You are privileged investors Why are you privileged investors? Because you have the chance to understand what's going on and to anticipate what's to come. Who do you think will take the time to read the 43 pages of the report published by Robex on SEDAR.COM? Who will take the time necessary to read all the notes in the financial statements which allow certain amounts to be specified? Of the current shareholders, only a few will invest these efforts and for those who are not already shareholders, probably no one will make the effort.
Therefore, I draw your attention to the most important information that will allow you to view the next financial statements with great enthusiasm. This is not speculation and it is not a game because everything is recorded in the reports.
This very important information concerns the 7,831 ounces of gold which were kept in reserve as of June 30, 2020. As indicated in the management report, these ounces of gold were sold there a few weeks, during the third trimester. The amount obtained for this gold sale is $ 19,400,000.
However, in the 2020-Q2 financial statements, the value of those 7,831 ounces of gold was recorded in inventory. And as required by IFRS accounting presentation standards, the value of these gold ounces must be recorded at cost of production, which is $ 4,233,000. The difference between the amount obtained from this sale and the amount recorded in inventory is therefore $ 15,167,000. This is a really very large amount that does not appear anywhere in the accounting reports because to appreciate them you have to make the effort to read the notes which specify the amounts. So all software and other financial statement analysis tools will not see this very important detail. Since this sale took place during 2020-Q3, the revenues obtained will only appear in future financial statements.
If the 2020-Q3 had a regular gold sale of 14,000 ounces at $ 2,500, the income from that sale would be $ 35,000,000. To this amount must be added $ 19,400,000 for the income obtained from the sale of the gold reserve. Total revenue would be $ 54,400,000. For just one quarter, that is a very impressive amount! On the one hand you have to subtract an amount of $ 4,233,000 from inventory and in exchange you get $ 19,400,000 in additional income. Isn't that wonderful?
This amount of $ 15,167,000, which is the difference in value of this gold reserve, is also creating distortion in other places. In total assets, this $ 15,167,000 should also be added to the $ 102,144,000 already entered.
In the statistics, since the calculation of the cash cost is determined by the number of ounces sold, this amount should also be adjusted. This cash cost is currently $ 630.50 ($ 4,098,286 / 6,500 ounces) whereas it would have been much lower if Robex had not built up this reserve. The same should also be done for the all-inclusive maintenance cost.
In conclusion, if this reserve of gold negatively affects the presentation of these 2020-Q2 financial results, we must understand that the reality is much more beautiful than the one presented to us. And fortunately, the adjustment that will be made in the 2020-Q3 financial statements will have the opposite effect and propel income into the stratosphere, which should impress many investors. For your information, delaying the sale of these 7,831 ounces of gold will have generated additional income of approximately $ 500,000, which is not negligible.
That was the first part of my analysis of the 2020-Q2 financial statements. We will have the opportunity to discuss everything else in the coming weeks.