Inca One Gold (IO.V) has announced May was its best month ever as the average throughput of the Chala One processing plant reached 110 tonnes per day, which is more than twice as much as the throughput in the same month last year. An excellent achievement, as it now looks like the plant could sustain the 100 tpd nameplate capacity (in fact, Inca One was able to process in excess of 130 tonnes per day for three days).
Thanks to the higher throughput, the gold production increased to 1531 ounces for an average recoverable grade of 0.45 ounces of gold per tonne (indicating the head grade was approximately half an ounce of gold per tonne of rock). Inca One’s weak spot never was the plant, but the stockpile of ore. Over the past few years, Inca One’s working capital position didn’t allow it to purchase as much ore as it wanted, and this resulted in low stockpiles and lower production rates.
As of at the end of May, Inca One’s stock pile contained approximately 1200 tonnes of rock, which should allow it to run the plant at an average throughput of 100 tonnes per day for 12 continuous days. We would like to see the stockpile increase again (considering Inca One processed 1,100 tonnes more than it purchased), and expect to see Inca One using its incoming cash to buy more ore.
The market is still a bit reluctant to believe and trust the numbers, and appears to be waiting for the company to publish the financial results of an entire quarter of Chala One operating at a full production rate. But at 100 tonnes per day and 0.5 ounces of gold per tonne, Inca One should be free cash flow positive (on a consolidated basis, so including the Canadian G&A expenses).