Orvana Fiscal Q1 2022 Profit Outlook all,
With the production interruption at Orovalle last quarter, one result was the creation of a stockpile of 41,566 metric tons of ore grading at about 5 grams/ton which if it were all oxide ore would grade at around 5 grams/ton gold. So Orvana's metal inventory reflected $2.964 million USD in ore stockpiles and $1.5 million USD of ore in progress.
During the last 8 calendar quarters, the quarterly oxide ore ratio has varied from 36 to 53 percent, and the total quarterly oxide tons processed has varied from a low of 58,938 tons to a high of 88,004 tons.
Because of this ore stockpile, my most bearish case for fiscal Q1 2022 is that throughput is below normal at 170,000 tons, none of the stockpile ore is processed during FQ1, and the oxide ratio going to the mill is 34 percent corresponding to 57,800 tons of oxide ore processed. This bearish case implies 12,460 ounces of gold production, 1.7 million pounds of copper, revenue of $28.5 million USD and profit of 0.6 cents USD per share. This case also assumes all metal in inventory stays there, which IMHO is highly unlikely.
My bullish case assumes that 10,000 tons of stockpile oxide ore will be processed through the plant in fiscal Q1 2022 along with 180,000 metric tons of throughput mined during the quarter. Assume 83,600 tons of oxide ore or 44 percent of throughput consistent with the average oxide mining rate in 2021. The resultant gold production is 15,400 ounces along with 1.8 million pounds of copper. Revenue works out to $33.9 million USD and quarterly EPS at 3.2 cents per share at current metal prices. Annualized that is 12.8 cents per year which corresponds to a PE10 stock price of $1.28 USD.
That profit level includes a $1.1 million USD spend rate at Orvana Argentina, $1.3 million USD quarterly spend at Don Mario, and $3.2 million USD in quarterly corporate G&A cost.
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