Comparison of Emerita Resources with Orvana Minerals Part Iall,
As an introduction to this post, I think that the comparison of Emerita Resources with Orvana merits 3 separate posts=
- the first providing an overview of the two companies comparing the business models, current comparative short interest, and looking at key indicators on the monthly technical charts.
- The second post will cover the price history of the two stocks and then go into where the stocks are on the daily, weekly, and monthly technical charts.
- The third post will cover the comparative production models of both stocks assuming that they were both in production at the current time. I think that shareholders of ORV.TO and EMO.V will find that comparison highly interesting.
Business models As a developer, Emerita’s business is to push out paper and print shares so that it can finance its exploration programs, so Emerita’s revenue from operations has been ZERO . In the last 5 years, stock float has grown from 11.89 million shares 5 years ago, to 16.72 million shares 4 years ago, 28.4 million shares 3 years ago, 85 million shares as of September 2020, 122 million shares as of December 2020, 136.87 million shares as of March 2021, 154.36 million shares as of June 2021, and currently the total float stands at 187.868 million shares. So between common stock, warrants, and stock options Emerita prints about 100 million shares per year.
In contrast, Orvana’s stock float has remained unchanged at 136.623 million shares during the same 5 year time period. Orvana being a producer sells gold, silver, and copper concentrate produced at Orovalle and has generated $80.2 million USD in revenue ytd in fiscal 2021.
Orvana shares trade currently at 0.6 times book value, while Emerita trades at 75.7 times book value.
Based on Orovalle’s fiscal 2021 gold equivalent production of 63,108 ounces, implied annual revenues due to be reported next month in mid December based on production would be around $112 million USD—This is the highest revenue since Orovalle went into commercial production in 2012. The previous peak annual revenue at Orovalle was the $102.39 million USD that the mine generated in 2013. Short Interest in EMO.V shares increased from a low of 158,667 shares short on June 4, 2021, and has grown to 3,266,066 shares short as of November 15, 2021. So the increasing short interest says that the shorts are confident that they can push EMO.V lower.
In contrast, short interest in ORV.TO peaked at a high of 65,215 shares that same week in June 2021, and has shrunk to 8,202 shares short as of November 15, 2021. Maybe the ORV shorts are thinking that it would be unwise to short a stock that is heading higher?
The most interesting technical indicator on Orvana’s 20 year monthly chart is the Chande Trend Meter which is sitting at 65.36 and is rising.
The last time this CTM indicator was at 65.36 was in November 2009, the month where Orvana started on its one year bullish run to $3.97 which finished with the CTM monthly indicator at above 97. Gold was priced around $1100 USD and copper at $3.50 USD/lb. Today gold is at $1785 USD/oz and copper is at $4.50 USD/lb, so metal prices are already substantially higher than when Orvana hit its high of $3.97. Back in 2010, the Euro was at $1.35 USD and today, the Euro is down to around $1.12 USD, so production costs are lower in dollar terms than they were back in 2012-2013. Emerita’s monthly technical chart had the Chande Trend Meter (CTM) cross the 60 level in April 2021 when the stock was at a price level of 35 cents.
EMO,V currently has a CTM of 96.34, and Emerita’s peak price this month is in the same range as Orvana’s 2010 high. So the question is whether Orvana will follow the same technical pattern and stock price pattern as EMO.V in the coming 6 to 12 months? Because of the very interesting trading action in both EMO and ORV today. I would like to make a second post covering the daily, weekly, and monthly technical charts of both stocks tomorrow.
Finally, in a third post, let’s pretend that Emerita had invested $160 million USD to build a mine and processing plant with the same throughput as Orovalle has today, and that it was permitted and in production. What would the quarterly profit potential be at current metal prices? Very interesting comparison to come!
ganndolph