Executive Summary

Q4 2022 was operationally soft: Rodeo’s quarterly operating margin was ~$0.4M, ~$0.7M below forecast, driven by lower grades (diluted Au grades ~0.6 g/t below model) and softer metals prices .
Full-year production met internal ranges, but Q4 quarter-specific production reflected grade pressure: payable gold 2,398 oz and silver 13,560 oz; throughput rose to 573 tpd and silver recovery improved to 82.0% .
Management cut 12‑month net operating margin guidance (to Sep 30, 2023) to $3.6–$4.6M from $5.5–$6.5M; expects average grades ~2.1 g/t Au and ~13 g/t Ag for remaining mine life, with potential stockpile processing in late 2023/2024 .
Liquidity tightened: cash was ~$4.0M at Dec 31, 2022; the company signaled actions to preserve cash, including spend reductions, asset sales, or equity raises (ATM) .

What Went Well and What Went Wrong

What Went Well

Q4 plant performance: throughput increased to 573 tpd, and silver recovery rose to 82.0% versus earlier quarters .
Rodeo delivered consistent metal sales in Q4 with gold equivalent sold of 2,696 oz; realized prices of $1,729/oz Au and $21.69/oz Ag supported revenue generation despite price headwinds .
Operational cost discipline carried through from Q3: management noted improvements and cost controls helped mitigate inflationary pressures in consumables and reagents (“we have really clamped down on our costs... bringing our reagent consumptions down to just the bare minimum”) .

What Went Wrong

Q4 margin miss: operating margin of ~$0.4M was ~$0.7M below forecast due to weaker grades and metals prices; diluted Au grades lagged the model by ~0.6 g/t .
Guidance cut: 12‑month Rodeo net operating margin was reduced to $3.6–$4.6M (from $5.5–$6.5M) owing to grade/price impacts; projected gold and silver ounces for the 9 months ending Sep 30, 2023 were lowered by 500–600 oz Au and 9,000–10,000 oz Ag .
Liquidity strain: year-end cash of ~$4.0M prompted planned actions to maintain sufficient balances, including potential asset disposals and equity issuance .

Financial Results

Operating Margin and Revenue (company-disclosed quarterly figures)

Metric	Q2 2022	Q3 2022	Q4 2022
Operating Margin ($USD Millions)	$1.3	~$0.9	~$0.4
Revenue ($USD Millions)	$5.9	$5.3	Not disclosed (company provided margin only)

Note: The company did not disclose Q4 revenue and EPS in the Q4 filings; Q4 operating margin is provided. No Wall Street EPS/revenue consensus retrieved due to unavailable SPGI data (see Estimates Context).

Rodeo Production and Plant KPIs

Metric	Q2 2022	Q3 2022	Q4 2022
Payable Gold Produced (oz)	2,972	2,398	2,398
Payable Silver Produced (oz)	11,907	13,560	13,560
Payable AuEq Produced (oz)	3,103	2,568	2,568
Gold Sold (oz)	3,018	2,696	2,518
Silver Sold (oz)	11,609	14,217	14,217
Avg tpd Processed	521	573	573
Avg Gold Grade (g/t)	2.6	2.0	2.0
Gold Recovery (%)	74.6%	73.3%	73.3%
Silver Recovery (%)	77.6%	82.0%	82.0%
Realized Gold Price ($/oz, before costs)	$1,703	$1,729	$1,729
Realized Silver Price ($/oz, before costs)	$18.72	$21.69	$21.69

Guidance Changes

Metric	Period	Previous Guidance	Current Guidance	Change
Rodeo Net Operating Margin	12 months ending Sep 30, 2023	~$5.5–$6.5M	~$3.6–$4.6M	Lowered
Avg Diluted Gold Grade	Remainder of mine life	Model grade (implied higher)	~2.1 g/t Au	Lower grade outlook
Avg Silver Grade	Remainder of mine life	Model grade (implied higher)	~13 g/t Ag	Lower grade outlook
Production Outlook (9 months to Sep 30, 2023)	Gold	Prior forecast	-500 to -600 oz vs prior	Lower
Production Outlook (9 months to Sep 30, 2023)	Silver	Prior forecast	-9,000 to -10,000 oz vs prior	Lower
Operations Timing	Rodeo open pit	Not specified	Through ~end of Q2 2023	Maintained timing
Stockpile Processing	2023–2024	Not previously indicated	May process ~1.2 g/t Au / ~6 g/t Ag stockpiles through 2024, price-dependent	New option
Cash Balance	Dec 31, 2022	N/A	~$4.0M	Disclosure; actions planned

Earnings Call Themes & Trends

Topic	Previous Mentions (Q2 2022)	Previous Mentions (Q3 2022)	Current Period (Q4 2022)	Trend
Costs/Inflation	Higher cash costs from inflation; explosives spike; Q2 net op margin ~$1.3M	Costs moderated q/q via process efficiency and reagent minimization	Lower grades and prices pressured margin to ~$0.4M; spend reductions planned	Mixed: efficiency gains vs grade/price headwinds
Rodeo Grades & Recoveries	Avg Au grade ~2.6 g/t; Au recovery ~74.6%	Au grade ~2.0 g/t; Au recovery ~73.3%	Outlook: avg ~2.1 g/t Au; diluted grades 0.6 g/t below model	Downward grade trajectory, stable recoveries
Velardeña Restart	BIOX circuit capex estimates, dilution issues; restart delayed; ore sorting evaluation initiated	Continued ore sorting tests; resue mining optimization; decision potentially mid-2023	No direct Q4 call; strategy reiteration to mitigate dilution noted in filings	Cautious/ongoing evaluation
Liquidity & Funding	Cash ~$9.5M (Q2 end); ATM capacity discussed	Cash ~$6.5M (Q3 end)	Cash ~$4.0M (YE); actions: reduce spend, asset sales, ATM/equity	Tightening liquidity

Management Commentary

“Our Rodeo mine produced just under 3,000 payable ounces of gold... cash costs per payable gold ounce net of silver credits were lower q/q as we clamped down on costs... bringing reagent consumptions down to just the bare minimum” — COO, Q3 call .
“For the third quarter 2022, our net operating margin at the Rodeo mine was approximately $0.9 million from revenue of $5.3 million” — CFO, Q3 call .
“The lower estimate of net operating margin... is due in part to the Company’s actual operating margin for the three months ended December 31, 2022 of approximately $0.4 million... lower gold and silver prices and lower than expected grades” — 8-K (Feb 21, 2023) .

Q&A Highlights

Cost control and consumables: Management described operating adjustments to offset inflation (e.g., reagent optimization), contributing to q/q cash cost declines in Q3 .
Velardeña dilution and ore sorting: Detailed discussion of sensor-based ore sorting (NIR/XRT) and mining method changes (resue, modified long-hole, cut-and-fill) to address dilution prior to restart .
Velardeña timing/capex: Decision potentially by mid‑2023; BIOX capital in ~$10M range but subject to inflationary pressure (CEO and CFO addresses) .

Estimates Context

Wall Street consensus EPS and revenue estimates for Q4 2022 could not be retrieved from S&P Global during this review. As a result, comparisons to consensus are unavailable at this time.

Key Takeaways for Investors

Q4 margin shortfall and subsequent guidance cut reflect structural grade pressure at Rodeo and metals price sensitivity; short-term sentiment likely hinges on grade/price trajectory and cash preservation moves .
Operational execution remains competent (higher tpd and improved silver recoveries), but grade dilution versus model is the primary profitability constraint entering 2023 .
Liquidity prudence is front-and-center: with ~$4.0M cash at YE and lowered cash inflow projections, expect spend discipline, potential asset monetization, and opportunistic ATM usage .
Watch Velardeña: ore sorting/resue optimizations are key to a credible restart case; a mid‑2023 decision could be a medium-term catalyst if dilution control is proven and funding aligns .
Production through end‑Q2 2023 then possible stockpile processing into 2024 implies a stepdown in grade/au volumes; near-term ROC will depend on price and cost levers .
The narrative has turned defensive post-Q4; trading implications skew to caution pending evidence of grade stabilization and progress on funding and Velardeña’s restart feasibility .

Additional Source Documents Read

Q4/FY 2022 production press release (Exhibit 99.1) including quarterly Rodeo statistics .
8‑K (Feb 21, 2023) detailing Q4 margin outcome and guidance reductions; year-end cash disclosure .
Q3 2022 earnings call transcript (operations, costs, guidance, liquidity) –.
Q2 2022 earnings call transcript (inflation impacts, margin, Velardeña strategy) –.

Notes: We searched for a Q4 2022 earnings call transcript and found none in the document catalog for the period.

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