RE:RE:RE:RE:RE:RE:RE:RE:RE:selling ORV Puffertime,
The rise in the AISC at Don Mario from $1243 USD/oz to $1678 USD/oz was caused by the lower 1.20 g/t gold grades at the bottom of the Cerro Felix open pit. For fiscal Q4, I am expecting 50 percent of the gold production to come from the Las Tojas satellite open pits which I am modeling with a strip ratio of 7 at a head grade of 1.54 g/t. So I am looking for gold production of around 7,400 ounces, and AISC of around $1400 which makes Don Mario break even at current gold prices.
During 2009 to 2011, 1 kilometer of Las Tojas strike was mined and produced 50,000 ounces of gold over the 2 year time period. The new Las Tojas open pits have another two years of gold schist ore production starting in the current quarter, and exploration will be done in 2020 to extend Las Tojas 3 kilometers west to Oscar, and then explore the 8 kilometer schist band east southeast of Las Tojas. If all 10 kilometers of strike are mineralized, then Don Mario could have another 500,000 ounces of gold production in the future just from the schist band.
And of course the greenstone at Don Mario is totally unexplored. IMHO, very few investors understand the potential at Don Mario.
At Orovalle, AISC increased last quarter due to a combination of $1 million higher cost combined with $2.3 million dollars drop in copper by product revenue, and Carles being not in production for fiscal Q3. In the September 9, 2019 news release Orvana provided the following update on Carles.
El Valle (Spain) Update
During the fourth quarter of fiscal 2019, the Company restarted production at its Carls Mine with a short-term open pit project, as scheduled. Further Carls exploration activities are scheduled in the near term. El Valle continues to fine-tune the oxides fleet with higher capacity equipment to improve efficiencies and availability; evaluate backfill processes to improve logistic efficiencies with a focus on cost control; and is progressing on the ventilation system upgrade at El Valle, with emphasis on power cost control.
So, big deal, they mine Carles with an open pit in fiscal Q4. What is the big deal?
Well, mining cost should drop by $30 USD per tonne.
Gold grades on the open pit around 3.84 g/t, and copper grades 0.92 percent.
If Carles supplied 20 percent of ore production during fiscal Q4, total gold production would be around 21,000 ounces, and copper production around 1.67 million pounds. Coupled with the increase in the price of gold to $1500 USD, we could be looking at quarterly revenue from Orovalle of $34 million USD, and an after tax profit of $12.4 million USD.
Figuring in a small loss of $500,000 USD at Don Mario, Orvana Minerals should post a nice profit of around 9 cents per share for fiscal Q4 2019.
For the year, the company should be reporting its first annual profit since 2013.