- Silver equivalent production fell 4% to 786,000 oz.
- Ore grade fell from 59 gpt. to 55 gpt.
- Cash costs rose from $8.90/oz. to $10.29/oz.
As a result, the company reported a loss of $1.4 million on $9.2 million in revenue (note the company uses base metals as offsets in its accounting).
Since I wrote about the stock last July, shares have lost three quarters of their value as the company stopped producing at its Shafter Mine late last year. As I said last July, an investment in Aurcana largely depended on the company successfully ramping up production at Shafter, and this turned out not to work out. Now the company has one producing asset -- La Negra -- which as we have just seen is struggling to turn a profit. With the company's high debt load, it seems that Aurcana is a stock to avoid until its fortunes change.
However at the same time investors have priced in a pretty lousy scenario for Aurcana, and considering that its La Negra Project has an estimated 150 million ounces of silver plus more than this in silver equivalents, this could now be a good speculation stock for investors looking for leverage to the silver price. But until the company brings its costs down, this isn't a good investment.
Disclosure: The author has no positions in any stocks mentioned, and no plans to initiate any positions within the next 72 hours.
The author wrote this article themselves, and it expresses their own opinions. The author is not receiving compensation for it (other than from Seeking Alpha). The author has no business relationship with any company whose stock is mentioned in this article.
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