TORONTO, Feb. 7, 2017 /CNW/ - Orvana Minerals Corp. (TSX:ORV) (the "Company" or "Orvana") announced today financial and operational results for the first quarter of fiscal 2017 ("Q1 2017"). The Company is also providing financial and operational results for its OroValle (El Valle and Carlés Mines) operations in norther Spain and for its EMIPA (Don Mario Mine) operations in Bolivia.
The unaudited condensed interim consolidated financial statements for Q1 2017 and Management's Discussion and Analysis related thereto are available on SEDAR and on the Company's website at www.orvana.com.
Q1 2017 Highlights
The Company's strategic objectives to increase production at its operations include productivity enhancements to allow for expected delivery of greater throughput, increased gold recovery and lower unitary costs. The Company is pleased to report the following positive developments in the first quarter as follows:
- El Valle – Productivity improvements:
- In December 2016, El Valle reached nameplate plant capacity of 2,000 tonnes per day. This achievement represents an important milestone for El Valle on the path to increases in gold production and planned lower unitary costs by end of fiscal 2017.
- Development and backfill rates continued to improve during the first quarter by 7% and 27%, respectively, compared with the fourth quarter of fiscal 2016, allowing for increased flexibility in the mine plan.
- Don Mario – CIL re-commissioning:
- The re-commissioning process is nearing its completion with successful production of initial gold-silver doré bars. The focus is on adjustments to reagent mix and residence time in order to achieve targeted gold recovery of 80%. First commercial delivery is expected later in February.
- Total capital costs are expected to be within the Company's capital cost estimate of $6.4 million +/-15%.
- Don Mario has stockpiled higher gold grade material from the Lower Mineralized Zone for processing in the fully re-commissioned CIL circuit in order to capitalize on forecasted higher gold recovery.
- Repayment of the associated project financing with Banco BISA S.A. (the "BISA Loan") began in December 2016.
"We are pleased with the progress made at both El Valle and Don Mario in Q1 in achieving some of our planned objectives for this year," said Jim Gilbert, Chairman and CEO of Orvana. "At El Valle Mine we still have a lot of work to do with our primary focus on improving ore grade delivered to the processing plant, through improved oxide ore production, while maintaining throughput of 2,000 tonnes per day. These are the critical actions required that will allow El Valle Mine to turn around its disappointing financial performance in Q1 and deliver the unitary cost improvements that we are aiming for by the end of fiscal 2017. At Don Mario Mine, we have substantially completed the re-commissioning of the CIL plant and expect to meet our objective of achieving higher gold recovery and reduced unitary costs in the second half of the current fiscal year."
Strategy and Outlook
The Company's most important objectives through fiscal 2017 and beyond are to safely 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 current objective is to increase mined grades while sustaining current ore volumes through the plant. The Company plans to execute on the following:
- Ongoing development to increase access to higher grade oxide zones in El Valle Mine, targeting improved oxide production in the second half of fiscal 2017.
- Increasing production from the Carlés Mine, targeting a significant ramp-up beginning in the third quarter of fiscal 2017. The Company extended its Carlés project timeframe to the end of fiscal 2017 due to a permitting delay.
- Increasing access to ore fronts will allow El Valle Mine greater flexibility in its mining activities and therefore greater ability to deliver planned ore volumes to sustain its objective of 2,000 tonnes per day going forward.
- Continuing improvement and maintenance of targeted backfill and development rates.
- De-risking the mine plan, moving away from transition zones in which poor ground conditions were experienced through fiscal 2016.
Don Mario:
- At Don Mario, the Company is nearing completion of the re-commissioning of the CIL circuit. Once operational, average gold recoveries are expected to increase to 80% compared to an average of approximately 55% using the current flotation process.
- Once re-commissioned, the CIL circuit will produce a gold-silver doré product in lieu of current gold gravity concentrate production, lowering deduction costs at Don Mario. Efforts are underway to finalize a doré sales agreement, targeting first commercial delivery later in February.
- The CIL circuit will support the Company's objective of extending mine life at Don Mario, as the enhanced processing capabilities of the CIL circuit facilitate other known opportunities, including mining from the Cerro Felix and Las Tojas areas close to the existing mine, 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 during the second 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
| Q1 2017Actual | FY 2017Guidance | ||
| El Valle Mine Production | |||
| Gold (oz) | 10,723 | 50,000 – 55,000 | |
| Copper (million lbs) | 0.8 | 6.0 – 6.5 | |
| Silver (oz) | 29,321 | 170,000 – 200,000 | |
| Don Mario Mine Production | |||
| Gold (oz) | 4,976 | 35,000 – 40,000 | |
| Copper (million lbs) | 2.7 | 7.0 – 7.5 | |
| Silver (oz) | 78,959 | 130,000 – 150,000 | |
| Total Production | |||
| Gold (oz) | 15,699 | 85,000 – 95,000 | |
| Copper (million lbs) | 3.6 | 13.0 – 14.0 | |
| Silver (oz) | 108,280 | 300,000 – 350,000 | |
| Total capital expenditures | $7,719 | $27,000 – $30,000 | |
| Cash operating costs (by-product) ($/oz) gold (1) | $1,258 | $1,050 – $1,150 | |
| All-in sustaining costs (by-product) ($/oz) gold (1) | $1,732 | $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
| Q1 2017 | Q4 2016 | Q1 2016 | FY 2016 | ||
| Operating Performance | |||||
| Gold | |||||
| Production (oz) | 15,699 | 14,842 | 17,789 | 65,785 | |
| Sales (oz) | 14,060 | 14,705 | 15,955 | 61,816 | |
| Copper | |||||
| Production ('000 lbs) | 3,588 | 3,630 | 3,951 | 14,735 | |
| Sales ('000 lbs) | 3,598 | 3,296 | 3,814 | 13,367 | |
| Silver | |||||
| Production (oz) | 108,280 | 122,589 | 171,664 | 525,934 | |
| Sales (oz) | 128,217 | 96,520 | 160,565 | 469,847 | |
| Financial Performance (in 000's, except per share amounts) | |||||
| Revenue | $23,458 | $24,044 | $22,497 | $93,850 | |
| Mining costs | $24,356 | $22,884 | $20,806 | $84,544 | |
| Gross margin | ($6,853) | ($3,599) | ($3,869) | ($7,883) | |
| Net loss | ($8,154) | ($1,528) | ($3,076) | ($8,455) | |
| Net loss per share (basic/diluted) | ($0.06) | ($0.01) | ($0.02) | ($0.06) | |
| Ending cash and cash equivalents | $9,521 | $18,939 | $17,535 | $18,939 | |
| Capital expenditures (2) | $7,719 | $5,394 | $3,716 | $14,977 | |
| Cash operating costs (by-product) ($/oz) gold (1) | $1,258 | $1,206 | $1,004 | $1,082 | |
| All-in sustaining costs (by-product) ($/oz) gold (1)(2) | $1,732 | $1,699 | $1,316 | $1,428 | |
| (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).
