Orvana Reports Third Quarter Results
TORONTO, ONTARIO -- (Marketwire) -- 08/13/10 -- Orvana Minerals Corp. (TSX: ORV) announced operating results today for the third quarter ended June 30, 2010. Dollar amounts are in U.S. dollars unless stated otherwise, and fine troy ounces of gold are referred to as 'ounces'. Highlights for the third quarter ended June 30, 2010 are:
-- Revenues of $7.8 million on sales of 6,535 ounces for the third quarter
of fiscal 2010 compared to $11.9 million on sales of 12,925 ounces for
the same period a year ago, with lower ounces of gold sold contributing
to most of the decline, which was somewhat offset by higher average gold
prices realized;
-- Net loss of $1.1 million (loss of $0.01 per share) for the third quarter
of fiscal 2010 compared to net income of $3.2 million ($0.03 per share)
for the same period a year ago;
-- Cash from operations before changes in working capital was $0.2 million
for the third quarter of fiscal 2010 compared to $5.3 million for the
third quarter of fiscal 2009;
-- Capital expenditures were $13.1 million in the quarter compared to $2.0
million for the same period last year. Expenditures included $4.1
million on the development of the Upper Mineralized Zone ('UMZ') of the
Don Mario Mine, $8.3 million on the development of the El Valle-
Boinas/Carle's ('EVBC') project and $0.7 million on the Copperwood
project; and
-- Cash and cash equivalents amounted to $26.9 million at June 30, 2010
compared to $58.0 million at September 30, 2009.
'Results for the third quarter and the nine months ended June 30, 2010, are in line with our expectations. The Company continues to transition as we work towards start-up of the El Valle-Boinas/Carles mine, the development of the UMZ at Don Mario and the completion of a preliminary economic assessment of Copperwood. Our senior management team remains focused on developing these current projects and seeking out new opportunities' said Roland Horst, Orvana's Chief Executive Officer.
Orvana has $26.9 million in cash and cash equivalents at quarter end. Subsequent to the end of the third quarter, Orvana signed a term sheet with Credit Suisse AG for a US$50 million five-year term corporate debt facility, expected to close in October 2010, subject to due diligence, final credit approval and documentation. After fully funding its capital requirements at EVBC and UMZ, Orvana expects to have accumulated substantial cash reserves from its residual cash and operating free cash flows to finance additional gold and/or copper property acquisitions, as well as the forecasted mine development at Copperwood. Orvana has no plans to issue equity at this time. Orvana will continue to seek gold and/or copper advanced stage properties in politically stable regions, utilizing its mining expertise to increase long-term value for shareholders.
Don Mario Mine Operations
All dollar amounts (except per unit amounts) in the remainder of this news release are in thousands of United States dollars unless otherwise stated.
The ore from the Lower Mineralized Zone ('LMZ') of the Don Mario Mine was exhausted during the last quarter of fiscal 2009 and the processing of the Las Tojas ores continued in the third quarter ended June 30, 2010. A total of 154,270 tonnes of ore were treated in the quarter compared to 71,639 tonnes for the same period a year ago as indicated in the table below:
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Quarter Quarter
ended ended
June 30, June 30, May 31, April 30, June 30,
2010 2010 2010 2010 2009
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Tonnes -- -- -- -- 42,680
Underground mine -------------------------------------------------------
g/t -- -- -- -- 8.51
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Tonnes 154,270 51,298 50,142 52,830 28,959
Las Tojas -------------------------------------------------------
g/t 1.66 1.76 1.58 1.64 2.26
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Tonnes 154,270 51,298 50,142 52,830 71,639
Total -------------------------------------------------------
g/t 1.66 1.76 1.58 1.64 5.98
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Gold recovery rate 79.5% 80.7% 78.8% 78.4% 92.6%
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Gold production - ounces 6,545 2,348 2,011 2,186 12,760
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Gold production for the third quarter of fiscal 2010 was 49% lower, at 6,545 ounces, compared to 12,760 ounces for the third quarter of fiscal 2009. This decline was due to processing of the tonnages from the lower grade ore of the Las Tojas deposit. The prior year results included the production from the now depleted higher grade ore of the Don Mario underground mine.
The following tables show the cash operating costs and total production costs for the three and nine-month periods ended June 30, 2010 and 2009. The Company prepares its financial statements in accordance with Canadian generally accepted accounting principles ('GAAP'). The calculations below represent non-GAAP information, which should not be construed as an alternative to GAAP reporting of operating expenses, and may not be comparable to similar measures presented by other issuers (see 'non-GAAP measures' below).
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Three months ended Three months ended
June 30, 2010 June 30, 2009
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Costs Cost/oz. Costs Cost/oz
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Direct mine operating costs $ 5,084 $ 776.80 $ 4,491 352.00
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Third-party smelting, refining
and transportation costs 37 5.55 51 3.98
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Cash operating costs 5,121 782.35 4,542 355.98
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Royalties and mining rights 261 39.86 375 29.41
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Mining royalty tax 538 82.10 835 65.42
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Total cash costs 5,920 904.31 5,752 450.81
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Depreciation, amortization and
accretion 675 103.17 1,955 153.21
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Total production costs $ 6,595 $ 1,007.48 $ 7,707 $ 604.02
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Gold production 6,545 ozs. 12,760 ozs.
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Cash operating costs at $782.35 per ounce were dramatically affected by the decline in gold production resulting from the transition from the LMZ to the lower grade Las Tojas deposit. These costs are not representative of the expected costs of the operation of the UMZ.
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Nine months ended June Nine months ended June
30, 2010 30, 2009
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Costs Cost/oz. Costs Cost/oz
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Direct mine operating costs $ 14,032 $ 619.87 $ 11,237 $ 229.92
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Third-party smelting, refining
and transportation costs 116 5.13 226 4.61
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Cash operating costs 14,148 625.00 11,463 234.53
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Royalties and mining rights 860 38.00 1,307 26.73
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Mining royalty tax 1,790 79.06 2,961 60.59
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Total cash costs 16,798 742.06 15,731 321.85
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Depreciation, amortization and
accretion 2,458 108.57 5,430 111.10
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Total production costs $ 19,256 $ 850.63 $ 21,161 $ 432.95
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Gold production 22,637 ozs. 48,876 ozs.
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Financial Highlights
Orvana's financial highlights for the three and nine-month periods ended June 30, 2010 compared to the three and nine-month periods ended June 30, 2009 are summarized below:
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Three months ended Nine months ended
June 30 June 30
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2010 2009 2010 2009
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Revenue $7,758 $11,869 $25,612 $42,345
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Net income (loss) (1,106) 3,218 (1,564) 11,826
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Net income /(loss) per share - basic
and diluted ($0.01) $0.03 ($0.01) $0.10
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Cash provided (used) by operating
activities 932 4,216 (3,971) 13,301
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Cash and cash equivalents 26,922 97,989 26,922 97,989
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Total assets 139,514 127,208 139,514 127,208
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Long-term debt and obligations under
capital leases 4957 3,056 4957 3,056
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Shareholders' equity $110,003 $108,775 $110,003 $108,775
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Audited consolidated financial statements and Management's Discussion & Analysis for the period ended September 30, 2009 are available on SEDAR and at www.orvana.com.
Outlook
The forward looking statements made in this section are intended to provide an overview of management's expectations with respect to certain future operating activities of the Company and may not be appropriate for other purposes.
Orvana's focus is to use its cash resources and mining capability to build long-term value for its shareholders through organic growth and future strategic acquisitions of advanced-stage gold and/or copper properties.
In the short term, Orvana is focused on its start-up plan to commencing production at its recently acquired EVBC project in northern Spain, revising and expanding its Don Mario copper/gold operation in eastern Bolivia, and advancing its Copperwood copper project in Michigan.
With the start up of operations at EVBC and the UMZ expected to occur in fiscal 2011, Orvana expects annualized gold production to increase from about 25,000 ounces to over 120,000 ounces. Additionally, annualized copper production is expected to increase substantially to over 12,000 tonnes and annualized silver production is expected to increase to over 750,000 ounces.
Over the longer term, Orvana will continue to seek gold and/or copper advanced stage properties in politically stable regions, utilizing our mining expertise to increase long-term value for shareholders.
The Company will hold a conference call on Monday August 16, 2010 at 10:00 a.m.(Eastern Time) to discuss the third quarter results. The call will be hosted by Roland Horst, Chief Executive Officer and Malcolm King, Chief Financial Officer. Following the presentation there will be a question and answer period for analysts and investors.
The conference call can be accessed at 1-416-340-2217 or the North American toll-free number at 1-866-696-5910, using the passcode 7167756 followed by the number sign.
About Orvana
Orvana Minerals is a gold producer with a strong balance sheet and is transforming itself into a multi-mine gold and copper producer. Orvana owns and operates the copper-gold Don Mario Mine in Bolivia and is bringing into production the El Valle-Boinas/Carle's gold-copper project in northern Spain and advancing the Copperwood copper project in Michigan, USA. Additional information is available at Orvana's website (www.orvana.com).
Forward Looking Disclaimer
Certain statements in this press release constitute forward-looking statements or forward-looking information within the meaning of applicable securities laws ('forward-looking statements'). Any statements that express or involve discussions with respect to predictions, expectations, beliefs, plans, projections, objectives, assumptions, potentials, future events or performance (often, but not always, using words or phrases such as 'believes', 'expects' 'plans', 'estimates' or 'intends' or stating that certain actions, events or results 'may', 'could', 'would', 'might', 'will' or 'are projected to' be taken or achieved) are not statements of historical fact, but are forward-looking statements.
Forward-looking statements relate to, among other things, all aspects of the development of the Upper Mineralized Zone ('UMZ') deposit at the Don Mario Mine in Bolivia, the El Valle-Boinas/Carles project in Spain and the Copperwood project in Michigan and their potential operations and production; the outcome and timing of decisions with respect to whether and how to proceed with such development and production; the timing and outcome of any such development and production; estimates of future capital expenditures; mineral resource estimates; estimates of permitting time lines; statements and information regarding future feasibility studies and their results; production forecasts; future transactions; future metal prices; the ability to achieve additional growth and geographic diversification; future production costs; future financial performance, including the ability to increase cash flow and profits; future financing requirements; and mine development plans.
Forward-looking statements are necessarily based upon a number of estimates and assumptions that, while considered reasonable by Orvana as of the date of such statements, are inherently subject to significant business, economic and competitive uncertainties and contingencies. The estimates and assumptions of Orvana contained or incorporated by reference in this news release, which may prove to be incorrect, include, but are not limited to, the various assumptions set forth herein and in the Company's most recently filed Annual Information Form, or as otherwise expressly incorporated herein by reference as well as: there being no significant disruptions affecting operations, whether due to labour disruptions, supply disruptions, power disruptions, damage to equipment or otherwise; permitting, development, operations, expansion and acquisitions at the UMZ deposit, El Valle-Boinas/Carle's and the Copperwood projects being consistent with the Company's current expectations; political developments in any jurisdiction in which the Company operates being consistent with its current expectations; certain price assumptions for gold, copper and silver; prices for key supplies being approximately consistent with current levels; production and cost of sales forecasts meeting expectations; the accuracy of the Company's current mineral reserve and mineral resource estimates; and labour and materials costs increasing on a basis consistent with Orvana's current expectations.
A variety of inherent risks, uncertainties and factors, many of which are beyond the Company's control, affect the operations, performance and results of the Company and its business, and could cause actual events or results to differ materially from estimated or anticipated events or results expressed or implied by forward looking statements. Some of these risks, uncertainties and factors include fluctuations in the price of gold, silver and copper; the need to recalculate estimates of resources based on actual production experience; the failure to achieve production estimates; variations in the grade of ore mined; variations in the cost of operations; the availability of qualified personnel; the Company's ability to obtain and maintain all necessary regulatory approvals and licenses; the Company's ability to use cyanide in its mining operations; risks generally associated with mineral exploration and development, including the Company's ability to develop the UMZ deposit, the Copperwood project or the El Valle-Boinas/Carle's project; the Company's ability to acquire and develop mineral properties and to successfully integrate such acquisitions; the Company's ability to obtain financing when required on terms that are acceptable to the Company; challenges to the Company's interests in its property and mineral rights; current, pending and proposed legislative or regulatory developments or changes in political, social or economic conditions in the countries in which the Company operates; general economic conditions worldwide; and the risks identified in Orvana's Management's Discussion and Analysis for the period ended September 30, 2009 under the heading 'Risks and Uncertainties'. This list is not exhaustive of the factors that may affect any of the Company's forward-looking statements and reference should also be made to the Company's Annual Information Form for a description of additional risk factors.
Forward-looking statements are based on management's current plans, estimates, projections, beliefs and opinions and, except as required by law, the Company does not undertake any obligation to update forward-looking statements should assumptions related to these plans, estimates, projections, beliefs and opinions change. Readers are cautioned not to put undue reliance on forward-looking statements.
Non-GAAP Measures
The Company has used Non-GAAP measures, including direct mine operating costs, cash operating costs, total cash costs and total production costs, and related unit cost information, because it understands that certain investors use this information to determine the Company's ability to generate earnings as cash flow for use in investing and other activities. The Company believes that conventional measures of performance prepared in accordance with GAAP do not fully illustrate the ability of its operating mine to generate cash flow. Non-GAAP measures do not have any standardized meaning prescribed under Canadian GAAP, should not be construed as an alternative to GAAP reporting of operating expenses, and may not be comparable to similar measures presented by other companies. The measures are not necessarily indicative of cost of sales as determined under Canadian GAAP. Cash costs are determined in accordance with the former Gold Institute's Production Cost Standard. For a reconciliation of the non-GAAP costs and unit costs provided above with the Company's GAAP-based statement of operations, please see the Company's Management's Discussion & Analysis for the period ended June 30, 2010.
Contacts:
Orvana Minerals Corp.
Natalie Frame
Investor Relations
(289) 200-7640
Orvana Minerals Corp.
Malcolm King
Vice President and Chief Financial Officer
(416) 369-1629
Orvana Minerals Corp.
Roland Horst
Chief Executive Officer
(416) 369-1629
ask_us@orvana.com
www.orvana.com