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Orvana Achieves Strong Mine Performance In Fiscal Second Quarter
Date : 05/13/2013 @ 8:07PM
Source : Marketwired Canada
Orvana Achieves Strong Mine Performance In Fiscal Second Quarter
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Orvana Minerals Corp. (TSX:ORV) (the "Company" or "Orvana") announced today
financial and operating results for the second quarter ended March 31, 2013 ("Q2
2013"). The Company reported increased gold and copper production based on
strong performance from the EVBC Mine in Spain.
The Company reported net income for Q2 2013 of $6.5 million and adjusted net
income of $0.9 million excluding the unrealized gain from the revaluation of the
Company's outstanding financial instruments and the tax effect thereof.
The unaudited consolidated interim financial statements for Q2 2013 ("Q3
Financials") and management's discussion & analysis related thereto ("Q2 2013
MD&A") are available on SEDAR and at www.orvana.com.
Dollar amounts (other than per ounce/pound and per share amounts) are in
thousands of U.S. dollars unless stated otherwise, and fine troy ounces of gold
and silver are referred to as "ounces" or "oz".
Q2 2013 Operating and Financial Highlights
-- Production of 18,144 ounces of gold, 3.9 million pounds of copper and
191,374 ounces of silver compared to 12,755 ounces of gold, 3.0 million
pounds of copper and 115,282 ounces of silver in the second quarter of
fiscal 2012. (1)
-- Sales of 19,248 ounces of gold, 3.9 million pounds of copper and 213,879
ounces of silver compared to 11,331 ounces of gold, 3.3 million pounds
of copper and 86,636 ounces of silver in the second quarter of fiscal
2012. (1)
-- Consolidated revenue of $44,301 compared to $31,245 in the second
quarter of fiscal 2012, an increase of 42%.
-- Net income of $6,483 compared to a net loss of $7,959 in the second
quarter of fiscal 2012.
-- Adjusted net income of $922 compared to adjusted net income of $2,794 in
the second quarter of fiscal 2012. (2)
-- Cash flows provided by operating activities of $14,014 compared to cash
flows used in operating activities of $5,568 in the second quarter of
fiscal 2012 and cash flows provided by operating activities before
changes in non-cash working capital of $10,627 compared to cash flows
provided by operating activities before changes in non-cash working
capital of $7,900 in the second quarter of fiscal 2012. (2)
-- Capital expenditures of $8,753 and $12,982 for the three and six months
ended March 31, 2013.
-- Debt net of cash, cash equivalents and restricted cash for debt
repayment of $50,951 and payment of long-term principal and interest of
$8,779 in the six months ended March 31, 2013.
1. For a description of the EVBC Mine and the UMZ Mine, please see "Overall
Performance - EVBC Mine" and "Overall Performance - UMZ Mine".
2. Adjusted net income (loss) and cash flows from operating activities
before changes in non-cash working capital are non-IFRS performance
measures with no standard definition under IFRS. The Company believes
that, in addition to conventional measures prepared in accordance with
IFRS, the Company and certain investors use this information to evaluate
the Company's performance including the Company's ability to generate
cash flows from its mining operations. Accordingly, it is intended to
provide additional information and should not be considered in isolation
or as substitutes for measures of performance prepared in accordance
with IFRS. For further information and a detailed reconciliation, please
see the "Other Information - Non-IFRS Measures" section of the Q2 2013
MD&A.
"The second quarter of 2013 highlights our focus on stabilizing and optimizing
operations. We had record production numbers at our EVBC Mine and we will
continue to implement changes to further improve our performance," said Michael
Winship, Interim President and CEO. "We continue to pay down our debt,
strengthening our balance sheet. With the volatility in the metals markets, we
are also concentrating on driving down unit costs."
OVERALL PERFORMANCE
In Q2 2013, the Company increased consolidated production due to a strong mining
and processing performance at the EVBC Mine. The benefit of improved throughput
was somewhat offset by increased total costs. The table below summarizes the
Company's operating and financial performance for the following periods:
----------------------------------------------------------------------------
Q1 2013 Q2 2013 Q2 2012 YTD 2013 YTD 2012
----------------------------------------------------------------------------
Operating Performance
(1)
Gold
Production (oz) 17,759 18,144 12,755 35,903 22,691
Sales (oz) 12,896 19,248 11,331 32,144 19,606
Average realized price
/ oz (2) $ 1,684 $ 1,616 $ 1,763 $ 1,651 $ 1,690
Copper
Production ('000 lbs) 4,384 3,852 3,024 8,236 6,255
Sales ('000 lbs) 3,974 3,848 3,325 7,822 4,016
Average realized price
/ lb (2) $ 3.17 $ 3.50 $ 3.81 $ 3.45 $ 3.81
Silver
Production (oz) 233,452 191,374 115,282 424,826 197,936
Sales (oz) 241,771 213,879 86,636 455,651 95,919
Average realized price
/ oz (2) $ 29.20 $ 28.10 $ 33.41 $ 29.08 $ 31.47
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Financial Performance
Revenue $ 34,028 $ 44,301 $ 31,245 $ 78,329 $ 46,618
Mining costs $ 18,623 $ 26,163 $ 18,397 $ 44,786 $ 30,979
Depreciation and
amortization $ 4,019 $ 6,441 $ 3,819 $ 10,460 $ 6,256
Gross margin $ 11,386 $ 11,697 $ 9,029 $ 23,083 $ 9,383
Financial instruments
gain (loss) $ 11,748 $ 6,545 $ (17,267) $ 18,293 $ (19,223)
Net income (loss) $ 13,651 $ 6,483 $ (7,959) $ 20,134 $ (12,464)
Net income (loss) per
share (basic and
diluted) $ 0.10 $ 0.05 $ (0.06) $ 0.15 $ (0.09)
Adjusted net income
(loss) (3) $ 4,341 $ 922 $ 9,308 $ 5,264 $ (459)
Adjusted net income
(loss) per share (basic
and diluted) (3) $ 0.03 $ 0.01 $ 0.02 $ 0.04 $ 0.00
Operating cash flows $ 51 $ 14,014 $ (5,568) $ 14,065 $ (278)
Operating cash flows
before non-cash working
capital changes (3) $ 8,189 $ 10,627 $ 7,900 $ 18,816 $ 7,894
Ending cash and cash
equivalents $ 11,988 $ 14,346 $ 7,431 $ 14,346 $ 7,431
Restricted cash
(including long-term) $ 15,954 $ 13,858 $ 12,904 $ 13,858 $ 12,904
Capital expenditures
(including primary mine
development) (4) $ 4,229 $ 8,753 $ 5,169 $ 12,982 $ 13,343
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(1) Metals production and sales are from the EVBC Mine and the UMZ Mine. The
EVBC Mine and the UMZ Mine reached commercial production in August 2011 and
January 2012, respectively.
(2) Average realized metal prices are calculated by dividing gross revenue
recorded for the period from sales of the particular metal, before deduction of
treatment and refinement charges, by ounces of gold or silver or pounds of
copper sold during the period.
(3) Adjusted net income (loss), adjusted net income (loss) per share and
operating cash flows before non-cash working capital changes are non-IFRS
performance measures with no standard definition under IFRS. For further
information and a detailed reconciliation, please see the "Other Information -
Non-IFRS Measures" section of the Q2 2013 MD&A.
(4) These amounts are presented in the consolidated cash flows in the Q2
Financials on a cash basis. Each reported period excludes unpaid capital
expenditures for the EVBC Mine 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. See "Cash Flows, Commitments
and Liquidity - Capital Expenditures" in the Q2 2013 MD&A.
EVBC Mine, Spain
In Q2 2013, the Company started to realize a strong benefit from the new
hoisting and shaft system at the Boinas Mine. There was increased haulage and
processing flexibility with the ramp and shaft combination. There was a minor
drop in grade in Q2 2013 compared to the first quarter of fiscal 2013 and this
caused a slight negative impact to recoveries. The following table includes
consolidated operating and financial performance data for the EVBC Mine for the
periods set out below:
----------------------------------------------------------------------------
EVBC Mine (1) Q1 2013 Q2 2013 Q2 2012 YTD 2013 YTD 2012
----------------------------------------------------------------------------
Operating Performance
Ore mined (tonnes) 163,051 191,460 144,595 354,511 268,453
Ore milled (tonnes) 145,890 176,445 126,978 322,335 250,544
Gold
Grade (g/t) 3.19 3.04 2.83 3.11 2.50
Recovery (%) 93.2 90.9 93.2 92.0 91.4
Production (oz) 13,949 15,713 10,761 29,662 18,416
Sales (oz) 8,759 16,824 9,747 25,583 18,022
Copper
Grade (%) 0.51 0.48 0.40 0.49 0.37
Recovery (%) 82.5 80.4 85.1 81.4 82.3
Production ('000 lbs) 1,347 1,488 956 2,835 1,683
Sales ('000 lbs) 816 1,636 1,085 2,452 1,776
Silver
Grade (g/t) 11.46 10.03 10.27 10.68 8.77
Recovery (%) 79.5 73.8 78.8 76.6 74.7
Production (oz) 42,877 41,848 33,049 84,725 52,774
Sales (oz) 33,279 43,183 31,354 76,462 40,637
----------------------------------------------------------------------------
Total cash costs (by-
product) ($/oz of gold
sold) (2) $ 847 $ 784 $ 765 $ 805 $ 985
Total production costs
(by-product) ($/oz of
gold sold) (2) $ 1,130 $ 1,076 $ 1,033 $ 1,094 $ 1,265
----------------------------------------------------------------------------
Financial Performance
Revenue $ 17,278 $ 31,180 $ 20,303 $ 48,458 $ 35,676
Mining costs $ 9,731 $ 17,051 $ 8,289 $ 26,782 $ 20,796
Financial instruments
gain (loss) $ 11,748 $ 6,545 $ (17,267) $ 18,293 $ (19,223)
Income (loss) before tax $ 16,020 $ 15,377 $ (8,924) $ 31,370 $ (11,644)
Adjusted income (loss)
before tax (2) $ 2,721 $ 7,402 $ 6,434 $ 10,123 $ 5,501
Capital expenditures
(including primary
development) (3) $ 3,355 $ 3,243 $ 7,395 $ 6,598 $ 14,703
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(1) The EVBC Mine is located in the Rio Narcea Gold Belt in northern Spain. The
EVBC Mine is comprised of the El Valle-Boinas Mine, where skarns and oxides are
being mined, and the Carles Mine, where skarns are being mined. The EVBC Mine
commenced commercial production in August 2011.
(2) Total cash costs (by-product) and total production costs (by-product) per
ounce of gold sold and adjusted income (loss) before tax are non-IFRS
performance measures with no standard definition under IFRS. For further
information and a detailed reconciliation, please see the "Other Information -
Non-IFRS Measures" section of the Q2 2013 MD&A. Adjusted income before tax
includes realized expenses in connection with financial instruments settled
during the period and excludes the mark-to-market fair value adjustments of the
Company's outstanding financial instruments at the end of the period. See also
"Other Information - Financial Instruments" in the Q2 2013 MD&A.
(3) These amounts are presented on a cash basis. Each reported period excludes
unpaid 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 reported period. See "Cash Flows, Commitments and
Liquidity - Capital Expenditures" in the Q2 2013 MD&A.
UMZ Mine, Bolivia
The performance of the UMZ Mine in Q2 2013 declined compared to the first
quarter of fiscal 2013. The mining and processing tonnage dropped due to union
labour activities. Grade was also lower in Q2 2013 due to a restricted footprint
of the open pit of the UMZ Mine in the transition and sulphide zones. Oxides
mining and waste stripping are being accelerated to improve sulphides access
and, consequently, financial performance. The recoveries dropped in Q2 2013
compared to the first quarter of fiscal 2013 due to high copper solubility and
lower grades in the feed. The following table includes operating and financial
performance data for the UMZ Mine for the periods set out below:
----------------------------------------------------------------------------
UMZ Mine (1) Q1 2013 Q2 2013 Q2 2012 YTD 2013 YTD 2012
----------------------------------------------------------------------------
Operating Performance
(1)
Ore mined (tonnes) 483,042 450,489 242,180 933,531 415,488
Ore milled (tonnes) 201,312 184,607 104,475 385,919 222,408
Gold
Grade (g/t) 1.18 1.01 1.85 1.10 1.78
Recovery (%) 49.8 40.7 31.1 45.8 33.6
Production (oz) 3,810 2,432 1,994 6,242 4,276
Sales (oz) (2) 4,137 2,424 1,584 6,561 1,584
Copper
Grade (%) 1.45 1.26 1.87 1.36 1.80
Recovery (%) 47.8 46.0 47.9 46.8 51.7
Production ('000 lbs) 3,037 2,363 2,068 5,400 4,571
Sales ('000 lbs) (2) 3,158 2,212 2,240 5,370 2,240
Silver
Grade (g/t) 52.0 42.1 86.4 47.3 81.1
Recovery (%) 56.6 59.8 28.1 58.0 25.0
Production (oz) 190,575 149,526 82,233 340,101 145,162
Sales (oz) (2) 208,492 170,697 55,282 379,189 55,282
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Total cash costs (co-
product) ($/lb) copper
(3) $ 2.05 2.47 $ 3.61 $ 2.23 $ 3.61
Total cash costs (co-
product) ($/oz) gold
(3) $ 1,008 $ 1,155 $ 1,587 $ 1,076 $ 1,587
Total cash costs (co-
product) ($/oz) silver
(3) $ 20.31 $ 22.52 $ 33.00 $ 21.29 $ 33.00
----------------------------------------------------------------------------
Financial Performance
Revenue $ 16,750 $ 13,121 $ 10,942 $ 29,871 $ 10,942
Mining costs $ 8,892 $ 9,112 $ 10,108 $ 18,004 $ 10,183
Income (loss) before tax $ 6,063 $ 369 $ (859) $ 6,432 $ (1,371)
Capital expenditures $ 1,382 $ 423 $ (3,812) $ 1,806 $ (3,812)
----------------------------------------------------------------------------
(1) The UMZ Mine is an open-pit copper, gold and silver mine located in
south-eastern Bolivia. The UMZ Mine commenced commercial production on January
1, 2012. Information relating to production for fiscal 2012 includes production
from the UMZ Mine during the start-up and commissioning period in the first
quarter of fiscal 2012. Sales for the first quarter of fiscal 2012 from the UMZ
Mine were credited against capitalized commissioning costs and sales from
January 1, 2012 onwards were recorded as revenue.
(2) The sales volumes for the first quarter of fiscal 2013 have been adjusted
from the previously reported information to deduct volume adjustments relating
to final liquidations from prior period sales. Sales volume used to calculate
unitary cash costs do not include volume adjustments relating to final
liquidations from prior period sales.
(3) Total cash costs (co-product) per pound of copper and per ounce of gold and
silver are non-IFRS performance measures with no standard definition under IFRS.
For further information and a detailed reconciliation, please see the "Other
Information - Non-IFRS Measures" section of the Q2 2013 MD&A.
Copperwood Project
Orvana has been advancing its copper project (the "Copperwood Project") located
in the Upper Peninsula of Michigan, United States. The Company has achieved most
of its major permitting milestones in calendar 2012. In February 2013, the
Company received the Wetland Permit which is the last major permit necessary.
Optimization work is being done further to the Copperwood Project feasibility
study, with a focus on additional metallurgical testing and mine design.
Total capital expenditures in respect of the Copperwood Project during Q2 2013
and for the six months ended March 31, 2013 were $1,215 and $2,285,
respectively, compared to a total of $5,842 in fiscal 2012. These capital
expenditures included metallurgical testing, mine planning, costs associated
with permitting including the Wetland Permit, well field investigation and peer
review and supporting costs.
Orvana is continuing to investigate a variety of possible options to enhance the
value of the Copperwood Project to Orvana's shareholders including mine
financing, partnerships and third party acquisition.
Outlook
Orvana's short-term focus is operational optimization at the EVBC Mine and the
UMZ Mine to generate increasing operating cash flows in order to pay down debt.
As well, Orvana will continue to de-risk the Copperwood Project and look for
means to possibly advance the mine development. Operational and corporate
reviews have been initiated to seek means to reduce operating and capital costs
given the volatility in the metals markets.
Fiscal 2013 guidance for production is 75,000 ounces of gold, 18 million pounds
of copper and 850,000 ounces of silver.
Total EVBC Mine production in the first half of fiscal 2013 was 29,662 ounces of
gold (fiscal 2013 guidance of 63,000), 2.8 million pounds of copper (fiscal 2013
guidance of 6 million) and 84,725 ounces of silver (fiscal 2013 guidance of
200,000). During fiscal 2013, the Company's primary focus at the EVBC Mine is on
improving head grade, increasing gold production and reducing total cash costs
(net of by-product revenue) per ounce of gold.
Total UMZ Mine production in the first half of fiscal 2013 was 6,242 ounces of
gold (fiscal 2013 guidance of 12,000), 5.4 million pounds of copper (fiscal 2013
guidance of 12 million) and 340,101 ounces of silver (fiscal 2013 guidance of
650,000). During fiscal 2013, the Company's primary focus at the UMZ Mine is on
improving recoveries.
Orvana's long-term focus is to utilize future cash flow and mining capabilities
to build long-term value for its shareholders.
The Company will hold a conference call on Tuesday, May 14, 2013 at 9:30 a.m.
(Eastern Time) to discuss its financial and operational results for the second
quarter of fiscal 2013. Following the presentation there will be a question and
answer period for analysts and investors.
The conference call can be accessed at 1-416-695-7806 or the North American
toll-free number at 1-888-789-9572, using the pass code 8728 099 followed by the
number sign.
About Orvana
Orvana Minerals is a multi-mine gold and copper producer. Orvana's primary asset
is the El Valle-Boinas/Carles gold-copper Mine in northern Spain. Orvana also
owns and operates the Don Mario Mine in Bolivia, processing its
copper-gold-silver Upper Mineralized Zone deposit. Orvana is also advancing its
Copperwood copper project in Michigan, USA. Additional information is available
at Orvana's website (www.orvana.com).
Forward-Looking Disclaimer
Certain statements in this press release 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.
Forward-looking statements relate to, among other things, all aspects of the
development of the Upper Mineralized Zone deposit ("the UMZ Mine") at the Don
Mario Mine in Bolivia, the El Valle-Boinas/Carles Mine (the "EVBC Mine") in
Spain and the Copperwood project (the "Copperwood Project") in Michigan and
their operations and production; the outcome and timing of decisions with
respect to whether and how to proceed with such development and production; the
timing and outcome of any such development and production; estimates of future
capital expenditures; mineral resource estimates; estimates of permitting time
lines; statements and information regarding future feasibility studies and their
results; production forecasts; future transactions; future metal prices; the
ability to achieve additional growth and geographic diversification; future
operating costs; 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 Orvana as of the date of such
statements, are inherently subject to significant business, economic and
competitive uncertainties and contingencies. The estimates and assumptions of
Orvana contained or incorporated by reference in this news release, which may
prove to be incorrect, include, but are not limited to, the various assumptions
set forth herein and in the Company's most recently filed Management's
Discussion & Analysis and Annual Information Form in respect of the Company's
most recently completed fiscal year (the "Annual 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 the UMZ Mine,
the EVBC Mine and the Copperwood Project 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 UMZ Mine and/or the EVBC Mine
or develop the Copperwood Project; the Company's ability to acquire and develop
mineral properties and to successfully integrate such acquisitions; 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 Annual 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 Annual Disclosures for a description of additional risk factors.
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.
FOR FURTHER INFORMATION PLEASE CONTACT:
Orvana Minerals Corp.
Michael Winship
Interim President and Chief Executive Officer
(416) 369 - 1629
Orvana Minerals Corp.
Daniella Dimitrov
Chief Financial Officer
(416) 369 - 1629
Orvana Minerals Corp.
Natalie Frame
Investor Relations
(289) 200 - 7640
ask_us@orvana.com
www.orvana.com
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