Orvana Announces Results for the First Quarter Ended December 31, 2011
TORONTO, ONTARIO -- (Marketwire) -- 03/15/12 -- Orvana Minerals Corp. (TSX: ORV) announced operating results today for the first quarter ended December 31, 2011. Dollar amounts (other than per ounce and per share amounts) are in thousands of U.S. dollars unless stated otherwise, and fine troy ounces of gold and silver are referred to as "ounces".
Highlights:
-- El Valle-Boinas/Carles ("EVBC") Mine in Spain has been in production
since August 2011. Cash costs were $1,088 per ounce of gold net of by-
products for the first quarter of fiscal 2012;
-- Commissioning of the Upper Mineralized Zone ("UMZ") of the Don Mario
Mine continues;
-- Total production was 9,937 ounces of gold, 3,231,000 pounds of copper
and 82,654 ounces of silver for the first quarter of fiscal 2012;
-- Revenue for the quarter ended December 31, 2011 was $15,373 and was
generated from EVBC's sale of concentrate and gold/silver dore
containing 8,276 ounces of gold, 9,283 ounces of silver, and 691,000
pounds of copper;
-- Gross profit for the quarter ended December 31, 2011 was $354;
-- Net loss for the quarter ended December 31, 2011 was $4,505, resulting
primarily from the loss on the mark-to-market revaluation and settlement
of derivative contracts and finance costs on borrowings;
-- Cash and cash equivalents, were $13,763 at December 31, 2011 compared to
$12,244 at September 30, 2011;
-- Increased EVBC reserve estimates announced - measured and indicated gold
ounces increased by 95,000 ounces to 1,300,000 ounces and proven and
probable reserve estimate increased by 28,000 ounces of gold to 812,000
ounces;
-- Draft mining permit for the Copperwood copper project, a key permitting
milestone in the process of developing the Copperwood Mine, was received
from the Michigan Department of Environmental Quality.
"Although the production at EVBC did not meet our targets, underground development advanced well and progress on the shaft proceeded on schedule with commissioning expected during the third quarter of fiscal 2012," said Bill Williams, President and Chief Executive Officer. "Gold head grades are improving. At Don Mario, although the performance of the leach-precipitation-flotation process circuit improved during the quarter, events during January and February led management to decide to start processing the mixed oxide-sulphide, or transition ore by using the flotation-only process. Copperwood continues to advance on schedule and we are exploring all alternatives to finance the project."
Operations:
1. EVBC Mine, Spain
EVBC Mine has been in commercial production since August 1, 2011. Production for the fourth quarter of fiscal 2011 (August and September only) and the first quarter of the 2012 fiscal year is summarized in the table below:
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El Valle-Boinas-Carles Production
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Fourth quarter of fiscal First quarter of fiscal
2011 2012
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Tonnes dmt 94,658 123,566
Head grade
Au, g/t 2.04 2.17
Cu, % 0.33 0.34
Ag, g/t 7.06 7.23
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Concentrate
Tonnes dmt 774 1,686
Au, g/t 97 83.0
Cu, % 27.5 19.6
Ag, g/t 415 330
Cu Recovery, % 67.9 80.0
Au Recovery, % 38.8 54.7
Ag Recovery, % 48.1 63.2
Au, ounces 2,419 4,499
Cu, tonnes 213 330
Ag, ounces 10,318 17,880
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Bullion
Au Recovery, % 48.6 37.5
Ag Recovery, % 6.4 6.6
Au, ounces 3,020 3,058
Ag, ounces 1,373 1,742
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Total Production
Au Recovery, % 87.4 92.2
Cu Recovery, % 67.9 80.0
Ag Recovery, % 54.5 69.9
Au, ounces 5,439 7,655
Cu, 1000lbs 469 727
Ag, ounces 11,691 19,725
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During the first quarter of fiscal 2012, concentrate production was 727,525 pounds of copper, 4,499 ounces of gold, and 17,880 ounces of silver. Recoveries for gold, copper, and silver were 92%, 80% and 70%, respectively. Cash operating costs, including royalties, were $1,088 per ounce of gold, net of by-product revenues. During January, cash operating costs, including royalties, were $710 per ounce of gold, net of by-product revenues (refer to the press release dated February 21, 2012).
EVBC gold head grades are expected to steadily increase over the next few months and gold production for the fiscal year ending September 30, 2012 is targeted to be approximately 60,000 ounces.
2. Don Mario Mine - UMZ
Start-up of the LPF mill and a sulphuric acid plant, which began in April 2011, continued through their commissioning stage, which has been slower than planned due to initial operating issues with the sulphuric acid plant, issues related to the delivery of supplies, and lower than planned copper recovery. Because of the low copper recovery, gold/silver dore cannot be produced. Nevertheless, cash operating costs were approximately $1.65/lb. copper net of by-product revenues. Production data is found in the table below.
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October November December First quarter of
2011 2011 2011 fiscal 2012
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Throughput (tonnes) 43,709 35,285 38,939 117,933
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Head Grade
Cu,% 1.73% 1.79% 1.74% 1.75%
Au,g/t 1.80 1.51 1.80 1.71
Ag,g/t 71.5 72.1 86.0 76.4
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Recovery (%)
Cu 56.5 51.3 56.9 54.9
Au 38.8 31.4 33.9 35.1
Ag 23.8 18.3 22.4 21.7
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Production (concentrate)
Tonnes 1,046 823 749 2,618
Cu,% 40.8% 39.1% 51.6% 43.4%
Au,g/t 29.2 20.4 31.7 27.1
Ag,g/t 711.8 563.0 999.3 747.8
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Production (fines)
Cu,tonnes 426 323 386 1,135
Cu,pounds 940,142 712,320 851,723 2,504,185
Au,ounces 981 539 762 2,282
Ag,ounces 23,935 14,930 24,064 62,929
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Key consulting metallurgists made improvements to the LPF process during January and February, including an increase in mill throughput to over 2,000 tonnes per day. Nonetheless, it was realized that the sulphuric acid plant could not supply the acid required to process ore at this throughput given the increased acid consumption by the oxide ore that was processed. Thus, the management team, based on the recommendations of the consulting metallurgists, decided to process the transition ore, which includes copper in both oxide minerals and sulphide minerals, by flotation only. Although the copper in oxide minerals would not be recovered, the expected increase in precious-metals recovery as well as the much lower processing costs (as compared to LPF), justified this decision. Also, this processing strategy would maintain mill availability approaching 90%. A bulk copper-lead concentrate has been made using this process, which concentrate is currently being marketed for sales.
In sum, the UMZ operation will produce both high-grade copper cement from the LPF process on oxide ore as well as a bulk copper-lead concentrate from the flotation-only process on transition ore in the future. The current mine plan can provide the necessary ore to support this plan. Nonetheless, this plan will be revised in order to accommodate the limitations of the processing schemes.
Financial Highlights:
Orvana's financial highlights for the first quarter ended December 31, 2011 are summarized below:
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Three months ended December 31, 2011
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Revenue $ 15,373
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Gross profit 354
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Net loss before derivatives mark-to-market adjustment, net-of-tax
((1)) (3,136)
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Gain (loss) on derivatives settlements and mark-to-market
adjustment, net-of-tax((1)) (1,369)
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Net earnings (loss) (4,505)
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Net earnings (loss) per share - basic and diluted $ (0.03)
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Net loss per share before derivatives settlements and mark-to-
market adjustment, net-of-tax - basic and diluted((1)) $ (0.02)
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Cash provided by operating activities 5,290
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Cash and cash equivalents 13,763
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Total assets 249,390
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Long-term debt, net of financing fees 47,867
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Obligations under capital leases 3,525
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Shareholders' equity $ 124,067
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(1) These amounts are non-GAAP measures and are derived from the following
amounts in the income statement: net derivatives loss of $1,956 less
future income tax recoveries of $587 for the quarter ended December 31,
2011.
Revenues for the first quarter ended December 31, 2011 were $15,373 on sales of 8,276 ounces of gold, 9,283 ounces of silver, and 691,000 pounds of copper. The first quarter results excluded revenue from the Don Mario UMZ Mine as these sales are credited against commissioning costs on the balance sheet until commercial production commences.
For the three months ended December 31, 2012 gross profit was $354. The net loss for the first quarter ended December 31, 2011 was $4,505 ($0.03 loss per share), resulting primarily from the loss on the settlement and mark-to-market revaluation of derivative contracts and finance costs on borrowings.
Cash provided by operating activities was $5,290 for the quarter ended December 31, 2011.
Capital expenditures were $8,174 for the quarter ended December 31, 2011. Expenditures included $960 on the development of the Don Mario UMZ, $6,316 on the development of the EVBC Mine and $898 on the Copperwood Project.
Cash and cash equivalents amounted to $13,763 at December 31, 2011 compared to $12,244 at September 30, 2011.
Subsequent to the end of the quarter, the Company entered into a $5,000 secured loan facility with its majority shareholder, Fabulosa Mines Limited ("Fabulosa"). The loan was subsequently amended, including increasing it to $6,500 and converting it to a term loan with a maturity date of July 1, 2013. Concurrently, the Company entered into a directors' nomination agreement with Fabulosa. The terms of the loan and the nomination agreement are summarized in the MD&A.
The consolidated financial statements and Management's Discussion & Analysis for the period ended December 31, 2011 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.
In the short term, Orvana is focused on its operations at the EVBC gold-copper-silver mine in northern Spain and its Don Mario Mine copper-gold-silver mine in eastern Bolivia as well as advancing its Copperwood copper project in Michigan.
In Spain, the Company commenced production start-up and commissioning at the EVBC Mine in May 2011 and advanced to the production stage on August 1, 2011.
During fiscal 2012, the Company expects gold production from EVBC to be about 60,000 ounces per annum, copper production about 2,000 tonnes per annum, and silver production about 125,000 ounces per annum. As head grades improve, cash cost per ounce of gold produced is expected to decrease. Mine life is now projected at 10 years. Beyond 2012, Orvana will continue to work on improving head grade, increasing gold production and reducing cost per ounce of gold produced. Completing the shaft, which is anticipated to take place during the third quarter of fiscal 2012, will allow for more efficient ore extraction, resulting in improved flexibility, increased mine production, and reduced costs. Orvana will also investigate alternatives to maximize the mill output and enhance recoveries, including a possible expansion of the mill in the future.
During fiscal 2012, the Company's focus at Don Mario will be on improving recoveries for both the LPF and flotation-only processing. Production in fiscal 2012 is expected to be about 6,000 tonnes copper, 11,000 ounces of gold, and 400,000 ounces of silver, respectively.
The Copperwood permitting process will continue during the third quarter of fiscal 2012. The Company will continue to investigate means of financing the estimated $213,000 pre-production capital expenditure, including a joint venture partnership, debt financing, off-take agreement, and equity financing.
Orvana projects total annual gold production to be approximately 70,000 ounces, total copper production to be 8,000 tonnes, and total silver production to be 525,000 ounces.
The Company will hold a conference call on Friday March 16, 2012 at 10:00 a.m. (Eastern Time) to discuss the fiscal 2011 first quarter results. Following the presentation there will be a question and answer period for analysts and investors.
The conference call can be accessed at 1-416-695-7806 or the North American toll-free number at 1-888-789-9572, using the pass code 7100 584 followed by the number sign.
About Orvana:
Orvana Minerals is a multi-mine gold and copper producer. Orvana's primary asset is the El Valle-Boinas/Carles ("EVBC") gold-copper Mine in northern Spain, which is now in production. Orvana also owns and operates the Don Mario Mine in Bolivia where a newly completed leaching-precipitation-flotation ("LPF") plant is processing its copper-gold-silver Upper Mineralized Zone ("UMZ") deposit while working through its commissioning stage. Orvana is also advancing its major 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 Mine 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 Mine and the Copperwood project 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 Mine; 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, 2011 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-IFRS Measures
The Company has used Non-IFRS 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 IFRS do not fully illustrate the ability of its operating mine to generate cash flow. Non-IFRS measures do not have any standardized meaning prescribed under IFRS, should not be construed as an alternative to IFRS 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 IFRS. Cash costs are determined in accordance with the former Gold Institute's Production Cost Standard. Cash costs for copper are determined in accordance with methods used by Brook Hunt.
Contacts:
Orvana Minerals Corp.
Natalie Frame
Investor Relations
(289) 200-7640
Orvana Minerals Corp.
Bill Williams
President and Chief Executive Officer
(480) 522-7925
Orvana Minerals Corp.
Malcolm King
Vice President and Chief Financial Officer
(416) 369 -1629
ask_us@orvana.com
www.orvana.com