Orvana Minerals Corp.
TSX : ORV

Orvana Minerals Corp.

November 29, 2007 17:15 ET

Orvana Reports Record Production, Cash Provided by Operating Activities and a 64% Increase in Earnings Per Share for Fiscal 2007

TORONTO, ONTARIO--(Marketwire - Nov. 29, 2007) - Orvana Minerals Corp. (TSX:ORV) announced record earnings today with net income of US$26.0 million (US$0.23 per share) on revenues of US$55.9 million for the year ended September 30, 2007 ("fiscal 2007" or "2007") compared to net income of US$15.7 million (US$0.14 per share) on revenues of US$44.9 million for the year ended September 30, 2006 ("fiscal 2006" or "2006").

Cash provided by operating activities amounted to US$31.5 million in fiscal 2007 compared to US$24.7 million in 2006.

Dollar amounts in the remainder of this news release are in thousands of United States dollars unless stated otherwise, and fine troy ounces of gold are referred to as "ounces".

The Company produced 86,381 ounces of gold and sold 86,322 ounces in the year ended September 30, 2007 compared to 80,028 ounces produced and 79,621 ounces sold in fiscal 2006.

Orvana President and Chief Executive Officer, Carlos Mirabal said, "We are obviously very pleased with the results from our fourth full year of commercial operation at the Don Mario Mine, with gold production at 86,381 ounces, an increase of 8% over last year. Compared to last year, all key measures of financial performance showed improvement: revenues increased by 25%; net income increased by 66%; earnings per share increased by 64%; and cash flow from operating activities increased by 27%. We remain long-term debt-free.

The Company owns and operates the Don Mario Mine in eastern Bolivia. The Company's business strategy is to use its cash resources and mining capability to achieve additional growth and geographic diversification through projects in other countries in the Americas by acquisition of producing mines with characteristics similar to those of the Don Mario Mine and advanced-stage properties that could potentially be brought into production over the next two to three years. Management is investigating and evaluating other possible opportunities in the Americas. However, given the limited number of opportunities for investment in producing mines and advanced-stage properties, management is considering exploration projects as an additional way to achieve geographic diversification.

The Company is also undertaking exploration activities consisting of ground geophysics, trenching and drilling on other targets located in the ten concessions contiguous to the concession on which the Don Mario Mine is situated. During fiscal 2007, the largest portion of total exploration spending was incurred on the concessions known as Las Tojas and La Aventura. For fiscal 2008, the Company will continue to focus its exploration and development efforts on these two concessions of the Don Mario Property.

Orvana is very encouraged with the results of drilling thus far at Las Tojas. The Las Tojas mineralization has the same mineralogical characteristics as the ore in the Don Mario Mine.

Lower Mineralized Zone ("LMZ") and can be put through the Company's existing gold processing facilities at Don Mario. While the grades are not as high as those of the LMZ, which is being mined underground, the Las Tojas operation will likely be an open pit mine. Las Tojas has the potential of extending the current Don Mario gold mining operation (the LMZ and Las Tojas taken together) from about the end of 2009 to the end of 2010. This will defer mining of the Upper Mineralized Zone ("UMZ") at Don Mario, which is a base metals project, and requires the installation of additional facilities to the plant for copper production.

As part of its diversification strategy, Orvana intends to increase its exploration efforts in Bolivia and elsewhere in the Americas and plans to increase exploration spending by approximately $3.5 million in fiscal 2008.

Orvana is committed to the social development and well-being of the communities in which it operates. To this end the Company provides financial and in-kind support for local community improvements including education, sanitation, purchasing of local goods and services, utilities and parks, information technology, maintenance of community roads and community business development initiatives.

The Company is also committed to developing and operating its projects in full compliance with recognized international and local environmental standards. As part of this policy, the Company is continuously implementing programs to protect and enhance the natural habitats and sensitive species. This includes reclamation efforts, continuous reforestation efforts and the establishment of water sources for wildlife."

Proposed Changes to Bolivian Laws

On November 23, 2007, the Bolivian Congress approved legislation amending the country's mining and corporate income tax laws. Under Bolivia's constitution, the tax changes become effective on a prospective basis from the date of their enactment which is expected to be in the next 60 days. The tax increases take two forms:

- An income tax rate to increase from 25% to 37.5%.

- A new tax, to be called "Regalia Minera", that will be payable in addition to income tax. The Regalia Minera tax will be calculated as a percentage of gross revenues, with the tax rate varying directly with the price of gold. Had this new Regalia Mineral been in effect in fiscal 2007, the before-tax cost to the Company would have been $3,600.

- If both the increase in the income tax rate and Regalia Minera tax are enacted as described above, the effective income tax rate on the Company's Bolivian subsidiary will go from the current rate of 25% to approximately 50%.

On November 24, 2007, the Constituent Assembly of Bolivia approved the new constitutional draft in principle. The proposed new constitution, if implemented as currently drafted, could have adverse implications for the Company due to, among other things, increased powers that the Bolivian government would have under the constitution to control the commercialization of minerals.

Don Mario Mine Operations

In fiscal 2007, a total of 253,469 tonnes of ore were treated, compared to 253,930 tonnes in fiscal 2006.



------------------------------------------------
Quarters ended
Year ended -------------------------------------
Sept. 30, Sept. 30, June 30, Mar. 31, Dec. 31,
2007 2007 2007 2007 2006
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Underground mine Tonnes 241,218 57,260 61,598 58,577 63,783
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g/t 11.91 12.36 12.58 12.74 10.08
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Minipit & stockpile Tonnes 12,251 2,782 5,388 2,270 1,811
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g/t 2.00 1.86 2.02 1.91 1.72
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Total tonnes
treated Tonnes 253,469 60,042 66,986 60,847 65,594
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g/t 11.43 11.99 11.64 12.33 9.85
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Gold recovery rate 92.7% 93.2% 93.4% 93.4% 90.7%
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Gold production - ounces 86,381 21,571 23,425 22,538 18,847
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The following table shows the cash costs for the fourth quarter and fiscal year 2007. 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 Quarter ended
Sept.30, 2007 Sept.30, 2007
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Costs Cost/oz. Costs Cost/oz
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Direct mine operating costs $11,499 $ 133.12 $2,921 $ 135.43
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Third-party smelting, refining and
transportation costs 213 2.47 53 2.47
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Cash operating costs 11,712 135.59 2,974 137.90
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Royalties and mining rights 1,809 20.94 452 20.94
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Total cash costs 13,521 156.53 3,426 158.84
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Depreciation and amortization 6,679 77.32 1,521 70.52
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Total production costs $20,200 $ 233.85 $4,947 $ 229.36
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Fiscal Year Financial Highlights

Orvana's operating results and financial position for the two latest fiscal
years are summarized below:

-----------------------
Year ended September 30
-----------------------
2007 2006
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Revenue $55,920 $ 44,875
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Net income 26,023 15,682
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Net income per share - basic and diluted $0.23 $0.14
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Cash provided by operating activities $31,488 $ 24,724
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Cash and cash equivalents 55,667 26,850
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Total assets 81,153 54,860
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The Company is long-term debt-free.



Quarterly Financial Highlights

Orvana's financial highlights for the fourth quarter ended September 30,
2007 compared to the fourth quarter ended September 30, 2006 are
summarized below:

---------------------------------
Fourth quarter ended September 30
---------------------------------
2007 2006
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Revenue $14,183 $ 13,219
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Net income 6,944 5,268
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Net income per share - basic and diluted $0.06 $0.05
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Cash provided by operating activities $7,042 $9,156
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Audited consolidated financial statements and Management's Discussion & Analysis for fiscal 2007 are available on SEDAR and at www.orvana.com.

About Orvana

Orvana Minerals Corp. is a Canadian mining and exploration company based in Toronto, Canada, involved in the evaluation, development and mining of precious and base metal deposits in the Americas. The Company owns and operates the Don Mario Gold Mine in eastern Bolivia. Orvana's long-term goal is to become a low cost, long-life, multi-mine gold and base metals producer in the Americas. Orvana's shares have been listed on the Toronto Stock Exchange since 1992 under the trading symbol ORV.

Forward-Looking Statements

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" or "does not expect", "is expected", "anticipates" or "does not anticipate", or "intends" or stating that certain actions, events or results "may", "could", "would", "might" or "will" be taken or achieved) are not statements of historical fact, but are "forward-looking statements". Such forward-looking statements involve known and unknown risks, uncertainties and other factors that may cause the actual results, performance or achievements of Orvana, or developments in Orvana's business or in its industry, to differ materially from the anticipated results, performance, achievements or developments expressed or implied by such forward-looking statements. Forward-looking statements include disclosure regarding possible events, conditions or results of operations that are based on assumptions about future conditions, courses of action and consequences. Forward-looking statements may also include, without limitation, any statement relating to future events, conditions or circumstances. Orvana cautions you not to place undue reliance upon any such forward-looking statements, which speak only as of the date they are made.
Forward-looking statements relate to, among other things, all aspects of the possible development of the Upper Mineralized Zone ("UMZ") deposit at Don Mario and of its potential operation and production, mineral resource and mineral reserve estimates, the realization of mineral reserve estimates, estimates of future capital expenditures and timing of development and production and estimates of the outcome and timing of decisions with respect to whether and how to proceed with such development and production, permitting time lines, statements and information regarding future feasibility studies and their results, production forecasts, future transactions, the successful completion of reclamation projects, future gold prices, the ability to achieve additional growth and geographic diversification, future production costs, accounting estimates and assumptions, future tax benefits, the renewal or renegotiation of agreements, future financial performance, including the ability to increase cash flow and profits, future financing requirements, mine development plans, and possible changes in the regulatory, political, social and economic environment in Bolivia.
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 results to differ materially from current expectations of estimated or anticipated events or results. Some of these risks, uncertainties and factors include fluctuations in the price of gold; the impact or unanticipated impact of: the need to recalculate estimates of reserves and 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; risks generally associated with mineral exploration and development, including the Company's ability to develop the UMZ deposit if it determines to do so and to acquire and develop mineral properties; the Company's ability to obtain additional 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 Bolivia; general economic conditions worldwide and the risks identified in Orvana's Management's Discussion and Analysis for the year ended fiscal 2007 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 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 year ended fiscal 2007.

Contact Information

  • Orvana Minerals Corp.
    Malcolm King
    (416) 369-1629
    Website: www.orvana.com