Aura Minerals Inc.
TSX : ORA

Aura Minerals Inc.

January 23, 2012 20:40 ET

Aura Minerals Provides 2011 Production Results and 2012 Guidance

VANCOUVER, BRITISH COLUMBIA--(Marketwire - Jan. 23, 2012) - Aura Minerals Inc. ("Aura Minerals" or the "Company") (TSX:ORA) today provided operating results for the full year 2011 and production guidance for 2012.

2011 Operational Highlights:

  • 2011 full year gold production of 160,159 ounces, meeting the lower end of the previously stated guidance. Production includes 56,286 ounces from the Sao Francisco Mine, 43,002 ounces from the Sao Vicente Mine and 60,871 ounces from the San Andres Mine; and
  • 2011 full year copper concentrate production of 7.7 million pounds, meeting previously stated guidance with strong growth in the fourth quarter to 2.9 million pounds, a 28% increase over the prior quarter.

2012 Outlook Highlights:

  • 2012 gold production is expected to be in the range of 165,000 to 185,000 ounces;
  • Expected average cash costs(1) of approximately $1,200 to $1,300 per ounce of gold produced;
  • Continued ramp up of the Aranzazu Mine to steady-state, design production levels during the first quarter, with full year 2012 production expected of 13 to 14 million pounds of copper, 7,500 to 8,500 ounces of gold and 145,000 to 155,000 ounces of silver contained in concentrate;
  • Expected average cash costs1 of approximately $1.75 to $2.00 per pound of payable copper, after by-product credits; and
  • Work is ongoing to complete the feasibility study for the Serrote de Laje project (the "Serrote Feasibility Study") and the preliminary economic assessment for the Aranzazu Mine (the "Aranzazu PEA"), which will be based on evaluating an expanded throughput rate of approximately 5,000 tonnes per day ("tpd") or more, using a low-cost, bulk-mining method such as long-hole stoping.

"Aura Minerals ended the 2011 fiscal year well, meeting the revised gold and copper production guidance and seeing strong growth at the Aranzazu Mine, and we are poised for strong growth in 2012," stated Jim Bannantine, President and Chief Executive Officer of Aura Minerals.

"The Sao Francisco and Sao Vicente Mines began operating in accordance with the new mine plans announced in the fourth quarter and yielded 30,662 ounces of gold during the quarter. These two operations will produce at relatively high costs in 2012 primarily due to the lower grades at the Sao Francisco Mine, as previously announced in mid-November, but we fully expect production cash costs1 to decrease later in the year and to below $1,000 per ounce into 2013 based on lower waste-to-ore ratios and as progressively higher grade ore material is mined at the Sao Francisco Mine.

Fourth quarter production at the San Andres Mine was below our expectations due to the continued impact of processing lower-recovery mixed ore, and ore movement and handling limitations caused by highly altered clay ore. In spite of these issues, the mine produced nearly 61,000 ounces of gold in 2011 and is expected to be a reliable cash generator for the foreseeable future. The Aranzazu Mine continued its ramp up delivering quarter over quarter copper production growth of 28% helped by increased copper grades and operational improvements. We expect that the Aranzazu Mine will achieve design production levels during the first quarter of 2012 in its current plant and mine configuration.

With continued execution of the new mine plans at the Sao Francisco and Sao Vicente Mines, reliable production at the San Andres Mine and the ramp-up to full production at the Aranzazu Mine, we expect to generate positive free cash flow in 2012 based on current metal prices."

Preliminary Operating Results 2011

Gold Mines

Fourth quarter gold production amounted to 43,864 ounces, resulting in the production of 160,159 ounces for the year ended December 31, 2011 meeting the lower end of the previously stated guidance.

Production on a mine-by-mine basis for the fourth quarter, 2011 and for the full year is summarized below:

Gold Mines - Preliminary Production Q4 2011 FY 2011
San Andres Mine 13,202 oz 60,871 oz
Sao Francisco Mine 17,556 oz 56,286 oz
Sao Vicente Mine 13,106 oz 43,002 oz
Total Gold Production 43,864 oz 160,159 oz

Aranzazu Mine

The Aranzazu Mine also met the revised production guidance for 2011, producing 7.7 million pounds of copper contained in concentrate. Operations have improved steadily since declaring commercial production in February, 2011 with production growing from 1.6 million pounds in the second quarter to 2.3 million in the third quarter and to 2.9 million in the fourth quarter.
The Aranzazu Mine's production for the fourth quarter, 2011 and for the full year is summarized below:

Aranzazu - Preliminary Production
(contained metal in concentrate)

Q4 2011

FY 2011
Copper 2,905,400 lbs 7,744,200 lbs
Gold 1,510 oz 5,680 oz
Silver 39,700 oz 130,900 oz

Production Outlook 2012

Gold Mines

Gold production guidance for 2012 is expected to be 165,000 to 185,000 ounces, representing an increase over 2011 levels. The increase in year-over-year production is mostly attributable to the Sao Francisco Mine, which only operated for nine months in 2011 following the stripping campaign completed early in the second quarter of the year. Production for the two Brazilian mines is in accordance with the new mine plans announced in the Company's news release dated November 10, 2011, entitled "Aura Minerals Announces Updated Resource and Reserve Estimates for Brazilian Gold Mines." Based on the significantly reduced life of mine strip ratio and progressively higher grade ore material to be mined, the Company expects increased production levels from the Sao Francisco Mine beyond 2012 until operations cease in mid-2015. Production at the Sao Vicente Mine, also in accordance with the new mine plan, is expected to approximate 2011 levels. Production at the San Andres Mine is also expected to approximate 2011 levels, provided mining is sequenced in accordance with the mine plan.

Estimated 2012 gold production per mine is summarized below:

Gold Mines - Production Estimate 2012
San Andres Mine 60,000 - 65,000 oz
Sao Francisco Mine 70,000 - 80,000 oz
Sao Vicente Mine 35,000 - 40,000 oz
Total Gold Production 165,000 - 185,000 oz

Aranzazu Mine

Production guidance for 2012 is expected to increase approximately 75% over 2011 production, to between 13 to 14 million pounds of copper in concentrate. Gold and silver by-products are not expected to grow at copper's pace as a result of falling by-product grades.

Estimated 2012 production for the Aranzazu Mine is summarized below:

Aranzazu Mine - Production Estimate 2012
Copper 13,000,000 - 14,000,000 lbs
Gold 7,500 - 8,500 oz
Silver 145,000 - 155,000 oz

Cash Costs

For the gold mines, cash costs1 for 2012 are forecasted to be $1,200 to $1,300 per ounce of gold produced. For the Aranzazu Mine, cash costs1 are forecasted to be $1.75 to $2.00 per pound of payable copper net of gold and silver by-products.

Capital Expenditures

Total capital expenditures in 2011 were approximately $56 million of which $20 million primarily relates to the capitalized stripping program at the Sao Francisco Mine and $8 million to development at the Aranzazu Mine. The remaining $28 million primarily represents sustaining capital expenditures. For 2012, capital spending is expected to be approximately $28 million, with $19 million relating to growth and sustaining capital projects and $9 million relating to continued development at the Aranzazu Mine.

Exploration

The Company plans to spend up to $9 million on exploration in 2012, including costs associated with the completion of the Serrote Feasibility Study and the Aranzazu PEA as well as resource definition and expansion drilling at the San Andres Mine.

Non-GAAP Measures

This news release includes certain non-GAAP performance measures, in particular, the total cash costs of gold per ounce and payable copper per pound. These non-GAAP measures do not have any standardized meaning within International Financial Reporting Standards (IFRS) and therefore may not be comparable to similar measures presented by other companies. The Company believes that this information is useful to management and certain investors in evaluating the Company's performance. The data presented is intended to provide additional information and should not be considered in isolation or as a substitute for measures of performance prepared in accordance with IFRS. Cash costs are presented as they represent an industry standard method of comparing certain costs on a per unit basis. Total cash costs include on-site mining, processing and, administration costs, off-site refining and royalty charges, reduced by by-product credits, but exclude amortization, reclamation, and exploration costs, as well as capital expenditures. Total cash costs of gold produced are divided by ounces to arrive at per ounce cash costs. Similarly, total cash costs of copper produced, net of gold and silver by-product revenues and including offsite treatment and refining costs, are divided by payable pounds of copper produced to arrive at per cash costs per payable pound of copper.

About Aura Minerals Inc.

Aura Minerals is a Canadian mid-tier gold and copper production company focused on the exploration, development and operation of gold and base metal projects in the Americas. The Company's producing assets include the San Andres gold mine in Honduras, the Sao Francisco and Sao Vicente gold mines in Brazil and the copper-gold-silver Aranzazu Mine in Mexico. Other significant assets include the feasibility-stage copper-gold-iron ore Serrote de Laje Project (formerly known as the Arapiraca Project) in Brazil.

For further information, please visit Aura Minerals' web site at www.auraminerals.com.

Cautionary Note Regarding Forward-Looking Statement:

This document contains "forward-looking information" within the meaning of Canadian securities legislation and "forward-looking statements" within the meaning of the United States Private Securities Litigation Reform Act of 1995. This information and these statements, referred to herein as "forward-looking statements" are made as of the date of this news release or as of the effective date of information described in this news release, as applicable. Forward-looking statements relate to future events or future performance and reflect current estimates, predictions, expectations or beliefs regarding future events and include, without limitation, statements with respect to: (i) the amount of future production over any period; (ii) cash costs; (iii) expected time frames; and (iv) mine life and mine plans. Any statements that express or involve discussions with respect to predictions, expectations, beliefs, plans, projections, objectives, assumptions or future events or performance (often, but not always, using words or phrases such as "expects", "anticipates", "plans", "projects", "estimates", "envisages", "assumes", "intends", "strategy", "goals", "objectives" or variations thereof or stating that certain actions, events or results "may", "could", "would", "might" or "will" be taken, occur or be achieved, or the negative of any of these terms and similar expressions) are not statements of historical fact and may be forward-looking statements.

All forward-looking statements are based on the Company's or its consultants' current beliefs as well as various assumptions made by and information currently available to them. These assumptions include, without limitation: (i) the presence of and continuity of metals at each mine at modeled grades; (ii) the capacities of various machinery and equipment; (iii) the availability of personnel, machinery, equipment and key consumables at estimated prices; (iv) exchange rates; (v) metals and minerals sales prices; (vi) appropriate discount rates; (vii) tax rates and royalty rates applicable to the mining operations; (viii) cash costs; (ix) anticipated mining losses and dilution; (x) metals recovery rates, (xi) reasonable contingency requirements; and (xii) receipt of regulatory approvals on acceptable terms. Although management considers these assumptions to be reasonable based on information currently available to it, they may prove to be incorrect. Many forward-looking statements are made assuming the correctness of other forward looking statements. The cost information is also prepared using current values, but the time for incurring the costs will be in the future and it is assumed costs will remain stable over the relevant period.

By their very nature, forward-looking statements involve inherent risks and uncertainties, both general and specific, and risks exist that estimates, forecasts, projections and other forward-looking statements will not be achieved or that assumptions do not reflect future experience. The Company cautions readers not to place undue reliance on these forward-looking statements as a number of important factors could cause the actual outcomes to differ materially from the beliefs, plans, objectives, expectations, anticipations, estimates assumptions and intentions expressed in such forward-looking statements. These risk factors may be generally stated as the risk that the assumptions and estimates expressed above do not occur, but specifically include, without limitation, risks relating to variations in the mineral content within the material identified as mineral reserves and mineral resources from that predicted, changes in development or mining plans due to changes in logistical, technical or other factors, the impact of general business and economic conditions, global liquidity and credit availability on the timing of cash flows and the values of assets and liabilities based on projected future conditions, fluctuating metal prices (such as gold, copper, silver, nickel and iron ore), currency exchange rates (such as the Canadian dollar, Brazilian Real, Mexican Peso and the Honduran Lempira versus the United States dollar), possible variations in ore grade or recovery rates, changes in accounting policies, changes in the Company's corporate resources, changes in project parameters as plans continue to be refined, changes in project development and production time frames, the possibility of project cost overruns or unanticipated costs and expenses, higher prices for fuel, steel, power, labour and other consumables contributing to higher costs and general risks of the mining industry, failure of plant, equipment or processes to operate as anticipated, unexpected changes in mine life, final pricing for concentrate sales, unanticipated results of future studies, seasonality and unanticipated weather changes, costs and timing of the development of new deposits, success of exploration activities, successful completion of proposed acquisitions, permitting time lines, government regulation of mining operations, environmental risks, unanticipated reclamation expenses, title disputes or claims, limitations on insurance coverage and timing and possible outcome of pending litigation and labour disputes, as well as those risk factors discussed or referred to in the Company's Annual Information Form, dated March 30, 2011, under the heading "Item 4.2 - Risk Factors" and in the annual financial statements and management's discussion and analysis of the Company for the year ended December 31, 2010. The foregoing list of factors that may affect future results is not exhaustive.

When relying on our forward-looking statements, investors and others should carefully consider the foregoing factors and other uncertainties and potential events. The Company does not undertake to update any forward-looking statement, whether written or oral, that may be made from time to time by the Company or on behalf of the Company, except as required by law.

The forward-looking statements contained herein are presented for the purpose of assisting investors in understanding the Company's expected financial and operational performance and results as at and for the periods ended on the dates presented in the Company's plans and objectives and may not be appropriate for other purposes.

1 See cautionary note regarding non-GAAP measures.

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