Orvana Minerals Corp. (TSX: ORV) (the "Company" or "Orvana") announced today financial and operational results for the fourth quarter ("Q4 2016") and for the fiscal year ended September 30, 2016 ("fiscal 2016").
The audited consolidated financial statements for fiscal 2016 ("2016 Financials") and Management's Discussion and Analysis related thereto ("2016 MD&A") are available on SEDAR and on the Company's website at www.orvana.com.
Fiscal 2016 Highlights
The Company's strategic objectives to increase production at its operations include productivity enhancements to allow for delivery of greater throughput, increased gold recovery and lower unitary costs. In that regard, the Company accomplished the following milestones in fiscal 2016:
- Productivity – At El Valle, recent upgrades to power infrastructure yielded positive results during the second half of fiscal 2016, increasing development rates by 50% over the same period. In addition, improvements to water management and dewatering strategies at El Valle, which will continue during fiscal 2017, materially improved both productivity in affected areas of the mine and the quality of water discharged from the mine. At Don Mario, the Company's mining activities transitioned from mining the remaining Upper Mineralized Zone to the higher gold grade Lower Mineralized Zone.
- Financing – The Company has secured $20 million in debt financing during fiscal 2016 in support of its objectives. A $12.5 million prepayment facility was secured with Samsung C&T U.K. Ltd. to fund the capital infrastructure improvements and development projects required to support productivity enhancements at El Valle. At Don Mario, $7.9 million in project financing was secured with a local Bolivian bank to support the recommissioning of the CIL circuit, which is expected to result in improvements in gold recoveries.
- Management – The Company reconstituted its management and board during fiscal 2016, with a mandate to drive repositioning of its El Valle and Don Mario Mine assets.
"While we are obviously pleased to have achieved our guidance for fiscal 2016, producing just under 100,000 ounces on a gold equivalent basis, of greater importance is the aggressive plan we have put in place to drive up productivity and drive down unit costs at both of our operations", said Jim Gilbert, Chairman and CEO of Orvana. "We raised the necessary funding and commenced investment projects and operational improvements at El Valle, where development rates have increased by half. In addition, we have resolved production disruptions from power supply and water management issues, with a view to pushing the mill to full capacity in fiscal 2017 and beyond. At Don Mario, we raised local financing for the CIL recommissioning project, which is projected to increase gold recoveries by more than 25% and will also allow us to look at opportunities for profitably extending the life of mine in Bolivia."
Strategy and Outlook
The Company's most important objectives through fiscal 2017 and beyond are to increase productivity rates at both its operations and to extend the mine life of Don Mario Mine beyond fiscal 2018.
El Valle:
- At El Valle, the Company's primary objective is improving underground mining rates to meet plant nameplate capacity of 2,000 tonnes per day, representing an increase in production of 60%. In targeting such an increase, the Company is executing on the following:
- Construction of a new power line to support increased requirements. The Company received the first of its permits subsequent to fiscal 2016 and expects to finalize construction at the end of fiscal 2017.
- Continuing improvements to water and ventilation systems, de-risking production and increasing access to ore bodies.
- Completion of ongoing optimization studies, including the conclusion of a long-term backfill solution as well as a comprehensive review of mining methods for both skarns and oxides.
- The Carlés Mine was also restarted at the end of fiscal 2016 in order to provide a productivity increase through fiscal 2017 with little to no capital outlay required.
Don Mario:
- At Don Mario, the Company is focusing on achieving higher gold recoveries with the recommissioning of the CIL circuit, expected to be fully operational at the beginning of the second quarter of fiscal 2017. Once operational, the CIL circuit is expected to return higher gold recoveries compared with the current flotation process.
- The CIL circuit furthermore supports Don Mario's objective of extending mine life, as the enhanced processing capabilities of the CIL circuit support other known opportunities in the future, including mining from the Cerro Felix and Las Tojas areas as well as tailings reprocessing.
- The Company is also expecting to increase mine life at Don Mario through the processing of 2.2 million tonnes of oxide stockpiles with an average estimated gold grade of 1.84 g/t. Oxide stockpile studies are underway and are expected to return results at the end of the first quarter of fiscal 2017.
While maintaining its focus on optimizing current operations, the Company will also evaluate strategic alternatives that could accelerate the growth of the Company.
FY 2017 Production and Cost Guidance
| FY 2016Revised Guidance | FY 2016Actual | FY 2017Guidance | ||
| El Valle Mine Production | ||||
| Gold (oz) | 43,000 – 46,000 | 44,683 | 50,000 – 55,000 | |
| Copper (million lbs) | 4.5 – 5.0 | 4.3 | 6.0 – 6.5 | |
| Silver (oz) | 120,000 - 130,000 | 144,411 | 170,000 – 200,000 | |
| Don Mario Mine Production | ||||
| Gold (oz) | 20,000 – 21,000 | 21,102 | 35,000 – 40,000 | |
| Copper (million lbs) | 11.0 – 12.0 | 10.5 | 7.0 – 7.5 | |
| Silver (oz) | 330,000 – 370,000 | 381,523 | 130,000 – 150,000 | |
| Total Production | ||||
| Gold (oz) | 63,000 – 67,000 | 65,785 | 85,000 – 95,000 | |
| Copper (million lbs) | 15.5 – 17.0 | 14.7 | 13.0 – 14.0 | |
| Silver (oz) | 450,000 – 500,000 | 525,934 | 300,000 – 350,000 | |
| Total capital expenditures | $17,000 – $19,000 | $14,977 | $27,000 – $30,000 | |
| Cash operating costs (by-product) ($/oz) gold (1) | $1,000 – $1,100 | $1,082 | $1,050 – $1,150 | |
| All-in sustaining costs (by-product) ($/oz) gold (1) | $1,300 – $1,400 | $1,428 | $1,300 – $1,400 | |
| (1) | FY2017 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 2016 | Q4 2015 | FY 2016 | FY 2015 | ||
| Operating Performance | |||||
| Gold | |||||
| Production (oz) | 14,842 | 15,206 | 65,785 | 72,817 | |
| Sales (oz) | 14,705 | 13,887 | 61,816 | 73,304 | |
| Copper | |||||
| Production ('000 lbs) | 3,630 | 4,409 | 14,734 | 22,601 | |
| Sales ('000 lbs) | 3,296 | 4,666 | 13,367 | 23,956 | |
| Silver | |||||
| Production (oz) | 122,589 | 174,027 | 525,934 | 598,039 | |
| Sales (oz) | 96,520 | 162,566 | 469,847 | 596,405 | |
| Financial Performance (in 000's, except per share amounts) | |||||
| Revenue | $24,044 | $20,385 | $93,850 | $121,425 | |
| Mining costs | $22,884 | $23,636 | $84,544 | $105,384 | |
| Gross margin | ($3,599) | ($10,589) | ($7,883) | ($13,854) | |
| Net loss | ($1,528) | ($7,819) | ($8,455) | ($16,733) | |
| Net loss per share (basic/diluted) | ($0.01) | ($0.06) | ($0.06) | ($0.12) | |
| Ending cash and cash equivalents | $18,939 | $17,236 | $18,939 | $17,236 | |
| Capital expenditures (2) | $5,394 | $2,340 | $14,977 | $10,118 | |
| Cash operating costs (by-product) ($/oz) gold (1) | $1,205 | $1,297 | $1,082 | $949 | |
| All-in sustaining costs (by-product) ($/oz) gold (1)(2) | $1,699 | $1,540 | $1,428 | $1,210 | |
| (1) | Cash operating costs ("COC") and all-in sustaining costs ("AISC") are non-IFRS performance measures. |
| (2) | These amounts are presented in the consolidated cash flows in the 2016 Financials on a cash basis. 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).
Source: Orvana Minerals
