Calibre Mining – Record Q1 2023 Production Results, And Exploration Update At Multiple Projects
Ryan King, Senior VP of Corporate Development and IR at Calibre Mining (TSX: CXB – OTCQX: CXBMF), joins us to recap the Q1 2023 operations results and the overall organically-funded exploration strategy, continuing grade-driven growth of the resources in both Nicaragua And Nevada.
There was consolidated quarterly gold production of 65,750 ounces and gold sales of 65,770 ounces, which was 27% increase in gold production compared to Q1 2022. The consolidated 2022 Mineral Reserves increased 370%, since acquisition in 2019, to 1,346,000 ounces gold, and the consolidated 2022 M&I Mineral Resources increased to 4,603,000 ounces gold.
We discussed the high-grade mining commenced ahead of schedule at Pavon Central open pit averaging a delivery rate 1,000 tonnes per day to the Libertad mill. The next key area of development and near-term production in the second half of this year will be coming from Eastern Boros, where permitting was approved last year in Q4 as well as commencement of construction. Both of these 2 new mining areas will continue adding in higher grade throughput through the Libertad Mill. There is also aggressive ongoing exploration focused on prior high-grade drill results from Panteon North, new zones around the Libertad Mill, Veta Azul, Volcan, and also new targets at Buena Vista and La Fortuna.
Next we transition over to the Nevada assets, and all the ongoing exploration work the company has underway around both the Pan Mine area and at the development-stage Gold Rock Project. The exploration team is encouraged by recent drill results stepping out from the known mineralization and finding higher grade gold intercepts at the Coyote target, as well as stepping out from the Pan Mine area. There are also some targets on drilling some deeper ‘Carlin Style’, sulfide mineralization at Gold Rock Deep. We wrap up by reviewing some of the recent high-grade gold intercepts that were released from the Golden Eagle Project in Washington state, the 2 million ounces of gold in the ground there, and some of the larger majors projects in the area that represents future optionality for this project.
If you have any follow up questions for Ryan on Calibre Mining, then please email us at Fleck@kereport.com or Shad@kereport.com.
- In full disclosure, Shad is a shareholder of Calibre Mining.
Q1 2023 Financial Results and Conference Call Details
First quarter financial results will be released after market close on Monday, May 8, 2023, and management will be hosting a conference call on Tuesday, May 9 at 10:00am (ET) to discuss the results and outlook in more detail.
DL – Good comments and technical analysis.
Yes, they are funding everything organically through production revenues, so no there have not been any financings in several years to the best of my knowledge, so no free trading warrant shares overhang.
Calibre on the daily chart really shows what a powerful move some of these mining stocks have made off their Q4 lows from last year. What I like is that the shorter duration moving averages are sloping up now and crossing through the longer-duration moving averages, and will do so even more as the next month or so unfolds.
>> (CXB) bottomed in October at $0.52 and closed the week at $1.50 for a legit 3-bagger.
We keep hearing people say the miners have been underperforming the metals, but isn’t that solid outperformance over what gold did from it’s low to present? (Yes…. it definitely is).
CXB, like many PM mining stocks on their respective charts, may be getting a little short-term overbought, so I trimmed a little off my position to pull some profits earlier this week.
Having said that, I do view any pullbacks as buying opportunities to layer some right back on again.
At least we’ve seen with Calibre the expected re-rating back up to where it should have been trading all along (with overblown fears of the Nicaraguan sanctions being reported poorly and incorrectly by the media and even within the junior mining space). We saw the typical shaking out of the weak hands and nervous nellies, that sell first and ask questions and gather facts later (which is the wrong batting order BTW); and savvy investors looking at the actual factual results from Calibre on production growth, development growth, and exploration growth banking nice gains over the last 6 months run.
It never ceases to amaze how emotional some of the retail hordes get to both the upside and downside. Some positive news is rewarded waaaaay too much where little drill plays get out way over their skis with valuations they have no business attaining as the herds of lemmings pile into them.
Conversely, sometimes companies are punished to the downside waaaaay too much where the selloff doesn’t really make any sense and it gets to comical levels. These are the extremes in volatility that can be exploiting in a space with such inefficient markets like junior mining stocks.
When Orezone originally tanked a few years back on the resource calculation misfire, retail punters through the baby out with the bathwater, and I remember buying down into that mass selloff and riding up the rerating, shaking my head it had gotten that extreme in the first place. It’s not like they didn’t have any resources, and they messaged that they were drilling more to rework it, so it was simply a matter of time before they put out a much better one.
Then a little over a year ago, we saw the exact same kind of process play out with Gatos Silver, where they realized they had misreported their reserves and man it really fell out of bed. (GATO) was over a $20 stock (hitting a $24 spike high at one point), which I always felt was a bit rich of a valuation. However, when it dropped 90% on that news down to $2.68 then I started accumulating in the $2.70s, $2.80s, $2.90s, and low $3s… I remember telling a few people we talked to off-mic that I was doing that, and they said “that was ballsy and that they wouldn’t touch it.” That gave me even more conviction to buy more, and I actually accumulated more shares in the $2.40s.
Well fast-forward to the close this week at $6.70, and ask, was it really that risky or ballsy? No, it was insanely oversold, and to a great degree still is. I have little doubt that GATO will blast back up into the $10-$20 range once again, and it will keep getting re-rated higher as they clarify the resources and catch up on the backlogged filings (which is likely still holding the shares down). This storm cloud will pass, and then when it’s a $12 stock, THEN people will feel comfortable buying it again. Haha!
Here’s the GATO chart so folks can see the epic fall from grace, the fantastic long period of time anyone could have been accumulating (and really still can keep accumulating) into the F.U.D. from retail and market punters, that love to take moves to extremes.
GATO is one where I’m glad I stuck to my general practice of not holding things making new lows. I took a hit on a few miners when the silver price collapsed but nothing like that. When I bottom feed I want a previous low to hold and a range to be made and then some breadth to return and then a tendency towards the top half of the new base and then a breakout.
GATO wasn’t even on my radar for this current move. I tend to favor the more profitable companies during such times, but the base was there, it had a wash out false breakdown in October and then started spending time in the top half of the base without any major pullbacks and then broke out. I just wasn’t paying attention. Too many charts.
Yep there are absolutely too many charts to follow, but with GATO, I’d been following it ever since it launched about 2 1/2 years ago, as one of the guys behind it at the time (Stephen Orr since has stepped down) was buddies with Ross Beaty. Gatos Silver (Gatos is Spanish for cat, and both of those guys are into preserving rare big cats like leopards, jaguars, and cheetahs). That initially caught my attention, just because it was private silver producing company launching into the public markets (I think in 2000).
Well, when it launched, my initial reaction was dang…. that stock is pricey! It had a huge valuation in the billions right out of the gate, and while they had nice assets and a good operational track record from their time as a private company, I just figured it was going to be like Ross’s Pan American Silver or Keith’s First Majestic at the time and stay pricey due to the management premium.
Then the resource calculation misfire happened where they realized their models were flawed and they may only have 3/5ths (or something like that) of the reserves they initially reported. Well the stock sold off from hitting a high of $27 at one point and having hovered at $24 for some time down to $2.40. Well that was a 90% retracement for the miss calculation of only having 3/5ths of the reserves, which they were working to clarify and a CLEAR over-reaction by the markets. They still had all the sunk costs of their operational infrastructure, were still producing well, had all their permits, etc… and my thesis was that it was waaaaay undervalued now based on all the assets they had.
I accumulated a lot as it bounced along the bottom, made over 64% on the cumulative trade and sold that in December of last year to book the profits in 2022 against a number of other tax losses I’d already book to wash out those gains. Then in Jan-March I reloaded the boat again, and it’s up nicely again over 50%. So thus far I’ve had over 114% in gains on it, and didn’t catch the exact lows or exact highs on the initial trading. I guess that’s my point — investors don’t need to strive for perfection, but rather just catch the middle part of the move.
What was interesting, is that it reminded me exactly what happened with Orezone, only in this case it was a producer (with much more going for it) instead of just a developer with eyes on future production. It was clearly undervalued, and when I spoke to other investors I respected about it, it was exactly the same as when Orezone realized they’d over reported their resources years ago…. the mantra from everyone was “Stay away!” So I liked that everyone hated it, and as true contrarian, bought when everyone else was scared those companies lives were over. It was clear with both Orezone and Gatos Silver that both were actually quality companies, quality teams, quality assets (that were not worthless), and with Gatos all the production infrastructure and ongoing operations.
So my thesis in both was really less about technical analysis, and more about the fundamental valuation mismatch. I knew I was buying cheap and that both stocks would get rerated higher, and I didn’t need much chart analysis to know I was getting into both at a huge discount, and the trip higher in both would be nice rides higher… and they were and both are still going even higher….
Looking at the daily chart makes me wonder if there’s not support right around 1.33-1.43. It was resistance in late 2021 into early 2022, support in April of 2022 and then resistance again in May of 2022 right after it broke when the 200 day was moving down through the area.
I am expecting it to form another small round bottom pullback to the 1.25 to 1.31 region, but it could surprise to the upside and just not do that. A pennant forming inside the last week’s price action would be very interesting. Upside target on something like that happening would be just under $2.
But the time to trade on patterns is *after* they confirm, no before they even appear and are just a possibility. That said, I’m looking for the bottom of the last week’s price action to act as support and will likely use it as a profit protection point for the remainder of my position.
DL – Good points on the chart support for Calibre in the $1.25-$1.31 region. I had trimmed some of the position back early last week, and would like to add that tranche back again and buying in the high $1.20s seems like a good place to do.
Record production and guiding for future quarters to also be new records for production? That sounds pretty good. I also looked into recent financing activity and couldn’t find any mass of shares coming out of a no-trading period. I still need to take a look a how many warrants are sitting out there and at what levels. They should have no problem self funding given the gold price and that record quarterly production.
My technical overview of CXB:TO
Weekly Chart https://schrts.co/sCJiEuwt
Broken downward trend line. Connect the tops going back to October 2020 and you’ll get a trend line going all the way to the Jan 2023 high. This is broken to the upside. I don’t know if it will get retested as the upside momentum is so strong it might be one of those breaks that just gets left in the dust.
RSI pushing into overbought on the weekly. In the past it has sustained these levels but that was during the big gold run out of the covid lows. We’ll see how it goes this time.
200 week moving average: CXB:TO seems respect this moving average and broke through it on its current run. It has not yet retested. It could easily act as support at 1.31. Looking left, there are also a lot of previous lows from 2021 that went around the 1.30 area. 61.8 Fibonacci retracement from the 2019-2020 move is right around there as well for those who like that sort of a thing.
Volume by price shelf: 1.05 to 1.50 has seen a lot of previous trades over the last five years. The first move into this region from below in late 2022 was rejected, but then the bottom of this range acted as support a few months later after it broke in. During 2023 the price has been slicing through this range pretty rapidly and maybe the price will break right out of it and challenge the previous highs of the consolidation since the 2020 high.
Consolidation highs at around 1.60 to 1.76. Confirmed weekly closes over this region would be a breakout of a very large base. I don’t expect it to do so on the first attempt, but you never know. If it doesn’t I’ll likely take some profit and look to get back in on any test of support down at the 200 week or other nearby levels
Breadth of the industry group: CXB:TO does seem to respond well to breadth indicators. Included on the chart is a percent of the GDX that has it’s 20 day average of the 50. It’s at a pretty high level but can go higher and maintain a high level for quite a while. When the breadth does roll over, I will be taking some profits. In the big run out of the covid lows, CXB.TO continued to go higher as more and more stocks weakened, so I don’t consider it an automatic sell if the sector breadth rolls over, but taking profit or adding a profit protecting stop would probably be a good idea. Chandelier exits on the weekly chart could be an appropriate choice given how this stock behaves.
TLDR: Extremely positive but over-bought and heading into resistance at the top of the range where lots of trading happened over the last 5 years. Good support at 1.3-ish for pullbacks. Gold miner breadth is useful for this stock.