Ben Kramer-Miller • Mon, Jan. 19
- Orvana Minerals reported strong production on higher ore grades, offset by rising costs on a by-product basis.
- I hadn't expected costs to rise, although this isn't surprising considering the weakness in the copper and silver markets.
- Shares seem to have bottomed, but the issue of diminished reserves at EVBC restrict the upside potential in the near term.
Update: Orvana Minerals Receives $7.5 Million From Highland Copper Towards The Copperwood ProjectBen Kramer-Miller • Dec. 17, 2014
- Orvana Minerals just received $7.5 million for the Copperwood Project that it sold to Highland Copper earlier this year.
- The company also announced that its short-term lending facility won't be renewed.
- These developments are in line with expectations.
- While shares seem to have found support dwindling, resources at the company's EVBC Mine make this stock less compelling than I thought for the time being.
- Orvana Minerals just announced that it has paid back all of its debt relating to its flagship EVBC Project 2 years ahead of schedule.
- I had not anticipated this in my August article on the company.
- This is a bullish development for a company that has been struggling, and the reduction in interest expenses will be accretive longer term.
- Orvana Minerals reported full year production figures that rose ~5% year over year.
- This fits my expectations.
- Dwindling reserves remain an issue but the market knows about this: Orvana could be an interesting contrarian play now.
Update: Orvana Minerals Earnings - Revises Its Resources And EVBC Mine Life Downward; Shares Plunge
- Orvana Minerals reported a loss of $25.9 on more efficient operations but with a large--$25.5 million impairment charge.
- More importantly the company reduced its resource base for its flagship EVBC Project and shortened its estimated life.
- I got this one wrong last week seeing that I didn't predict the resource decline.
- At this point I would cut my losses.
Orvana Minerals: Cheaper, Safer, And More Efficient
- Orvana Minerals shares are down 25% in the 4 months since I recommended it as Q2 production figures at the company's flagship El Valle Boinas Carles were horrendous.
- Management has made necessary repairs to EVBC while emphasizing higher grade ore in order to maximize near-term efficiency--production is down but ore grades are up substantially.
- The trade-off will generate a significant increase in cash-flow leaving the shares significantly undervalued.
Orvana Minerals: Strong Cash-Flow And 20% Undervalued
- Orvana Minerals is one of the few gold miners to generate strong profits in 2013.
- Since one of its mines--Don Mario--is in Bolivia investors seem to be reluctant to invest.
- But this mine is a secondary asset compared with the company's EVBC mine, and the disparity between the actual risk and the perceived risk has created an opportunity.
- The stock is undervalued on a DCF basis even if we aggressively discount the cash flow from Don Mario.
- Further, the stock has tremendous upside if the gold price rises, or if the EVBC mine's life can be extended.
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