Today's Insights
Good insight this morning from ‘Blowie’ on a small resource stock Orinoco Gold (OGX). Blowie has made a considerable gain on a holding in AGY which is an emerging lithium producer in Argentina. Worth listening to then.
Recent results in the quarterly:
Blowie's thoughts.
“Thought I would try to consolidate some of the more pertinent information on OGX, lists of positives and risks as well as my personal opinion on why I think Orinoco is an attractive stock to hold
My opinion of the results from these announcements is that the very high gold grade nature of the mine is confirmed. Proof of the previous process systems failure to capture freed gold is confirmed via the high gold grade returns from Tailings (this is supposed to be processed material will little to no gold in it yet it returns grades higher that most mines at 9.42g/t). The high grade Hammer Mill results from Cascaval Lode, Mestre Lode, Tailings and the Waste rock tell me that Orinocos process issues are behind them and now are able to fully commercialise on the substantial gold grades found which means strong income and profits due to the expectedly low AISC (see public statement on AISC by MD Jeremy Gray in previous youtube link) with portions of profits going to continuous mine development and other tenement exploration. I would consider the Cascaval Mine a ‘company maker’ in itself however. With an All In Sustaining Costs (AISC) of AU$500 - AU$600 and a Price of Gold of around AU$1700 currently that puts potential profit per Ounce at AU$1100 - AU$1200. As can be seen from recent samples there is potential for an average of one ounce/tonne of Ore. The picture below is a very Basic valuation estimate based on managements own performance targets, I suggest you calculate your own with different P/E etc to see that variations possible.”
“Cascaval Gold Mine (Current Events focused): Development started Q2 2015. OGX initially commenced Process Plant (Name plate 100ktpa - 140ktpa) operations in Q3 2016 but suspended operations in Q4 2016 where upon Operational Reviews by SRK and Mining Plus were undertaken to diagnose low gold return from production. Average gold returns continued up until OGX initiated the full Back to Basics production approach under new management in late December. Orinoco is the 100% owner of the Cascaval Tenement which include developed Cascaval Lode and Mestre Lode with both targets continuing down dip at least another 300m and strike remaining open. A limited JORC on 125m of strike at 125m down dip was conducted on the Cascaval Lode only with inferred estimate comprising 4500t @15.4g/t grading (note this is a relatively small area of the lode and general extrapolation could indicate a resource exceeding 22,000oz plus. Company exploration target for the Cascaval lode and part of the Mestre lode is 23,000 - 24,000oz from down-dip sources. The Back to Basics Strategy backed by OGX utilises Hammer Mills to break down ore to powder size for easier extraction of gold. The pilot system was first put in practice in December 2017 with initial and subsequent results announced below”.
A very thorough update from ‘Blowie’.
One to watch. Has a great run but could continue .
OGX Price at posting:
8.0¢ Sentiment: Buy Disclosure: Held
