Tradeahead on financials @Tradeahead Guys, I am just reading up on 2021 results.
I did not expect great 2021 results. In financial terms I will even say they were pretty much as I expected, a small 700k loss. as they basically communicated out to us back when they released the revised mine plan. I see no immediate surprises in the accounting.
It was said in those statements in BC production terms, that Q4 was going to be a bad quarter, and Q1 2022 and Q2 2022 would be better, but (in my analysis) probably a struggle to make money as well in terms of BC Q1+Q2 2022. (NFG another story). While Q3 2022 and onwards in BC looks very profitable, in their projection.
They said this indirectly as well: NVO modified their strategy some, with fierce refocus on exploration in a lot of places outside of BC. This refocus was a subtle hint, that BC needed better ore. And it does!! It do not think it is a secret after the revised mining plan information, that BC NEEDS better ore. The ore is there, but it needs to be permitted and mined, before it reaches results of course. That takes a bit of time, which in the companys projection is Q3 2022.
Ref. AISC. When you mine in Q4 too little gold, it quickly does a number on the AISC, as the costs do not budge, and in the case of industrial operations they have even risen, due input costs rising. All of the mining industry has been under input cost pressure in Q4- that is not just NVO BTW. This quickly whacks AISC in pure mathematical terms - so I had expected a bad AISC number too, and that is what we got. But it should largely be ignored, because it does not reflect actual AISC going forward. It reflects an intermittent problem which has happened, and which must be corrected. (When something breaks, measuring its running performance in the rearview mirror matters little, what matters is to fix that which was broken. = If driving in your car and the cooler breaks down, look to fix it ASAP, rather than obsess with your engines performance data until the problem is fixed, which would be pointless).
Should we move to the good news? Anyone in favor??? OK.
* By Q3 I expect the USD price of gold to between 2500-2600 USD. There is an endless number of technical indicators which point to that. In AUD terms, that in itself will render BC profitable. The world is changing, and resources are about to matter.
* NVO has a plan with which production should pick up strongly by Q3. I know permits are required, and not having insight into Australian speed on the matter, we have to wait and see of course. But if the plan can be followed through, it will not only be profitable, combined with the new gold price it will be ultra-profitable.
* The rising costs pressuring Q4, simplest expressed via energy costs, have now probably completed their run for now RELATIVE to gold. It has shown a 5 wave EW pattern (chart below) to rising support, which indicates reversal. It indicates that from sometime this month, gold should rise relative to energy. That would mean 2 things: 1) Price of gold sold goes up. 2) Prices of costs paid on a relative basis goes down. So it will improve the spreads of BC dramatically. This is something of which I am quite sure.
* NVO has a strong exploration program with some interesting results and some interesting projects. Remember to ALSO value NVO as an explorer, too. I think they will create value, there are too many interesting targets and indications for them all to not work out. Odds are very good NVO will deliver an exciting discovery, the value of which is not quantifiable of course.
* NFG
* NFG
* NFG - NFG offers as much likely value creation as the rest of NVO combined. I believe they have started a 40,000meter drill program, they just produced a 981 gram-meter hole, which is in the top 0,1% of all drills holes drilled in the world LTM - and I fully expect NFG to DOUBLE within 5 months. There are a lot of reasons for this. A double would generate another 114 million CAD for NVO, and as I keep saying, green is green. NFG money is in fact as good as BC money.
* Ore sorter.... We shall see what they report.
I thus firmly believe 2022 is going to be a quite good year for NVO, when looked back upon from a 2023 viewpoint. I expect Q1+Q2 in BC terms to be a struggle (but better than Q4 which was riddled with extraordinary problems which hopefully will not repeat themselves). And I expect Q2+Q3 to be a BLAST for NVO in NFG terms. I also expect the markets implied value for NVOs australian prospects as a whole to rise (the market will revalue gold miners strongly Q2+Q3). And I expect input costs to subside for a while, at the very least relative to gold.
Lets not kid ourselves. NVO does need to find better ore for the mill. But that realization hit the market last year, not today.