Sunday, November 12, 2017

Orbit Garant - The Results Delivered By This Drilling Company Should Satisfy The Gold Bulls

It looks like the bear market in the mineral drilling sector is over. A few days ago Orbit Garant (OBGRF), a small mineral drilling company operating mainly in Canada (this country accounts for 75% of total revenue reported in 3Q 2017), released its 3Q 2017 report.

Look at this chart - in my opinion, it is one of the most important charts I published this year:

source: Simple Digressions

Note that the drilling prices reported in 3Q 2017 were the highest in history. Well, the company is, as always, very cautious about its future (and it should be) but the facts support a bullish thesis on the precious / base metals market - rising prices signal that the industry is definitely recovering.

Despite higher prices, Orbit is able to drill more and more metres:

source: Simple Digressions

Well, higher prices and more work to do result in an impressive jump in cash flow from operations (excluding working capital issues and taxes):

source: Simple Digressions

What is more, as of the end of September 2017 Orbit had the short-term debt of C$16.4M (which was a risk factor) but on November 2, 2017 it signed a new  agreement with its lender (which de-risks the company). Let me cite the company (3Q 2017 FS, page 12):

"On November 2, 2017, the Company and the Lender entered into an amended and restated credit agreement that replaces the Credit Facility with a new three-year credit facility, consisting of a $30 million revolving credit facility, a US$3 million letter of credit facility and a US$3 million revolving credit facility"

Now the question is whether Orbit share prices are able to break out above the latest trading range (the red rectangle):


No comments:

Post a Comment