Orvana Reports Fourth Quarter and Year-End Financial Results, Provides 2020 Guidance
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Date: November 26, 2019 #15-2019
ORVANA REPORTS FOURTH QUARTER AND YEAR-END FINANCIAL RESULTS,
PROVIDES 2020 GUIDANCE
All Amounts in US Dollars Unless Otherwise Stated
Fiscal 2019 Consolidated Highlights:
Production of 110,063 gold equiva lent ounces (97,259 gold ounces, 5.0 million copper pounds and 194,693
silver ounces);
Cash Operating Costs (“COC”) and All in Sustaining Costs (“AISC”) of $1,094 and $1,253;
Revenue of $136 million;
EBITDA of $18.1 million;
Capital expenditures of $10.9 million;
Cash balance of $12.4 million as of September 30, 2019.
TORONTO, ONTARIO, November 26, 2019 – Orvana Minerals Corp. (TS X:ORV) (the “Company” or
“Orvana”) announced today financial and operational results for the fourt h quarter (“Q4 2019”) and for the
fiscal year ended September 30, 2019 (“Fiscal 2019). The Company is also providing financial and operational
updates for its El Valle and Carlés Mines operations in norther n Spain (managed by the Spanish subsidiary
“OroValle”) and for its Don Mario Mine operations in Bolivia (managed by the Bolivian subsidiary “EMIPA”).
The audited consolidated financial statements for Fiscal 2019 ( “2019 Financials”) and Management’s
Discussion and Analysis related thereto (“2019 MD&A”) are available on SEDAR and on the Company’s website
at www.orvana.com.
Fiscal 2019 Highlights:
OroValle:
- Production increased by 10% to 64,327 ounces gold compared to 58,259 ounces in fiscal 2018;
- Production increase was due to a combination of 6% higher thr oughput at the mill and 4% higher head
grade.
- Gold head grade increased to 3 .26 g/t, compared to 3.13 g/t reported last year.
- Copper production decreased to 5.0 million pounds, compared t o 5.1 million pounds in fiscal 2018;
production exceeded guidance.
EMIPA:
- The Company progressed with the engineering and metallurgical studies to process an oxidized
stockpile (“Oxide Stockpile Proj ect”), and anticipates moving f orward with the development of a new
sulphidization plant circuit t o treat the mineral resource (Mea sured) of 2.18 million tonnes with an
average gold grade of 1.85 g /t; and approximately 386,950 oz of gold equivalent1. It is expected that
the Oxide Stockpile Project will be in operation by FY2021.
- Production of 32,932 ounces gold was 27% lower compared to the previous year.
- Gold head grade of 1.51 g/t, co mpared to 2.16 g/t reported last year, with the decrease due mainly to
lower ore grades on the last benches of Cerro Felix open pit.
- During the fourth quarter of fiscal 2019, mining activities t ransitioned from Cerro Félix to the open pit
operations at Las Tojas. On November 8 th the Company announced that it would suspend mining
operations at Las Tojas effective on or before December 31, 201 9, due to higher than expected ore-
grade operational mining dilution, resulting in uneconomic unitary costs.
- In light of the suspension of operations, the Company has com pleted an impairment test in respect of
carrying values at the end of fiscal 2019, concluding that the net recoverable amounts are greater than
the carrying values of the assets. As such, there was no impair ment of such carrying values as at
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September 30, 2019.
Note 1: Cautionary Statement – Mineral resources that are not mineral reserves do not have
demonstrated econom ic viability. The mineral re source for the oxides st ockpile was prepared in
compliance with National Instrument 43-101 and CIM guidelines, as set out in the Don Mario Mine
Operation 2016 Technical Report dated January 27, 2017 and effective as of September 30, 2016 (the
“2016 Report”). The 2016 Report was prepared on the assumption that the stockpile would be
processed by floatation and would not be included in the carbon-in-leach circuit. However, during
FY2018 and FY2019, the Company has been evaluating metallurgical alternatives to process the
oxides stockpile, concluding that a sulphidzation circuit would maximi ze the value of the stockpile. A
copy of the 2016 Report is posted under the Co mpany’s profile on www.sedar.com. These mineral
resources were estimated using a gold price of US $1,300 per ounce, copper price of US$3.00 per
pound and silver price of US$18 per ounce, prices of which were used in the 2016 Report.
Financing:
- The Company closed a new credit facility (the "Credit Facility") with a syndicate of local banks, through
its wholly-owned subsidiary OroValle, for a total amount of €8 million (€6 million in January and €2
million in May) at an attractive interest rate of 2.55%.
- Concurrent with the closing of the Credit Facility, Orvana repaid the Samsung C&T Prepayment Facility,
originally established in August 2016 (see news release dated February 6, 2019).
Fiscal 2020 Primary Objectives:
Orovalle:
- Increase the reliability of the underground mining fleet by e nhancing current preventive maintenance
programs.
- Continue reducing unitary c osts, based on current cost reduction programs.
- Conversion of current mineral resources into mineral reserves as well as the definition and addition of
new resources to the existing ore bodies to extend the current mine life.
- Continue with the execution of greenfield exploration program s mainly focused on Ortosa-Godán and
Lidia permits which will target additional mineral resources to the current mine life.
EMIPA:
- New sulphidization plant circu it development to allow for the processing of the Oxide Stockpile Project
(2.18 million tonnes); the Company anticipates that, subject to the favourable completion of technical,
economic and funding analysis, the sulphidization circuit and ancillary facilities may be in full production
by FY2021.
- Continue development of studies for the reprocessing of taili ngs for a potential treatment of 8 million
tonnes.
- Regional exploration program mainly focused on the Company’s land package of 58,000 hectares in
the Don Mario Complex.
- Orderly suspension of mini ng and milling operations, labour r estructuring, and expedient
implementation of temporary care and maintenance program.
Taguas:
- The Taguas Mine Development project is located in San Juan Pr ovince in Argentina. The Company
expects to close the acquisition (including the rights transfer registration and the TSX final acceptance)
during Q1 2020. Subject to closing the transaction and securing the required financing, the Company
is preparing a drilling program in order to expand the current resources (see news release dated May
14, 2019) and to support the potential upgrade in Mineral Resource estimates.
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Juan Gavidia, CEO of Orvana Minerals stated: “We are very pleas ed to report that OroValle has reached
sustainable levels of operation with a trend of lowering unitar y costs year over year. We are also excited with
our current exploration targets in and around the El Valle and Carlés Mines, as well as regional targets at the
Lidia and Ortosa-Godan permits, which are anticipated to add mi neral reserves and resources to OroValle’s
current mine life”. Mr Gavidia continued, “As for the EMIPA ope rations, we are diligently working to develop
final engineering and financing for the Oxides Stockpile Projec t, and we would expect that processing
operations will resume in FY2021. In addition, we are also conducting studies on the reprocessing of the tailings
to extend the mine-life at Don Mario.”
The Company is pleased to provide fiscal 2019 results and 2020 guidance:
FY 2019
Guidance (1)
FY 2019
Actual
FY 2020
Guidance (2)
El Valle Production
Gold (oz) 62,000 – 68,000 64,327 60,000 – 65,000
Copper (million lbs) 3.2 – 3.6 5 . 0 5.5 – 6.0
Don Mario Production
Gold (oz) 38,000 – 42,000 32,932 2,000 – 3,000
Total Production
Gold (oz) 100,000 – 110,000 97,259 62,000 – 68,000
Copper (million lbs) 3.2 – 3.6 5 . 0 5.5 – 6.0
Capital Expenditures
El Valle $8,333 $9,000 – $10,000
Consolidated $12,000 – $13,500 $11,261 $9,000 – $10,000
Cash operating costs (by-product) ($/oz) gold (1) (2)
El Valle $1,004 $900– $1,000
Consolidated $950 – $1,050 $1,094 $1,000– $1,100
All-in sustaining costs (by-product) ($/oz) gold (1) (2)
El Valle $1,185 $1,100– $1,200
Consolidated $1,150 – $1,250 $1,253 $1,250– $1,350
(1) Fiscal 2019 Guidance assumptions for COC and AISC included by-product commodity prices of $2.75 per pound of copper and
an average Euro to US Dollar exchange of 1.16.
(2) Fiscal 2020 Guidance assumptions for COC and AISC include b y-product commodity prices of $2.60 per pound of copper and
an average Euro to US Dollar exchange of 1.12.
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Selected Consolidated Operational and Financial Information
Q4 2019 Q3 2019 Q4 2018 FY 2019 FY 2018
Operating Performance
Gold
G r a d e ( g / t ) 2.17 2.08 2.72 2.34 2.61
Recovery (%) 89.9 93.8 92.3 92.6 91.7
Production (oz) 21,985 20,696 28,661 97,259 103,384
Sales (oz) 20,987 22,579 28,044 96,540 102,018
Average realized price / oz $1,444 $1,277 $1,208 $1,304 $1,273
Copper
G r a d e ( % ) 0.40 0.44 0.51 0.45 0.60
Recovery (%) 73.5 78.1 81.6 76.3 65.9
Production (‘000 lbs) 1,128 1,071 1,291 5,015 8,233
Sales (‘000 lbs) 1,089 1,052 1,231 5,073 8,687
Average realized price / lb 2.65 2.78 $2.81 2.77 $2.89
Financial Performance (in 000’s, except per share amounts)
Revenue $32,382 $30,831 $36,298 $135,544 $145,836
Mining costs $27,147 $28,304 $30,632 $113,558 $120,946
Gross margin ($3,618) ($2,561) $3,019 ($1,384) $3,156
Net income (loss) ($3,626) ($3,914) ($1,231) ($5,266) ($11,097)
Net income (loss) per share (basic/diluted) ($0.03) ($0.03) ($0.01) ($0.04) ($0.08)
EBITDA $4,811 $540 $1,165 $18,065 $13,750
Operating cash flows before non-cash working
capital changes $4,091 $1,368 $3,049 $18,312 $11,864
Operating cash flows $4,974 $4,866 $1,129 $14,444 $1,800
Free Cash Flow $1,929 ($3,631) ($2) $7,432 ($8,474)
Ending cash and cash equivalents $12,351 $11,682 $11,634 $12,351 $11,634
Capital expenditures $2,162 $4,999 $3,051 $10,880 $20,338
Cash operating costs (by-product) ($/oz) gold $1,206 $1,213 $1,003 $1,094 $1,021
All-in sustaining costs (by-product) ($/oz) gold $1,358 $1,432 $1,187 $1,253 $1,259
All-in costs (by-product) ($/oz) gold $1,402 $1,492 $1,271 $1,288 1,358
Earnings before interest, taxes, depreciation and amortization (“EBITDA”), free cash flow, cash operating costs, all-in sustaining costs and all-in 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 i n 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 made herein constitute forward-looking statements or forward-looki ng information within the meaning of appli cable
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 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,
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operating costs and capital expenditures; mineral resource and re serve estimates; statements and information regarding future f easibility
studies and their results; future transac tions; future metal prices; the ability to achieve additional growth and geographic di versification;
future financial performance, including the ability to increase ca sh 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 subj ect to significant business, ec onomic and competitive uncertainti es and
contingencies. The estimates and assumptions of the Company contained or incorporated by reference in this news release, which may
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;
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 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 a sulphidization circuit and ancillary facilities to process the current oxides stockpiles at Don Mario; the Company’ s ability to
acquire and develop mineral properties and to successfully integr ate 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 regul atory developments or changes i n political,
social or economic conditions in the count ries in which the Company operates; general economic conditions worldwide; and the ri sks
identified in the Company’s disclosures. This list is not exhaustive of the factors that may affect any of the Company’s forwar d-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 herein 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 stateme nts.
The forward-looking statements made herein are intended to provi de an overview of management’s expectations with respect to cer tain
future operating activities of the Company and may not be appropriate for other purposes.