TRADING NEAR YEAR LOW
MASSIVE DISCOUNT TO INTRINSIC VALUE
FREE CASH FLOW AT OREZONE IS GROWING
Highlighted in this article by Crux Investor is the famous Lassonde Curve.
The Lassonde Curve
In 1990 Pierre Lassonde hypothesized that the share prices of mining companies follow a specific cycle dependent upon resource specific events occurring, such as exploration, assessment/study, financing, construction, production, and closure. The subsequent Lassonde Curve is now a mainstay of the resources sector, and it provides a useful template for a single-asset junior Company. Note that it is a less useful guide for companies that can stack several assets at different development phases to smooth out the curve. Furthermore, the phases of the Lassonde Curve are often exacerbated through global commodity cycles leading to valuation extremes that can be either very low or very high.
Astute investors will look closely at what Orezone CEO, Patrick Downey recently stated: "Q2 marked another solid quarter at Bombore, with ore processed continuing to achieve rates beyond nameplate design. Overall mill throughput for the quarter was slightly below that of Q1 due to lower-than-planned plant availability from routine maintenance for the installation of newly designed mill liners and the replacement of worn shafts in the front-end mineral sizer. All major planned maintenance for the year is now complete and the company expects quarterly throughput in the second half of 2023 to reach record levels." "Gold production benefited from the reclaim of higher-grade stockpiles in the first half of the year with head grades expected to continue to moderate in the second half. The company reaffirms its 2023 annual production guidance of 140,000 to 155,000 ounces."
Mining Investment Principles, Part 3 - Producers: Produce, Deplete