Orvana Reports Q1 2018 Financial Results; El Valle Transition to Higher Gold Grade Oxides Underway

2018-02-13 / @newswire

TSX:ORV

First Quarter of Fiscal 2018 Highlights:

Quarterly gold production of 23,172 ounces and copper production of 2.8 million pounds;
El Valle oxide production increased to 37% of mill ore feed;
Consolidated COC and AISC of $999 and $1,253, respectively;
EBITDA of $4.2 million;
Cash balance of $20.6 million at December 31, 2017.

Fiscal 2018 Outlook:

El Valle transition to higher gold grade oxide mining continues, targeting a 50% oxide-skarn plant throughput ratio;
Don Mario consistently delivering planned performance from CIL circuit;
Consolidated production and cost guidance maintained;
Orvana seeking strategic and transformative transactions to enhance profile.

TORONTO, Feb. 13, 2018 /PRNewswire/ -- Orvana Minerals Corp. (TSX:ORV) (the "Company" or "Orvana") announced today financial and operational results for the first quarter ("Q1 2018"). The Company is also providing financial and operational updates for its El Valle and Carlés Mines (collectively, "El Valle") operations in northern Spain and its Don Mario Mine in Bolivia.

The unaudited condensed interim consolidated financial statements for Q1 2018 and Management's Discussion and Analysis related thereto are available on SEDAR and on the Company's website at www.orvana.com.

Q1 2018 Highlights

The Company's strategy to increase production at its El Valle operation targets productivity enhancements to allow for delivery of higher gold ore grades to the mill that are expected to result in higher gold ounces to be produced and reduced unitary costs, while at Don Mario the Company is focusing on nearby gold deposits to extend its mine life. The Company reports the following positive developments in the first quarter of fiscal 2018 as follows:

El Valle – Ramp up of oxides production continues:

The proportion of higher gold grade oxide production delivered to the mill from the El Valle Mine increased to 37%, up from 24% in the second half of fiscal 2017. The Company continues to target a ratio of 50% oxides to skarns delivered to the mill by mid-2018.
Production shortfalls were experienced in the first quarter due to fleet availability and the failure in the mine's ventilation system, as well as an unexpected build-up of in-process gold in the plant circuit. A number of process changes in the mine and plant, in addition to maintenance investments, are expected to allow El Valle to attain its stated production guidance for the remainder of the fiscal year.

Don Mario – Consistent performance:

Don Mario continued to generate consistent results from its carbon-in-leach circuit, producing 12,388 ounces of gold with recovery rates averaging 85.8% in the quarter.
Pre-stripping activities at the Company's nearby Cerro Felix gold deposit commenced during the first quarter. The Company is aiming to begin production from the Cerro Felix deposit starting in the third quarter of fiscal 2018.

Juan Gavidia, Interim CEO stated, "Our Don Mario operation continues to deliver consistently strong results from LMZ ore processed through its carbon-in-leach circuit, and we look forward to maintaining this trend with ore from our nearby Cerro Felix gold deposit shortly. At El Valle, our ramp up of higher gold grade oxide production continues, though on a longer timeframe than initially planned. The challenges that we experienced at El Valle in Q1 are in the process of being resolved. Our updated planning for the balance of fiscal 2018 indicates that a portion of our first quarter shortfall will be recovered over the remainder of the fiscal year, bringing annual production and costs in line with our guidance."

Strategy and Outlook

The Company continues to pursue 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, the primary objective in fiscal 2018 continues to be replacing mined skarn tonnes with higher gold grade oxides in order to bring the proportion of oxide ore processed in the plant up to a target of 50%, thereby substantially increasing ore grades delivered to the mill and increasing gold ounce production. Through additional geological and geotechnical work, the Company also expects to significantly increase the reliability of the mine plan by minimizing the proportion of inferred material in its mine planning and taking additional measures to address grade variability. Infrastructure and fleet maintenance 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 continues to produce consistent results from its re-commissioned CIL circuit, producing an average of over 12,000 ounces of gold per quarter from the Lower Mineralized Zone. Don Mario continues to pursue 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 also been evaluating opportunities to further extend the life of Don Mario, including processing existing mineral stockpiles, potential mining of the Company's Las Tojas deposit, potential mining of the UMZ bottom pit 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 2018 Production and Cost Guidance


		Q1 2018 Actual	FY 2018 Guidance
El Valle Production
	Gold (oz)	10,784	65,000 – 72,000
	Copper (million lbs)	0.9	4.1 – 4.5
Don Mario Production
	Gold (oz)	12,388	45,000 – 48,000
	Copper (million lbs)	1.9	2.0 – 2.3
Total Production
	Gold (oz)	23,172	110,000 – 120,000
	Copper (million lbs)	2.8	6.1 – 6.8
Total capital expenditures		$6,207	$24,000 – $27,000
Cash operating costs (by-product) ($/oz) gold ⁽¹⁾		$999	$950 – $1,050
All-in sustaining costs (by-product) ($/oz) gold ⁽¹⁾		$1,253	$1,150 – $1,250

(1)	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.

Selected Operational and Financial Information


		Q1 2018	Q4 2017	Q1 2017	FY 2017
Operating Performance
Gold
	Production (oz)	23,172	27,666	15,699	90,292
	Sales (oz)	21,995	29,639	14,060	88,636
	Average realized price / oz	$1,269	$1,268	$1,260	$1,258
Copper
	Production ('000 lbs)	2,759	3,601	3,588	13,893
	Sales ('000 lbs)	2,700	3,850	3,598	14,686
	Average realized price / lb	$2.82	$2.74	$2.32	$2.50
Financial Performance (in 000's, except per share amounts)
Revenue		$34,170	$46,156	$23,458	$137,999
Mining costs		$28,060	$34,562	$24,356	$116,370
Gross margin		$458	$3,274	($6,853)	($5,480)
Net loss		($3,379)	($1,722)	($8,154)	($15,555)
Net loss per share (basic/diluted)		($0.02)	($0.01)	($0.06)	($0.11)
EBITDA ⁽¹⁾		$4,182	$10,313	($3,334)	$16,535
Operating cash flows		$2,147	$12,328	($299)	$20,726
Ending cash and cash equivalents		$20,617	$23,811	$9,521	$23,811
Capital expenditures ⁽²⁾		$6,207	$5,818	$7,719	$21,332
Cash operating costs (by-product) ($/oz) gold⁽¹⁾		$999	$902	$1,258	$1,015
All-in sustaining costs (by-product) ($/oz) gold⁽¹⁾⁽²⁾		$1,253	$1,145	$1,732	$1,269

(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.

For further information: Jeff Hillis, Chief Financial Officer, T (416) 369-6281, E jhillis@orvana.com