Orvana Reports 2018 Record Production, Provides Fiscal Year-End Financial Results, Reports 2018 Revised Guidance Met, Provides 2019 Guidance
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Date: December 21, 2018 #12-2018
ORVANA REPORTS 2018 RECORD PRODUCTION, PROVIDES FISCAL YEAR-END FINANCIAL RESULTS,
REPORTS 2018 REVISED GUIDANCE MET, PROVIDES 2019 GUIDANCE
All Amounts in US Dollars Unless Otherwise Stated
Fiscal 2018 Achievements:
Record gold production of 103,384 ounces, 14% incr ease from 90,292 ounces in previous year. Very
satisfactory performance was the result of:
o Much improved mining rates for hi gher-grade oxides ore due to investments in fleet, crews’ skills and
general underground infrastructure at El Valle; and
o Improved recoveries from the CIL circuit, invest ment in mining fleet, and full production now underway
at new Cerro Felix open pit at Don Mario complex.
COC and AISC of $1,021 and $1,259, compared to $1,015 and $1,269 for fiscal 2017. Achieved lower
range of revised guidance.
EBITDA of $13.8 million.
Revenue of $145.8 million.
Cash balance of $11.6 million as of September 30, 2018.
Fiscal 2019 Outlook:
At El Valle, continued feed of higher-grade oxides ore processed, to sustai n recently achieved gold
production levels.
At Don Mario, steady ore production from Cerro Fe lix open pit to repeat another positive annual outcome.
Also, development of new processing circuit to treat oxides stockpile to extend Don Mario’s life of mine by
three years.
Production guidance for fiscal 2019 in line with fisc al 2018 results, plus a welcomed reduction in unitary
costs.
Orvana to continue improving produc tivity at both operations, while se eking strategic and transformative
transactions to enhance profile.
Renewed regional exploration programs in Spain and Bolivia have potential to increase reserves and
resources at local operations.
Orvana to replace current Samsung C&T Prepayment Facility with a syndicated credit facility from Spanish
financial institutions, thro ugh its wholly owned subs idiary OroValle. Replacement liability will provide an
extended repayment period at a reduced interest rate.
TORONTO, ONTARIO, December 21, 2018 – Orvana Minerals Corp. (TSX:ORV) (the “Company” or
“Orvana”) announced today financial and operational results fo r the fourth quarter (“Q4 2018”) and for the
fiscal year ended September 30, 2018 (“Fiscal 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 for its Don
Mario Mine operations in Bolivia.
The audited consolidated financial statements fo r Fiscal 2018 (“2018 Financials”) and Management’s
Discussion and Analysis related thereto (“2018 MD&A”) are available on SEDAR and on the Company’s website
at www.orvana.com.
The Company is pleased to report the following positive developments in Fiscal 2018:
El Valle – Delivers 13% higher gold production: Oxides ore mining productivity enhancements allowed
for 27% higher-grade ore throughput, thus better annual gold output and reduced unitary costs. Mechanical
advance rates in oxides areas cont inued to improve greatly, increasing by 82% to 6,861 metres, versus
3,761 metres in previous year.
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Don Mario – Delivers 16% higher gold production: Open pit mining transitioned from LMZ to Cerro Felix.
Mine tonnage increased by 19% to 856K compared to 719K the year before, suppo rted by investment in
heavy equipment throughout the year. CIL circuit recovery results exceeded expectations due to better ore
quality and process fine tuning by pl ant’s personnel. Better mining tonnage and metallurgical recovery
allowed gold production increase to 45K oz, compar ed to 39K in fiscal 2017. Throughout the year, the
Company has been evaluating alternativ es to treat its oxides stockpile s. Underway test s show optimal
oxides stockpile metallurgy by combining a Sulphidi zation Acidification Thickening Recycling process
(“SART”), with heap leaching, and a Carbon-in-Column (CIC) circuit.
Juan Gavidia, CEO of Orvana Minerals stated: “We have achieved a number of key operational successes that
ensure the sustainability of Orvana as a 100,000 oz plus gold produ cer. Our Spanish and Bolivian teams,
supported by prudent capi tal investments and renewed technical talent, have wo rked diligently on mining
efficiencies to ensure increased production and productivities. Our AISC will continue to be a hard core target
in Fiscal 2019, with improvement opportunities expected to come from continued higher-grade ore at El Valle,
as well as increased recoveries and operational productivity at both sites.” Mr. Gavidia further stated: “At El
Valle, we made excellent strides on mechanical advance, mastering the challenging higher-grade oxides areas.
While, at Don Mario, plant recoveries continued to exceed expectations, being at 92% by Fiscal 2018 year-end.
With the transition to Cerro Felix pit now completed, D on Mario unitary costs have stabilized to former lower
levels. Both, El Valle and Don Mario are also enhancin g their regional exploration drives to fulfill Orvana’s
strategic growth.”
Strategy and Outlook for Fiscal 2019
The Company continues to pursue its objectives of optim izing production, lowering unitary costs, maximizing
free cash flow, and extending life-of-mine of operations while increasing their output. It continues to seek
strategic and transformative transaction s to enhance its profile and longevit y, including the review of other
potential exploration projects, mainly focused in Sout h America, which could be aligned with the Company’s
strategy of adding to reserves and resources.
At El Valle, the primary objective is to continue incr easing higher-grade oxides mining. For that purpose the
Company is conducting additional geological and g eotechnical work, to increase mining and mine plan
reliability.
At Don Mario, ore will continue to be sourced from Cerr o Felix pit and processed at the higher recovery rate
achieved the previous year. Next focus is the processing of the oxides st ockpile, which will potentially provide
a three-year life of mine extension. The metallurgical solution goes through the development of a SART circuit
which is in the process of review for engineering and project financing purposes.
New Credit Facility
In August 2016, Orvana entered into a $12.5M copper conc entrates and gold doré Prepayment Facility with
Samsung C&T. Proceeds of this Facility were used for mine developm ent and infrastructu re upgrades at El
Valle, both, contributors to present good operational performance. Principal outstanding was $9.118 million at
the end of Fiscal 2018.
The Company has been evaluat ing alternatives to replace the Sams ung Facility in order to extend the
repayment period and reduce its interest rate. The Co mpany has recently obtained, through its wholly-owned
subsidiary OroValle, approval from three Spanish financial institutions to access a syndicated credit facility (the
“New Facility”) for €6 million. The closing of the New Facility is subject to the concurrent completion of the early
repayment of the Samsung Facility, th e release of guarantees and collate ral pledged in favour of Samsung,
and the execution of applicable legal documentation. The Company has an excellent relationship with Samsung
C&T, which has been very c ooperative throughout the Prepayment Facility, and looks forward to maintaining
this after its replacement.
The New Facility will extend the repaym ent period from one year (Samsung Fac ility), to four. The close of the
New Facility is expected by early 2019. Once closed, the New Facility will provide the Company with improved
financial metrics to fulfill its operational strategy.
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Fiscal 2019 guidance and Fiscal 2018 results are:
FY 2018
Guidance (1)
FY 2018
Actual
FY 2019
Guidance (2)
El Valle Production
Gold (oz) 55,000 – 62,000 58,259 62,000 – 68,000
Copper (million lbs) 4.9 – 5.3 5.1 3.2 – 3.6
Don Mario Production
Gold (oz) 45,000 – 48,000 45,125 38,000 – 42,000
Copper (million lbs) 3.1 3.1 -
Total Production
Gold (oz) 100,000 – 110,000 103,384 100,000 – 110,000
Copper (million lbs) 8.0 – 8.4 8.2 3.2 – 3.6
Total capital expenditures (million $) 21 – 24 20.3 12 – 13
Cash operating costs (by-product) ($/oz gold) (1) (2) 1,000 – 1,050 1,021 950 – 1,050
All-in sustaining costs (by-product) ($/oz gold) (1) (2) 1,250 – 1,300 1,259 1,150 – 1,250
(1) FY 2018 Revised Guidance assumptions for COC and AISC include by-p roduct commodity prices of $2. 75 per pound of copper and an a verage
Euro to US Dollar exchange of 1.18 in the fourth quarter of fiscal 2018.
(2) FY 2019 guidance assumptions for COC and AISC include by-product commodity prices of $2.75 per pound of copper and an average Euro to US
Dollar exchange of 1.16.
Selected Operational and Financial Information
Q4 2018 Q3 2018 Q4 2017 FY 2018 FY 2017
Operating Performance
Gold
Grade (g/t) 2.72 2.62 2.62 2.61 2.41
Recovery (%) 92.3 92.0 90.3 91.7 84.7
Production (oz) 28,661 26,761 27,666 103,384 90,292
Sales (oz) 28,044 26,490 29,639 102,018 88,636
Average realized price ($/oz) 1,208 1,298 1,268 1,273 1,258
Copper
Grade (%) 0.51 0.51 0.64 0.60 0.70
Recovery (%) 81.6 81.6 69.9 65.9 65.4
Production (‘000 lbs) 1,291 1,575 3,601 8,233 13,893
Sales (‘000 lbs) 1,231 2,225 3,850 8,687 14,686
Average realized price ($/lb) 2.81 3.11 2.74 2.89 2.50
Financial Performance (in ‘000 $, except per share)
Revenue 36,298 38,438 46,156 145,836 137,999
Mining costs 30,632 31,729 34,562 120,946 116,370
Gross margin 3,019 73 3,274 3,156 (5,480)
Net loss (1,231) (2,982) (1,722) (11,097) (15,555)
Net loss per share (basic/diluted) ($) (0.01) (0.02) (0.01) (0.08) (0.11)
EBITDA
1,165 3,930 10,313 13,750 16,535
Operating cashflow bef. non-cash w/c changes 3,049 4,282 8,596 11,864 11,914
Operating cashflow 1,129 4,010 12,329 1,800 20,726
Ending cash and cash equivalents 11,634 13,484 23,811 11,634 23,811
Capital expenditures 3,051 5,618 5,818 20,338 21,332
Cash operating costs (by-product) ($/oz gold) 1,003 1,027 902 1,021 1,015
All-in sustaining costs (by-product) ($/oz gold) 1,187 1,291 1,145 1,259 1,269
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Earnings before interest, taxes, depreciation and amortization (“EBITDA”), cash operating costs and all-in sustaining costs are non-IFRS performance
measures.
Capital expenditures are presented in the consolidated cash flows in the Audited Financials on a cash basis.
About Orvana Minerals Orvana is a multi-mine gold-copper-silver company. Orvana’s operating assets consist
of the producing El Valle and Carlés gold-copper-silver mines in northern Spain and the producing Don Mario
gold-silver operations in Bolivia. Additional information is available at Orvana’s website (www.orvana.com).
For further information please contact:
Nuria Menéndez
Chief Financial Officer
Joanne Jobin
Investor Relations Officer
T: 647 964 0292
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”, “cou ld”, “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 curr ent life-of-mine estimates including specifically, but not limited to in the
case of Don Mario, the mining of the Cerro Felix deposit, the processing of the mineral stockpiles (including the implementatio n of the
SART circuit) and the reprocessing of the ta ilings material; Orvana’s ability to optim ize its assets to deliver shareholder val ue; the
Company’s ability to optimize productivity at Don Mario and El Valle; estimates of future production, operating costs and capit al
expenditures; mineral resource and reserve estimates; statem ents 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; mine development plans; and closing the New Facility..
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 subj ect to significant business, ec onomic and competitive uncertainti es and
contingencies. The estimates and assumptions of the Company contai ned or incorporated by reference in this information, which m ay
prove to be incorrect, include, but are not limited to, the variou s 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 ex pressly incorporated herein by reference as well as: there being no significant disrup tions
affecting operations, whether due to labour disruptions, supply disruptions, power disr uptions, damage to equipment or otherwis e;
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 oper ates being consistent wi th its current expect ations;
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;
labour and materials costs increasing on a basis consistent with Orvana’s current expectations; and closing the New Facility.
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 an ticipated
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 es timates of resources based on ac tual 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 expl oration and development, including the Company’s ability to cont inue to
operate the El Valle and/or Don Mario and/or ability to resume long-term operations at the Carlés Mine; the Company’s ability to successfully
implement the SART circuit to process the current oxides sto ckpiles at Don Mario; 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 Comp any; challenges to the Company’s interests in its property and mineral
rights; current, pending and proposed legislat ive or regulatory developments or changes in political, social or economic condit ions in the
countries in which the Company operates; general economic conditions worldwide; and the risks identified in the Company’s disclosures.
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 develop ment and exploration of the Comp any’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 stateme nts.
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The forward-looking statements made in this information are intended to provide an ov erview of management’s expectations with respect
to certain future operating activities of the Company and may not be appropriate for other purposes.