Welcome To The Orvana Minerals HUB On AGORACOM

Operations: Copper-gold-silver-mine in Bolivia, Gold/copper mine/Mill in Spain and its developing copper project in Michigan

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Message: Orvana Reports 2017 Financial Results; Record Gold Production; Cost Guidance Met

Fiscal 2017 achievements:

  • Record annual gold production of 90,292 ounces, increase of 37% compared to fiscal 2016 due to investments in re-commissioning CIL circuit at Don Mario and reaching consistent nameplate plant throughput at El Valle;
  • COC and AISC of $1,015 and $1,269, respectively, better than guidance;
  • EBITDA of $16.5 million, compared to $4.4 million in fiscal 2016;
  • Revenue increased by $44.1 million to $138.0 million, up 47% compared to fiscal 2016;
  • Cash balance of $23.8 million at September 30, 2017.

 

Fiscal 2018 outlook:

  • Transition to higher gold oxide mining at OroValle through fiscal 2018, targeting a 50% oxide-skarn plant throughput ratio;
  • Mining at Don Mario to move to Cerro Felix gold deposit mid-fiscal 2018;
  • Orvana seeking strategic and transformative transactions to enhance profile.

 

TSX:ORV

TORONTODec. 13, 2017 /PRNewswire/ -- Orvana Minerals Corp. (TSX:ORV) (the "Company" or "Orvana")announced today financial and operational results for the fourth quarter ("Q4 2017") and for the fiscal year endedSeptember 30, 2017 ("fiscal 2017). The Company is also providing financial and operational updates for its El Valle and Carlés Mines (collectively, "El Valle") operations in northern Spain and for its Don Mario Mine in Bolivia.

The audited consolidated financial statements for fiscal 2017 ("2017 Financials") and Management's Discussion and Analysis related thereto ("2017 MD&A") are available on SEDAR and on the Company's website at www.orvana.com.

Fiscal 2017 Highlights

The Company's strategy to increase production at its operations targets productivity enhancements to allow for delivery of greater throughput, increased gold recovery and reduced unitary costs. The Company is pleased to report the following positive developments in fiscal 2017 as follows:

  • El Valle – Transitioning towards increased oxide mining:
    • Production from higher gold grade oxide ore at El Valle increased by 69% to 141,164 tonnes in fiscal 2017, compared with fiscal 2017. Total ore mined increased to 733,086 tonnes in fiscal 2017, a 53% year over year improvement.
    • As a result of the improvement in mining productivity, allowing for sustained mill throughput rates above 2,000 tonnes per day, gold and copper production increased by 15% and 29%, respectively, compared to fiscal 2016.
  • Don Mario – CIL production surpassed targets:
    • The re-commissioned carbon-in-leach ("CIL") circuit allowed Don Mario to achieve annual gold production of 38,746 ounces, an 84% increase compared to fiscal 2016 and Don Mario's highest annual gold production since fiscal 2009.
    • Gold recoveries from the CIL circuit averaged 87.8% over the second half of fiscal 2017, exceeding the Company's targeted average gold recovery of 80%.
  • Realized reductions in unitary costs and improved financial performance:
    • Driven by the productivity increases above, consolidated cash operating costs ("COC") fell to $1,015 per ounce, compared with $1,082 per ounce in fiscal 2016 and surpassing 2017 guidance targets of $1,050 to $1,150 per ounce.
    • All-in sustaining costs ("AISC") fell to $1,269 per ounce, compared with $1,428 in fiscal 2016 and surpassing 2017 guidance targets of $1,300 to $1,400 per ounce.
    • Revenue increased 47% to $138.0 million in fiscal 2017, compared with fiscal 2016; EBITDA improved by $12.1 million to $16.5 million in fiscal 2017.
    • Operating cash flow, before working capital changes improved by 129% in fiscal 2017, compared with fiscal 2016, rising to $11.9 million for fiscal 2017.
    • Consolidated cash balance increased from $18.9 million at September 30, 2016 to $23.8 million at September 30, 2017.

 

"We are very proud of our accomplishments in fiscal 2017 at both of our operations, which reflect the effort and commitment of our teams in Spain and Bolivia," stated Jim Gilbert, Chairman and CEO.  "We delivered on our key objectives by meeting production guidance and by lowering COC and AISC to levels that beat our stated cost guidance.  In fiscal 2018, at El Valle, the key objective is to achieve and sustain significant grade improvement by mining a larger proportion of high gold grade oxide zones.  At Don Mario, production will transition to the Cerro Felix deposit which is the first phase of the anticipated three-year mine life extension.  We anticipate that as we work towards meeting these objectives in fiscal 2018, we will realize reductions further in COC and AISC at El Valle that will support our path towards sustained free cash flow and future profitability."

Strategy and Outlook

The Company continues to pursue its initiatives at El Valle and Don Mario on an accelerated basis in order to meet its objectives of optimizing production, lowering unitary cash costs, maximizing fee cash flow, extending the life-of-mine of its operations and growing its operations to deliver shareholder value.

El Valle:

At El Valle, supported by capital infrastructure and development investments, the Company achieved its target of a sustained mill throughput rate of over 2,000 tonnes per day over the second half of fiscal 2017. Increased access to higher gold grade oxide ore fronts at the El Valle Mine and production from the Carlés Mine allowed El Valle to improve its gold production and lower its unitary cash costs progressively over 2017. Objectives in fiscal 2018 include continuing to improve access to oxide ore fronts in the El Valle Mine in order to bring the proportion of oxide ore processed in the plant up to 50%, an increase from historical levels lower than 20%, with the objective of substantially increasing ore grades delivered to the mill. Through additional geotechnical work and infill drilling, the Company also expects to significantly increase the reliability of the mine plan by minimizing the proportion of inferred material in its mine planning in fiscal 2018. Infrastructure investments to improve productivity and efficiency will continue to be made through fiscal 2018 as planned. It is anticipated that these actions will also positively impact El Valle's unitary costs in fiscal 2018.

Don Mario:

At Don Mario, the Company successfully re-commissioned the CIL circuit and completed two full quarters of commercial production of gold doré, increasing gold ounce production to its highest levels since 2009. Gold recoveries exceeded the targeted rate of 80%, reaching an average of 87.8% over the second half of fiscal 2017, up from previous average recoveries of 55% from the flotation process. Don Mario is now pursuing realization of a number of known opportunities for mine life extension. In the near term, the Company expects to commence pre-stripping activities at Cerro Felix in the first quarter of fiscal 2018, and intends to transition its mine production to this satellite deposit following the depletion of the LMZ, expected in mid-fiscal 2018. The Company has been evaluating opportunities to extend the life of Don Mario, including processing existing mineral stockpiles, potential mining of the Company's Las Tojas deposit, and reprocessing gold bearing tailings.

While maintaining its focus on optimizing current operations, the Company will also evaluate strategic alternatives that could serve to transform the profile of the Company.

FY 2017 Production and Cost Guidance

       
 

FY 2017

Guidance

FY 2017

Actual

FY 2018

Guidance (1)

El Valle Production

     
 

Gold (oz)

50,000 – 55,000

51,546

65,000 – 72,000

 

Copper (million lbs)

6.0 – 6.5

5.5

4.1 – 4.5

 

Silver (oz)

170,000 – 200,000

182,635

N/A

Don Mario Production

     
 

Gold (oz)

35,000 – 40,000

38,746

45,000 – 48,000

 

Copper (million lbs)

7.0 – 7.5

8.4

2.0 – 2.3

 

Silver (oz)

130,000 – 150,000

135,872

N/A

Total Production

     
 

Gold (oz)

85,000 – 95,000

90,292

110,000 – 120,000

 

Copper (million lbs)

13.0 – 14.0

13,893

6.1 – 6.8

 

Silver (oz)

300,000 – 350,000

318,507

N/A

Total capital expenditures

$27,000 – $30,000

$21,332

$24,000 – $27,000

Cash operating costs (by-product) ($/oz) gold (2) (3)

$1,050 – $1,150

$1,015

$950 – $1,050

All-in sustaining costs (by-product) ($/oz) gold (2) (3)

$1,300 – $1,400

$1,269

$1,150 – $1,250

(1)

Due to declining relevance, silver production guidance will no longer be provided beginning in fiscal 2018.

(2)

FY 2018 guidance assumptions for COC and AISC include by-product commodity prices of $2.75 per pound of copper and an average Euro to US Dollar exchange of 1.20.

(3)

FY 2017 guidance assumptions for COC and AISC include by-product commodity prices of $2.00 per pound of copper and $18.00 per ounce of silver and an average Euro to US Dollar exchange of 1.12.

 

Selected Operational and Financial Information

           
 

Q4 2017

Q3 2017

Q4 2016

FY 2017

FY 2016

Operating Performance

         

Gold

         
 

Production (oz)

27,666

26,414

14,842

90,292

65,785

 

Sales (oz)

29,639

24,287

14,705

88,636

61,816

 

Average realized price / oz                           

$1,268

$1,262

$1,313

$1,258

$1,211

Copper

         
 

Production ('000 lbs)

3,601

3,837

3,630

13,893

14,735

 

Sales ('000 lbs)

3,850

4,244

3,296

14,686

13,367

 

Average realized price / lb

$2.74

$2.45

$2.17

$2.50

$2.16

Silver

         
 

Production (oz)

68,164

75,578

122,589

318,507

525,934

 

Sales (oz)

72,587

77,173

96,520

362,827

469,847

 

Average realized price / oz

$16.91

$17.25

$19.74

$17.22

$16.29

Financial Performance (in 000's, except per share  amounts)

Revenue

$46,156

$36,671

$24,044

$137,999

$93,850

Mining costs

$34,562

$31,180

$22,884

$116,370

$84,544

Gross margin

$3,274

($1,909)

($3,599)

($5,480)

($7,883)

Net loss

($1,822)

($3,446)

($1,528)

($15,655)

($8,455)

Net loss per share (basic/diluted)

($0.01)

($0.03)

($0.01)

($0.11)

($0.06)

EBITDA (1)

$10,313

$4,782

$960

$16,535

$4,417

Operating cash flows

$12,329

$7,769

$221

$20,726

$3,437

Ending cash and cash equivalents

$23,811

$18,504

$18,939

$23,811

$18,939

Capital expenditures (2)

$5,818

$3,294

$5,394

$21,332

$14,977

Cash operating costs (by-product) ($/oz) gold (1)

$902

$1,032

$1,205

$1,015

$1,082

All-in sustaining costs (by-product) ($/oz) gold (1)(2)

$1,145

$1,199

$1,699

$1,269

$1,428

(1)

Earnings before interest, taxes, depreciation and amortization ("EBITDA"), cash operating costs and all-in sustaining costs are non-IFRS performance measures.

(2)

Each reported period excludes capital expenditures incurred in the period which will be paid in subsequent periods and includes capital expenditures incurred in prior periods and paid for in the applicable reporting period. The calculation of AISC includes capex incurred (paid and unpaid) during the period.

 

About Orvana
Orvana is a multi-mine gold and copper producer. Orvana's operating assets consist of the producing gold-copper-silver El Valle and Carlés mines in northern Spain and the producing gold-copper-silver Don Mario mine in Bolivia. Additional information is available at Orvana's website (www.orvana.com).

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