RE:Ridiculous Silly_me,
Why do you assume that just because the stock price went down from 40 cents Canadian to 20 cents Canadian, that there is something wrong with this stock or that some event has happened that we don't know about?
Fundamentals are the same as they were 6 weeks ago. Gold at $1490 USD is still way better than the $1300 USD realized gold price from last quarter. The last time gold prices were this high is in Q1 2013, and in that quarter Orovalle produced 13,949 ounces of gold and sold 8,759 ounces at north of $1686 USD per ounce. Last quarter, Orovalle sold 15,256 ounces of gold at at slightly over $1300 USD per ounce and had revenue of $21.23 million USD which is $4 million dollars higher than in Q1 2013.
So Orovalle gold production is up because more high grade oxide ore is being processed relative to the lower grade skarn ore. Back in 2013, the Euro was at $1.30 USD, so with the Euro trading at below $1.10 USD in the most recent quarter, there is a currency tail wind that was not there in 2013.
With the Carles high grade open pit being mined in fiscal Q4 2019, there is no reason to believe that gold production or revenue should be down relative to the previous quarter. So what explanation could there be for the drop in the stock price?
With repect to the shares in ORV traded on the TSX, since the breakout in the price of gold above $1300 USD, there has been 9.385 million shares of UP volume on the TSX for a cumulative up volume value of $3.265 million Canadian dollars or about $2.4 million USD. Since the top in July, the down volume has been 3.5 million shares or about 37 percent of the UP volume, and the Canadian dollar value of the shares sold in the last 6 weeks is only 30 percent of the UP volume dollar value. So the weak longs have sold roughly $1 million Canadian dollars which the shorts on the TSX profited on. So, therefore on the
technicals, this correction has been normal in the sense that very few shares are being sold in comparison to the shares that are being accumulated by the strong hands.
Since 10 times more shares of ORV are traded on the TSX every day, the TSX controls the short term stock price. In the US, ORVMF trades on the OTC. During the May to July run, 1.16 million shares worth $237,000 USD were added on the long side. During the last 6 week sell off, about 400,000 shares were sold by the weak longs, and the dollar value of the sales was about $100,000 USD. So while the recent price decline has been dramatic, I see it as a last chance to buy a stock that has an intrinsic value of over $1 USD per share for an 80 percent discount to intrinsic value.