RVR (ASX) Ann: June Quarter Production Update

Not such a bad quarterly report.
Ore mined for quarter slightly up on budget for quarter at 84K (annualised 336K )
Ore milled only 70K. This would imply ore on the pad at around 20K (ore mined since startup 248K v's ore milled 228K ) According to the Canaccord report in June this ore will be blended in with higher grade ore from the mine, when it becomes available. We need management to clarify when that will be.
Ore grades still well down on budget. This is probably due to the need to stabilise the the mine ( with crown pillars in lower grade areas ) to ensure safe working conditions for future production.We need management to clarify.
Zinc recoveries good at 88% against budget at 89%.
Lead recoveries continue to improve at 77.3% compared with budget at 80%.
Copper recoveries poor at 34.3% against budget at 80%. However, this is not a major concern at this stage as the copper head grade is so low at West 45 at 0.3%. Copper head grade much higher at Far West but that is not due into production till 1st Q next year so they have time to fix.
The main game at this stage is lead and zinc recoveries and they are going well.
The cash position is quite good considering the current low production numbers although we need more clarification with the quarterly and annual report. Reasonable correlation with my model but am guessing on some inputs.
It should also be noted that there will almost certainly be lead and zinc concentrate produced, but not yet sold, at Townsville. Also the 20K of mined ore on the pads has already been paid for. Both will be cash flow positive for the future with almost no costs.

What we need to know in the quarterly is when will the higher grade stopes at the mine start producing. We need a guide on the next quarters production forecast which Mel would have a good handle on.
I would urge everyone to contact Mel and request a lot more information than we are currently getting. Also, why experienced lead/zinc operators did not hedge a portion of their anticipated production when the prices were clearly in a bubble.

It is a total waste of energy looking at C1 and C3 costs per lb of production at present as the mine is still in ramp up. We need to wait until the mine settles at higher production rates, when the higher grade ore is mined, to get meaningful numbers.

Summing up the mine production profile looks pretty good. The problem of course is the zinc price. I have no real comment other than to say that China accounts for almost 50% of zinc consumption so we hope that it continues with it's current programme of roads to nowhere etc.
Remember the restart study was done at USc100/lb from memory (for zinc) so no real problem with cash flow provided they move into higher grade stopes shortly.

Contact Mel