RE:RE:RE:RE:RE:RE:RE:Easy money Eap5522,
To follow up on my previous post, based on my preliminary financial model for GPR based on the production results for Q2, I had expected GPR to report a profit of up to $4.3 million uSD or EPS of 2.2 cents US per share which equates to a PE 10 stock price around 90 cents which is where GPR is at in USD. That was based on the assumption that they sold all Q2 2019 production.
It turns out that the actual Q2 2019 number is a loss of $5.6 million USD or 2 cents per share. The reason is that GPR had approximately $10 million USD in unsold inventory at the end of the calendar quarter. Had they sold this inventory the result would have been a profit of around 2 cents per share or very close to my modeled result.
Here's the discussion from page 10 of the Q2 2019 MD&A which is the most important take away from the Q2 MD&A:
"AISC per Au oz for Tucano was $1,142 for the second quarter of 2019, compared to $1,365 in the first quarter of 2019. The decrease was mainly due to lower stripping costs due to mining from areas with a lower strip ratio. Partly offsetting the decrease was high dor and refined gold inventory of approximately 7,300 Au eq oz at the end of the quarter that had the effect of increasing AISC on a per-unit basis. AISC per Au oz is also expected to continue to trend towards the Company’s annual consolidated guidance of $1,030 – $ 1,130 per Au oz as production increases and the strip ratio decreases in the third and fourth quarters."
So the good news is that we can expect an additional $10 million USD in sales from Q2 on top of Q3 production.
As a result, I expect the market reaction following tomorrow's news conference to be positive. There may not be a gap up, but I expect the shorts to be covering in a hurry. The good news in this is that the economics of the Tucano gold mine are better than I expected based on the 43-101 report.
The other good news for investors in GPR is that the company has not sold any additional shares from the recent ATM that they did, so there has been no dilution. I don't expect GPR to sell any ATM shares below $3 USD per share.