A potential home run? Orvana filed an AIF (Annual Information Form) for FY23. On page 23 they provided a Life of Mine Plan (LOMP). The plan shows gold production at their mine in Spain running at 62,000 ounces of gold in FY25, and 60,000 ounces in FY26. That is up sharply from FY24 estimated production of around 40,000 ounces. A strike in Q! & Q2 hurt production in FY24. With the strike resolved, production is ramping up. The company is scheduling higher grade ore over the next couple of years, driving higher gold production.
The production plan is based on estimated Mineral Reserves. This area has been mined since Roman times and I am optimistic it will continue to operate for another 10+ years.
“IF” production increases to 62,000 ounces in FY25, AISC will likely be below $1400 a tonne. With gold at $2,500 an ounce EBITDA would be in excess of $60 million. At $0.32 per share, Orvana’s market cap is $42 million is less than estimated EBITDA. An EV/EBITDA ratio of 5 is the average for intermediate producers.
A higher stock price is warranted on the Spanish assets alone. Add in Argentina and Bolivia and we may have a home run.