 tons per day of ore production will resume at the Carles mine providing additional skarn ore to mill in with the high grade oxide ore. I am assuming an oxide ore percentage of 48 percent for the final fiscal quarter of 2019 which should push the average milled head grade to a record 3.87 g/t and gold production of 20,710 ounces. Add copper production of 1.123 million pounds and silver production of 46,000 ounces along with the rather conservative assumption of a very gradual gold price rise to $1500 USD, and Orovalle revenue increases to $32.7 million USD while Orovalle production costs total around $19 million USD leaving a profit of $10.2 million USD.
At Don Mario, the fresh higher grade ore from Las Tojas II increases gold production to 9660 ounces with projected revenue at $1500 USD gold to $14.6 million while production costs remain stable at around $10 million USD. The result is a profit of $1.8 million USD at Don Mario.
On a consolidated basis I expect total fiscal Q4 gold production to increase to 30,300 ounces, with an estimated profit of $12.1 million USD or 8.9 cents per share which prices Orvana at a forward PE 10 stock price of $3.55 USD.
If you still want to sell a single share of ORV or ORVMF, then you have defined yourself as an idiot--pure and simple!
By the way, the most significant element of today's news release from Orvana was that 2019 guidance remained unchanged which means Orvana management expects Q4 gold production to be above 25,000 ounces needed to meet the lower end of quidance. If my projections for fiscal Q4 2019 are correct, Orvana will come in at the mid range of guidance for 2019 and above the upper end of guidance for copper production.