Inca One Gold (IO.V) has provided an interim update on its Chala processing plant near the city of Chala in Peru. The company has acquired an existing desorption plant and has moved the plant to a safe spot very close to its processing plant. This eliminates another step of the production process which has been outsourced until now, and this will further reduce the operating cost per tonne of ore and per ounce of gold.
But what’s more important is the fact Inca one has been fine-tuning its existing operations to increase the recovery rate of the gold. Inca had developed a twelve-step plan to improve the operating efficiency at Chala, and this seems to be starting to pay off as the net revenue margin has almost doubled to 40-50%. In order to execute the operational efficiency plan, Inca One temporarily had to reduce its daily throughput, so you shouldn’t be surprised if the next reported 13 week production will be lower than in the previous periods. However, this is nothing to be alarmed about as the long-term gain of these improvements will definitely compensate for a temporary lower production.
Meanwhile, Inca One has entered into an agreement with Jett Capital whereby the latter will try to raise $20M in debt for Inca One. This cash would be used to acquire another plant, expand the existing Chala plant from 100 tonnes per day towards the ultimate maximal capacity of 350 tonnes per day, ore purchases and maybe the refinancing of existing debt. This is a major step forward for Inca One as this will allow the company to execute its expansion plans faster than originally anticipated.
Disclosure: The author holds a long position in Inca One Gold. Inca One is a sponsor of the website. Please see our disclaimer for current positions.