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
TORONTO, Dec. 12, 2017 /CNW/ - 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 ended September 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).
Cautionary Statements - Forward-Looking
Information
Certain statements in this information
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.
The forward-looking statements herein relate to, among other
things, Orvana's ability to achieve improvement in free cash flow;
the potential to extend the mine life of El Valle and Don Mario
beyond their current life-of-mine estimates including specifically,
but not limited to in the case of Don Mario, the completion of the
major tailings storage facility expansion, the mining of the Cerro
Felix deposit, the processing of the mineral stockpiles and the
reprocessing of the tailings material; Orvana's ability to optimize
its assets to deliver shareholder value; the Company's ability to
optimize productivity at Don Mario and El Valle; estimates of
future production, operating costs and capital expenditures;
mineral resource and reserve estimates; statements and information
regarding future feasibility studies and their results; future
transactions; future metal prices; the ability to achieve
additional growth and geographic diversification; 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 the Company as of the date of such statements, are
inherently subject to significant business, economic and
competitive uncertainties and contingencies. The estimates and
assumptions of the Company contained or incorporated by reference
in this information, which may prove to be incorrect, include, but
are not limited to, the various assumptions set forth herein and in
Orvana's most recently filed Management's Discussion & Analysis
and Annual Information Form in respect of the Company's most
recently completed fiscal year (the "Company Disclosures") 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 El Valle and
Don Mario 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 continue to operate
the El Valle and/or Don Mario and/or ability to resume long-term
operations at Carlés Mine; the Company's ability to acquire and
develop mineral properties and to successfully integrate such
acquisitions; the Company's ability to execute on its strategy; 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 the Company's Disclosures
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 Disclosures for a description of additional
risk factors.
Any forward-looking statements made in this information with
respect to the anticipated development and exploration of the
Company's mineral projects are intended to provide an overview of
management's expectations with respect to certain future activities
of the Company and may not be appropriate for other
purposes.
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.
The forward-looking statements made in this information 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.
Cautionary Notes to Investors – Reserve and Resource
Estimates
In accordance with applicable Canadian securities regulatory
requirements, all mineral reserve and mineral resource estimates of
the Company disclosed in this AIF have been prepared in accordance
with NI 43-101 (as defined below), classified in accordance with
Canadian Institute of Mining Metallurgy and Petroleum's "CIM
Standards on Mineral Resources and Reserves Definitions and
Guidelines" (the "CIM Guidelines").
Pursuant to the CIM Guidelines, mineral resources have a
higher degree of uncertainty than mineral reserves as to their
existence as well as their economic and legal feasibility. Inferred
mineral resources, when compared with measured or indicated mineral
resources, have the least certainty as to their existence, and it
cannot be assumed that all or any part of an inferred mineral
resource will be upgraded to an indicated or measured mineral
resource as a result of continued exploration. Pursuant to NI
43-101, inferred mineral resources may not form the basis of any
economic analysis, including any feasibility study. Accordingly,
readers are cautioned not to assume that all or any part of a
mineral resource exists, will ever be converted into a mineral
reserve, or is or will ever be economically or legally mineable or
recovered.
SOURCE Orvana Minerals Corp.