On November 9, 2017 Alio Gold (ALO) released its 3Q 2017 report. As expected, the company delivered the worst results this year but...they were not that bad as I predicted:
source: Simple Digressions
As you surely remember, I projected the 3Q 2017 gross margin of US$1.6M but the company reported a higher figure (US$7.7M).
What happened? Well, I had underestimated Alio - instead of the mining cost of US$3.2 per ton of ore processed, the company recorded the actual cost of US$2.6 per ton of ore.
In other words, I took the average cost of production reported during the latest four quarters but Alio was able to cut it even below the 2Q 2017 figure. So, hats off to the management and shame on me (I was too skeptical).
Unfortunately, the company has cut its 4Q 2017 production guidance from 20 - 22 thousand ounces of gold to 14.5 - 18.5 thousand ounces. The cut resulted in another selling wave:
Very likely, the price drop has also something to do with Torex and its problems in the Guerrero State, Mexico.
To remind my readers, Alio is going to build its Ana Paula gold mine in the same, quite dangerous, state so problems at Torex the El Limon - Guajes mine may have a negative impact on Alio.