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Orvana Minerals Corp. (TSX:ORV - News) announced operating
results today for the year ended September 30, 2010. Dollar amounts are in
U.S. dollars unless stated otherwise, and fine troy ounces of gold are
referred to as "ounces". Highlights for the year are:
-- Revenues of $32.3 million on sales of 28,341 ounces for the year ended
September 30, 2010 compared to $56.0 million on sales of 63,230 ounces
for the same period a year ago, with lower ounces of gold sold
contributing to most of the decline, which was somewhat offset by higher
average gold prices realized;
-- Net loss of $2.4 million ($0.02 per share) for the 2010 fiscal year
compared to net income of $13.4 million ($0.12 per share) for the year
ended September 30, 2009;
-- Cash from operations before changes in working capital was $2.5 million
for fiscal 2010 compared to $22.8 million for fiscal 2009;
-- Capital expenditures were $37.5 million for fiscal 2010 compared to $7.7
million for the same period last year. Expenditures included $11.1
million on the development of the Upper Mineralized Zone ("UMZ") of the
Don Mario Mine, $23.0 million on the development of the El Valle-
Boinas/Carles ("EVBC") project, $3.1 million on the Copperwood project
and $.3 million for systems improvements; and
-- Cash and cash equivalents amounted to $12.7 million at September 30,
2010 compared to $58.0 million at September 30, 2009.
"Results for the fourth quarter and
the year ended September 30, 2010, are in line with our expectations and we
will continue to produce gold at our Las Tojas operation in Bolivia until
early in 2011. Our focus though is on bringing the Spanish EVBC gold/copper
mine and the Bolivian UMZ copper/gold/silver mine into production early in
2011. In addition we are working towards a pre-feasibility study on our
Copperwood copper project in Michigan." said Roland Horst, Orvana's
Chief Executive Officer.
Orvana has $12.7 million in cash and
cash equivalents at year end. Subsequent to the end of the year, Orvana
entered into a US$50 million five-year term corporate debt facility with
Credit Suisse AG. After fully funding its capital requirements at the EVBC
project and the UMZ, Orvana expects to have accumulated cash reserves from
its operating free cash flows. Orvana will continue to seek gold and/or
copper advanced stage properties in politically stable regions, utilizing its
mining expertise to increase long-term value for shareholders.
Don Mario Mine Operations
All dollar amounts (except per unit
amounts) in the remainder of this news release are in thousands of United
States dollars unless otherwise stated.
The ore from the Lower Mineralized Zone
("LMZ") of the Don Mario Mine was exhausted during the last quarter
of fiscal 2009 and the processing of the Las Tojas ores continued to the end
of fiscal 2010. A total of 608,492 tonnes of ore were treated in fiscal 2010
compared to 331,506 tonnes a year ago as indicated in the table below:
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Quarters ended
------------------------------------
Year ended Sept. June March Dec. Year ended
Sept. 30, 30, 30, 31, 31, Sept. 30,
2010 2010 2010 2010 2009 2009
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Underground Tonnes 153,212
mine -----------------------------------------------------------------
g/t 11.49
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Tonnes 608,492 153,459 154,270 144,587 156,176 178,294
Las Tojas -----------------------------------------------------------------
g/t 1.73 1.41 1.66 1.70 2.13 1.87
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Tonnes 608,492 153,459 154,270 144,587 156,176 331,506
Total -----------------------------------------------------------------
g/t 1.73 1.41 1.66 1.70 2.13 6.32
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Gold recovery rate 82.2% 73.5% 79.5% 83.3% 89.0% 93.1%
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Gold production -
ounces 27,751 5,114 6,545 6,565 9,527 62,644
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Gold production for fiscal 2010 was 56%
lower, at 27,751 ounces, compared to 62,644 ounces for fiscal 2009. This
decline was due to processing of the tonnages from the lower grade ore of the
Las Tojas deposit. The prior year results included the production from the
now depleted higher grade ore of the Don Mario underground mine.
The following table shows the cash operating
costs and total production costs for years ended September 30, 2010 and 2009.
The Company prepares its financial statements in accordance with Canadian
generally accepted accounting principles ("GAAP"). The calculations
below represent non-GAAP information, which should not be construed as an
alternative to GAAP reporting of operating expenses, and may not be
comparable to similar measures presented by other issuers (see "non-GAAP
measures" below).
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Year ended September Year ended September
30, 2010 30, 2009
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Costs Cost/oz. Costs Cost/oz.
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Direct mine operating costs $ 18,237 $ 657.15 $ 15,331 $ 244.73
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Third-party smelting,
refining and transportation
costs 153 5.52 273 4.36
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Cash operating costs 18,390 662.67 15,604 249.09
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Royalties and mining rights 1,108 39.93 1,754 27.99
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Mining royalty tax 2,263 81.56 3,916 62.52
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Total cash costs 21,761 784.16 21,274 339.60
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Depreciation, amortization
and accretion 3,716 133.90 9,948 158.80
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Total production costs $ 25,477 $ 918.06 $ 31,222 $ 498.40
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Gold production 27,751 ozs. 62,644 ozs.
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Cash operating costs at $662.67 per
ounce were dramatically affected by the decline in gold production resulting
from the transition from the LMZ to the lower grade Las Tojas deposit. These
costs are not representative of the expected costs of the operation of the
UMZ.
Financial Highlights
Orvana's financial highlights for the
year ended September 30, 2010 compared to year ended September 30, 2009 are
summarized below:
---------------------------------
Year ended September 30
---------------------------------
2010 2009
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Revenue $ 32,344 $ 56,005
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Net (loss) income (2,431) 13,400
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Net (loss) income per share - basic and
diluted ($0.02) $ 0.12
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Cash (used) provided by operating
activities (8,644) 19,631
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Cash and cash equivalents 12,700 58,036
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Total assets 156,472 140,607
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Long-term debt and obligations under
capital leases 5,104 4,144
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Shareholders' equity $ 109,402 $ 110,367
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The audited consolidated financial
statements and Management's Discussion & Analysis for the period ended
September 30, 2010 are available on SEDAR and at www.orvana.com.
Outlook
The forward looking statements made in
this section 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.
Orvana's focus is to use its cash
resources and mining capability to build long-term value for its shareholders
through organic growth and future strategic acquisitions of advanced-stage
gold and/or copper properties.
In the short term, Orvana is focused on
commencing production at both the EVBC gold/copper project in northern Spain
and its Don Mario UMZ copper/gold operation in eastern Bolivia, as well as,
advancing its Copperwood copper project in Michigan.
With the start up of operations at EVBC
and the UMZ expected to occur in early 2011, Orvana expects annualized gold
production to increase from about 28,000 ounces to approximately 120,000
ounces, early in 2012. Additionally, annualized copper and silver production
are expected to increase substantially to over 12,000 tonnes and to 750,000
ounces respectively.
Over the longer term, Orvana will
continue to seek gold and/or copper advanced stage properties in politically
stable regions, utilizing our mining expertise to increase long-term value
for shareholders.
The Company will hold a conference call
on Tuesday December 14, 2010 at 10:00 a.m. (Eastern Time) to discuss the
annual results. 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 passcode 8416682 followed by the number sign.
About Orvana
Orvana Minerals is a gold producer with
a strong balance sheet and is transforming itself into a multi-mine gold and
copper producer. Orvana owns and operates the copper-gold Don Mario Mine in
Bolivia and is bringing into production the El Valle Boinas/Carles
gold-copper project in northern Spain and advancing the 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 ("UMZ") deposit at the Don Mario Mine in Bolivia, the El
Valle-Boinas/Carles project in Spain and the Copperwood project in Michigan
and their potential 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 production 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 Annual Information
Form, 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 deposit, El Valle-Boinas/Carles and the Copperwood
projects 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 develop the UMZ deposit,
the Copperwood project or the El Valle-Boinas/Carles; 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 Orvana's
Management's Discussion and Analysis for the period ended September 30, 2010
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 Information Form 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.
Non-GAAP Measures
The Company has used Non-GAAP measures,
including direct mine operating costs, cash operating costs, total cash costs
and total production costs, and related unit cost information, because it
understands that certain investors use this information to determine the
Company's ability to generate earnings as cash flow for use in investing and
other activities. The Company believes that conventional measures of
performance prepared in accordance with GAAP do not fully illustrate the
ability of its operating mine to generate cash flow. Non-GAAP measures do not
have any standardized meaning prescribed under Canadian GAAP, should not be
construed as an alternative to GAAP reporting of operating expenses, and may
not be comparable to similar measures presented by other companies. The
measures are not necessarily indicative of cost of sales as determined under
Canadian GAAP. Cash costs are determined in accordance with the former Gold
Institute's Production Cost Standard. For a reconciliation of the non- GAAP
costs and unit costs provided above with the Company's GAAP-based statement
of operations, please see the Company's Management's Discussion &
Analysis for the period ended September 30, 2010.
Contact:
Natalie Frame
Orvana Minerals Corp.
Investor Relations
(289) 200-7640
Malcolm King
Orvana Minerals Corp.
Vice President and Chief Financial Officer
(416) 369-1629 |
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