RichardLY
19 Aug 2016
vox markets blog interview [link]
forwardloop
19 Aug 2016
House broker says - still cheap? [link] Fitzgerald suggested that despite the share price more than doubling in the last 12 months, the shares are still cheapSouth America-focused gold miner Orosur Mining Inc (LON:OMI, CVE:OMI) has increased its forecast production guidance for the current financial year (FY17).Guidance has been increased to between 35,000 and 40,000 ounces of gold at operating cash costs of between US$800 and US$900 per ounce, up from previous guidance of 30,000 to 35,000 ounces at US$850-950 an ounce.Orosur said it expects to benefit from the savings generated by the ongoing optimisation of operations as well as higher grades from the San Gregorio West Underground (UG) project in Uruguay.The upgrade came in the company’s results statement for the year to 31 May, 2016, in which it revealed gold production in the financial year just ended came in at 35,773 ounces, a little bit ahead of guidance, which was for between 30,000 and 35,000 ounces.Cash operating costs reduced to US$877 an ounce from US$912 an ounce in the previous financial year and towards the lower end of the US$850 – 950 an ounce guidance range.All-in-sustaining costs (AISC) of US$1,069/oz was an improvement on the previous year’s US$1,185/oz, and in line with guidance of US$1,000 – US$1,100/oz. AISC fell below the US$1,000 an ounce level in the third and fourth quarters of fiscal 2016.Revenue declined to US$42.87mln from US$65.87mln the year before, reflecting lower production and a decline in the price of gold. The average gold price received from sales eased to US$1,154 an ounce from US$1,232 an ounce the previous year.Loss before tax narrowed dramatically to US$3.16mln from US$49.4mln the previous year, when the company took a US$45.55mln hit on foreign exchange movements.During the reporting period the company reduced its debt to US$400k from US$1.5mln and had a positive cash balance at the end of the period of US$4.3mln, down from US$4.8mln a year earlier.“Thanks to the success we enjoyed in improving operations and reducing costs in Uruguay, we were able to repay the majority of the company’s outstanding debt, while also progressing vital growth projects. This work affords the company the opportunity to take advantage of a more positive market environment which currently exists,” said Ignacio Salazar, chief executive of Orosur.“The company has been evaluating a number of options to advance the highly prospective Anzá project in Colombia, and is refining a geological model and carrying out some exploratory metallurgical and density test work,” he added.“At an average gold price of US$1,154/oz for FY16, the company returned to gross profitability and managed to increase its net cash balance. While this was ongoing, we commenced development of San Gregorio West UG project with first blast work occurring on May 12th 2016. This mine will be the second mechanised UG mine in Uruguay after our Arenal Deeps underground mine. The granting of a one year exemption on royalty payments by the Government of Uruguay, in this difficult period, represented a significant endorsement to our company and the way we operate,” Salazar said.The Orosur boss conceded the financial year just gone had been a challenging one but added that, for the first time since early 2013, the company is seeing signs of market improvement.The shares dipped to 20.5p from 20.75p in early trading, but are up more than 256% year-to-date.House broker Cantor Fitzgerald said Orosur’s results were ahead of its forecasts and confirmed the increased profitability that had resulted from the cost-cutting programme that kicked off a year ago.“While our estimates will need some adjustments, based on a US$1,321/oz gold price
Mrbusiness
17 Aug 2016
Re: Buy The Dip I have found the answer to my own question, see below, following yesterday's results:"While our estimates will need some adjustments, based on a US$1,321/oz gold price we are currently forecasting a significant increase in OMI's earnings next year, placing OMI on multiples of just 1.2x EV/EBITDA [enterprise value/underlying earnings] and 2.4x P/E [price/earnings] despite the share price having doubling in the past 12 months. Hence, we believe there must be more upside to the share price from this level and we reiterate our BUY recommendation and TP [target price] of 32p.” said Cantor’s Robin Byde.
Mrbusiness
16 Aug 2016
Re: Buy The Dip Thank you. So do you think Salazar is right that the company is still undervalued? What do you think the prospective PE is at the current POG?Thanks
TwoSporrans
16 Aug 2016
Re: Buy The Dip wrt post below, responding to mrbusiness, scrub my comments about the AISC.I think the rest is valid.Regards the AISC, the $1076/oz FY figure is within the guidance $10000-1100 and is OK.Actually more than OK for Q3+Q4 as the AISC:"reduced below US$1,000/oz in Q3 and Q4,"Anyway, the prognosis is quite promising given the production target has been raised to £35-40k pa, even though Arenal [as far as currently developed] will exhaust in mid 2017.Salazar has a history of conservative forecasting.Production from open pits may be raised quite a lot more if the POG can stay at or above these levels for rest of 2016.Seems that Salazar is reluctant to gamble on this; hence the modest increase in the target.TS
TwoSporrans
16 Aug 2016
Re: Buy The Dip Good Morning Mr. BusinessI'm OK with the results; not too peeved the net cash didn't build ~$5-mn during Q4.As to why the meagre $0.7-mn increase, I've only scan read what's been issued; not gone through details that methodically.Hard to pick out an explanation from annualised figures with no discrete Q4 given.But, the clue is surely in the higher AISC figure for the year than what was achieved in H1 which was below $1,000/oz.The overall AISC to end of May was $1,069 /oz; so the H2 must have risen to something well over $1,100/oz; maybe around $1,150/oz.Why?Well this might explain much of it, albeit obliquely:"The Company completed an assessment of the carrying value of its cash generating units (?CGUs?) as at May 31, 2016, and as a result, has recorded a non-cash impairment charge of US$4.2M for property, plant and equipment and development costs (FY15: 14.7M). The impairment was driven by changes in reserve estimations as the company enters the final stages of the Arenal Deeps project. Arenal Deeps is expected to reach the end of its mine life by mid-FY17. No impairment was recorded for other property, plant and equipment and development costs. Additionally, the Company wrote off US$351k for exploration properties (compared to US$27.9M in the prior year)"So, what we have is a one-off write-off charge of $4.2-mn for Arenal Deeps, as it has less than a year of production [but note: may get extended following further development] remaining, despite most of equipment going to the SG underground mine.The charge can't have directly impacted on the cash situation but indicates that maybe Orosur have burnt some cash on the SG development beyond what they anticipated when they last reported; i.e. the "synergies" refered to below have been a lot less than expected:"The development and startup of the SGW UG mine benefited from synergies with the?closing of?the Arenal UG operation, which is planned to complete during H1 FY17. As a result, Capex is expected to be minimized and personnel and equipment have started to be shifted from Arenal to San Gregorio. phasing the development of SGW UG with the closure of Arenal Deeps, the Company intends to fund the development with internal cash and cash flow. "That's my preliminary take.Gotta go now.cheersTS
Mrbusiness
16 Aug 2016
Re: Buy The Dip Dear Two SporransWhat did you think of the results?Why did it only increase its net cash by $.7m?Conference call this pm will be on the web site
TwoSporrans
20 Jul 2016
Buy The Dip "Orosur’s Q4 and FY 2016 results will be announced on or around August 16th 2016"[link] flat production and average Gold price of ~$1,240/oz [Q4 is to 31st May]anticipate net cash of at least $5-mn.
shugg1e
06 Jul 2016
Re: Keen buying coming in Still incredibly cheap.
gretel
06 Jul 2016
Keen buying coming in Nice - 31,600 shares just bought at 16.77p, way above the published 16p offer price.
TwoSporrans
06 Jul 2016
Open Pit Production to Resume? POG just hit $1,370/oz.An ongoing average of $1,300/oz pa is sufficient for Salazar to give the green light for about 15k pa of local [to the mill] open pit production; typically with a historic operating cost of ~$1,100/oz.So, a possible return to 50-55k production rather than the current 35k.Plenty of spare mill/tailings capacity. Mothballed equipment hopefully; so the marginal All In Sustainable cost not a lot more than the $1,100/oz operational cost.In any event, obviously the ongoing 35k production will be generating a lot more profit than previously.Back in April, an analyst projected [based on $1200/oz POG] :"We expect EBITDA to rise from US$1m at the interim stage to US$7.9m by year end,"Surely we can now expect much more; well over $10-mn just for 30-35k production.Add to that for renewed open pit production. Say 2 qtrs = 8k gold @ $200/oz net cashflow; add ~$1.6-mn to year end EBITDA....total of at least $12-mn looks attainable if POG averages $1300/oz from here.Prospective cash flow to fuel Waymar-Anza [Columbia] development/production; maybe starting with a small operation [but at least 10k pa gold] that can be brought into production within 2 years.From q3 results report: "....the high grade Anzá project, where Orosur is currently evaluating a number of options to advance the project via a smaller higher grade underground mine."TS
gretel
28 Jun 2016
EK : OMI seems "very cheap" Interesting comment last night from Evil Knievil:[link] "Gold closed above $1,308 on Friday last. So, according to the charts, it's upwards and onwards. coincidence, the Orosur (OMI) management came by on Friday morning. As ever, I cannot satisfactorily prove that OMI is cheap in relation to, say, Shanta since this is a political judgement with no proof expressible mathematically. But it still seems very cheap in relation to equities generally. The emerging star is Azna, the Colombian prospect which the market rates as valueless. This looks a big mistake even though it will take at least five years before Azna comes into production. The grades that have been recorded so far are really startling."
gretel
23 Jun 2016
Investor roadshow soon Nice - hopefully the forthcoming numbers are going to be good, giving OMI the confidence to organise this investor roadshow on the back of them...[link] Mining marketing roadshow, London, July 22-23The miner, which operates Uruguay's only producing gold mine, San Gregorio, has turned heads after managing to get all-in sustaining costs of production below US$1,000 an ounce in the third quarter of its financial year, which runs to end-May.The company’s UK roadshow will come after publication of full-year numbers in the coming weeks.Broker Cantor Fitzgerald has lifted its price target for Orosur from 22p to 26p (US38c) citing the positive impact of cost-cutting and rising precious metal prices, leading it to revise its 2017 earnings forecast upwards on the back of higher gold and silver price expectations.Orosur returned to the black with a profit before tax of US$3.1 million in the three months to February 29, having made a loss of US$1.9 million in the corresponding period the year before."
forwardloop
15 Apr 2016
info [link]
gretel
14 Apr 2016
175% upside per Cantor Fitzgerald Nice summary of today's results, with a 22p price target:[link] re broker comment:"Broker Cantor Fitzgerald said the miner was shaping up for a strong second half.Analyst Asa Bridle said he now expects the group to slightly exceed the top end of its annual production guidance (Cantor's estimate is 35,500 ounces) and to meet its target of all in sustaining costs (AISC) of being below US$1,000/oz in the second half, and between US$1,000-1,100/oz for the full year."We expect EBITDA to rise from US$1m at the interim stage to US$7.9m by year end," he added."Based on a conservative assumption of a US$1,200/oz gold price over the medium term, management are now assuming a stable production profile in the 30-35koz/year range," he noted."However, if gold returns to US$1,300/oz, OMI would have the option of lifting production back to 50-55koz/year, but in the meantime the focus remains firmly on profitably over scale."The broker rates the shares a 'buy' and has an unchanged target price of 22p."
