TORONTO, Aug. 10, 2017 /CNW/ - Orvana Minerals Corp. (TSX:ORV) (the "Company" or "Orvana") announced today financial and operational results for the third quarter of fiscal 2017 ("Q2 2017"). The Company is also providing financial and operational results for its El Valle and Carlés Mines (collectively, "El Valle") operations in northern Spain and for its Don Mario Mine in Bolivia.
The unaudited condensed interim consolidated financial statements for Q2 2017 and Management's Discussion and Analysis related thereto are available on SEDAR and on the Company's website at www.orvana.com.
Q3 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 the third quarter, as follows:
- El Valle – Further productivity improvements delivered higher gold and copper production:
- Production from higher gold grade oxide areas of El Valle in Q3 2017 increased to 42,243 tonnes in Q3 2017, or 44%, compared with Q2 2017. Production from the Carlés Mine improved to 39,115 tonnes in Q3 2017, or 35%, compared with Q2 2017.
- As a result of the improvement in mining productivity and increase in mill throughput rates, gold and copper production increased by 15% and 24%, respectively, compared to Q2 2017.
- Don Mario – CIL production surpassed targets:
- During the first full quarter of commercial production from the CIL circuit, gold production at Don Mario increased to 12,709 ounces, up 48% compared with the second quarter of fiscal 2017. Gold recoveries averaged 89.3% over Q3 2017, exceeding the Company's targeted average gold recovery of 80%.
- Copper and silver production increased by 45% and 29%, respectively, compared to Q2 2017, as a result of improved recoveries and mill throughput.
- Realized reductions in unitary costs and improved financial performance:
- Enabled by the productivity increases above, consolidated all-in sustaining costs fell to $1,199 per ounce, compared with $1,214 per ounce in the second quarter of fiscal 2017 and $1,311 per ounce in the third quarter of fiscal 2016.
- Revenue increased 16% to $36.7 million in the third quarter, compared with the second quarter of fiscal 2017; EBITDA improved by $2.3 million over the same period of fiscal 2016.
- Consolidated cash balance increased from $14.2 million at March 31, 2017 to $18.5 million at June 30, 2017.
"At El Valle, the recent increases to higher grade oxide production have demonstrated the improving flexibility of the mine and allowed for sustained gold production through the quarter, despite lower than expected grades from skarn production," commented Jim Gilbert, Chairman and CEO. "We look forward to reporting our continued progress on improving our oxide production at El Valle, targeting further decreases in unitary costs. With Don Mario also registering higher recoveries and gold production this year, Orvana is on track to meet the fiscal 2017 guidance laid out at the beginning of the year."
Strategy and Outlook
The Company's most important objectives through fiscal 2017 and beyond are to sustainably 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 achieved its objective of a sustained mill throughput rate of 2,000 tpd over Q3 2017, increasing its gold, copper and silver production by 15%, 24%, and 9%, respectively, compared to Q2 2017. Next steps include the following:
- Ongoing development to increase access to higher grade oxide zones in El Valle Mine, with the objective of increasing the proportion of oxide material relative to skarn material delivered to the mill. This is expected to be supported by the gains realized to date in development and backfill rates, allowing for access to a greater number of oxide stopes, as was partially realized during Q3 2017.
- Improved mine flexibility and grade control through a significant reduction of the proportion of inferred material in near-term mine planning.
Don Mario:
- The gold recovery results from Q3 2017 have poised Don Mario to realize on known opportunities for mine life extension, and the Company is working through the following near-term projects:
- A mine plan for Cerro Felix was completed subsequent to Q3 2017, and pre-stripping activities are expected to commence in Q1 fiscal 2018. Full production is expected to transition to Cerro Felix subsequent to the planned depletion of the Lower Mineralized Zone in mid-fiscal 2018.
- Don Mario is also reviewing its options for processing of 2.2 million tonnes of oxide stockpiles with an average estimated gold grade of 1.84 g/t. The Company has had a successful track record of processing this material as part of a blended feed into the processing plant during FY 2016 and FY 2017. Testing results received during FY 2017 have yielded positive indications, and the Company expects to conclude larger scale tests in the coming months.
- In support of the near-term and long-term mine life extension projects underway at Don Mario, a substantial tailings storage facility expansion project has commenced. The Company expects that this project will allow for sufficient capacity to support up to an additional three years of operations beyond Q2 fiscal 2018. The construction will be financed primarily by a portion of the recently closed $11.3 million in new debt facilities from Banco BISA S.A.
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
|
YTD 2017 Actual |
FY 2017 Guidance |
||
|
El Valle Production |
|||
|
Gold (oz) |
36,345 |
50,000 – 55,000 |
|
|
Copper (million lbs) |
4.2 |
6.0 – 6.5 |
|
|
Silver (oz) |
136,083 |
170,000 – 200,000 |
|
|
Don Mario Production |
|||
|
Gold (oz) |
26,281 |
35,000 – 40,000 |
|
|
Copper (million lbs) |
6.1 |
7.0 – 7.5 |
|
|
Silver (oz) |
114,260 |
130,000 – 150,000 |
|
|
Total Production |
|||
|
Gold (oz) |
62,626 |
85,000 – 95,000 |
|
|
Copper (million lbs) |
10.3 |
13.0 – 14.0 |
|
|
Silver (oz) |
250,343 |
300,000 – 350,000 |
|
|
Total capital expenditures |
$15,514 |
$27,000 – $30,000 |
|
|
Cash operating costs (by-product) ($/oz) gold (1) |
$1,071 |
$1,050 – $1,150 |
|
|
All-in sustaining costs (by-product) ($/oz) gold (1) |
$1,330 |
$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
|
Q3 2017 |
Q2 2017 |
Q3 2016 |
YTD 2017 |
YTD 2016 |
||
|
Operating Performance |
||||||
|
Gold |
||||||
|
Production (oz) |
26,414 |
20,513 |
16,038 |
62,626 |
50,943 |
|
|
Sales (oz) |
24,287 |
20,773 |
16,496 |
58,997 |
47,111 |
|
|
Average realized price / oz |
$1,262 |
$1,238 |
$1,258 |
$1,253 |
$1,202 |
|
|
Copper |
||||||
|
Production ('000 lbs) |
3,837 |
2,867 |
3,833 |
10,292 |
11,104 |
|
|
Sales ('000 lbs) |
4,244 |
3,032 |
3,879 |
10,836 |
10,071 |
|
|
Average realized price / lb |
$2.45 |
$2.50 |
$2.13 |
$2.42 |
$2.15 |
|
|
Silver |
||||||
|
Production (oz) |
75,578 |
66,485 |
112,507 |
250,343 |
403,345 |
|
|
Sales (oz) |
77,173 |
87,441 |
111,949 |
290,240 |
373,327 |
|
|
Average realized price / oz |
$17.25 |
$17.42 |
$16.91 |
$17.30 |
$15.40 |
|
|
Financial Performance (in 000's, except per share amounts) |
||||||
|
Revenue |
$36,671 |
$31,714 |
$26,030 |
$91,843 |
$69,806 |
|
|
Mining costs |
$31,180 |
$26,272 |
$21,809 |
$81,808 |
$61,660 |
|
|
Gross margin |
($1,909) |
$8 |
$406 |
($8,754) |
($4,284) |
|
|
Net loss |
($3,446) |
($2,233) |
($1,181) |
($13,833) |
($6,927) |
|
|
Net loss per share (basic/diluted) |
($0.03) |
($0.02) |
($0.01) |
($0.10) |
($0.05) |
|
|
EBITDA (1) |
$4,782 |
$4,774 |
$2,509 |
$6,222 |
$3,457 |
|
|
Operating cash flows |
$7,769 |
$928 |
$2,176 |
$8,396 |
$3,216 |
|
|
Ending cash and cash equivalents |
$18,504 |
$14,210 |
$12,021 |
$18,504 |
$12,021 |
|
|
Capital expenditures (2) |
$3,294 |
$4,501 |
$3,122 |
$15,512 |
$9,583 |
|
|
Cash operating costs (by-product) ($/oz) gold (1) |
$1,032 |
$993 |
$1,035 |
$1,071 |
$1,045 |
|
|
All-in sustaining costs (by-product) ($/oz) gold (1)(2) |
$1,199 |
$1,214 |
$1,311 |
$1,330 |
$1,344 |
|
|
(1) Earnings before interest, taxes, depreciation and amortization ("EBITDA"), cash operating costs ("COC") and all-in sustaining costs ("AISC") 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).
