Orvana Minerals Corp.

Orvana Minerals Corp.

November 10, 2011 08:20 ET

Update on Orvana Operations and Additional Gold Hedging

TORONTO, ONTARIO--(Marketwire - Nov. 10, 2011) - Orvana Minerals Corp. ("Orvana") (TSX:ORV) will release its financial results for the fiscal year ended September 30, 2011 on December 12, 2011. During fiscal 2011, Orvana started up two new mining operations - the Don Mario Upper Mineralized Zone ("UMZ") copper/gold/silver mine in eastern Bolivia and the El Valle-Boinas/Carles ("EVBC") gold/copper mine in northern Spain. This press release contains a report on progress at these two mine start-ups and, as well, progress on the Copperwood copper project in Michigan, USA.

Orvana also announces that it has entered into additional gold hedges with Credit Suisse to lock-in downside price protection at EVBC.

Don Mario UMZ

Production for the fourth quarter of the Company's fiscal year ended September 30, 2011 was 1.1 million pounds of copper, 890 ounces of gold, and 23,900 ounces of silver contained in a concentrate with 37.7% copper, 21.1 grams per tonne gold, and 570 grams per tonne silver. Recoveries for copper, gold, and silver averaged 49%, 30%, and 27%, respectively. Throughput was limited by the late delivery of consumables, especially iron sponge. No doré was poured during the quarter due to high copper content in the tailings. Through the fiscal year ended September 30, 2011, the Don Mario operation continued to be in the commissioning stage and all costs have been capitalized with pre-production revenues credited against capitalized costs.

In October, mill throughput averaged 1,400 tonnes per day with head grades of 1.72% copper, 1.80 grams per tonne gold, and 71.5 grams per tonne silver. Production was 940,142 pounds of copper, 981 ounces of gold, and 23,935 ounces of silver. Recoveries of copper, gold, and silver were 56.5%, 38.8%, and 23.8%, respectively. No doré was poured during the month due to high copper content in the tailings. Concentrate grades averaged 40.8% copper, 29.2 grams per tonne gold, and 712 grams per tonne silver, which include recoveries from the talc flotation circuit (explained further below).

To date, three concentrate shipments of 1,000-tonne lots have been made to the port in Arica, Chile and payments have been received. A fourth 1,000-tonne lot will be ready for shipment by mid-November.

The sulphuric acid plant has been running at or over its capacity of 100 tonnes of acid per day with current stock at 600 tonnes. Important processing plant improvements included increasing the agitator horsepower in the leach circuit and installing skimmers in the flotation circuit as well as the activation of an idle flotation circuit to float talc prior to sending the feed to the leach-precipitation-flotation ("LPF") circuit. These improvements have reduced acid consumption, increased metal recoveries and improved concentrate grade and quality.

"We have made important changes to the LPF circuit as well as to the feedstock that have improved recoveries," said Carlos Mirabal, Orvana's President and Chief Operating Officer. "The cost of these modifications was minor. We continue to work on all aspects of the process and mine plan in order to increase copper recoveries towards 70% and reduce unit production costs"


Commissioning began on June 1, 2011. Production from EVBC to September 30, 2011, was 9,336 ounces of gold, 1.05 million pounds of copper and 28,456 ounces of silver from an average daily throughput of about 1,500 tonnes per day with head grades of 1.92 grams per tonne gold, 0.41% copper, and 8.64 grams per tonne silver. Total copper concentrate produced was 1,934 tonnes averaging 24.8% copper, 74 grams per tonne gold, and 404 grams per tonne silver. Recoveries were 87% for gold, 66.1% for copper and 57.8% for silver.

Production in October averaged slightly over 1,500 tonnes with head grades of 1.97 grams per tonne gold, 0.28% copper, and 5.9 grams per tonne silver. Production in October was 2,663 ounces of gold, 238,775 pounds of copper, and 5,728 ounces of silver. Recoveries were 88.7% for gold, 79.5% for copper and 63.3% for silver.

To date, a total of 3,000 tonnes of concentrate have been shipped to port and various doré shipments have been made as well. Provisional payments have been received for these products.

Gold head grades should steadily increase over the next few months and gold production for the fiscal year ended September 30, 2012 is targeted to be about 5,000 ounces per month. Construction of the shaft is on target with completion expected in March 2012.

In its fiscal year ended September 30, 2011, Orvana will be reporting revenue from EVBC from August 1, 2011.

EVBC Gold Hedging

In order to lock-in downside gold price protection on part of its EVBC production, Orvana executed an additional gold hedge with Credit Suisse of 1,400oz/month from January 2012 to the maturity of the loan in September 2015. The hedge is in the form of a collar with puts at US$1,550/oz and calls at US$1,855/oz. Orvana has the right but not the obligation to sell gold under the hedge at US$1,550/oz. At prices over US$1,855/oz, Orvana will be required to sell the gold under the hedge at $1,855/oz. Combined with the existing hedge of about 780 ounces per month at US$1,333/oz from January, 2012 to January, 2016, Orvana has hedged about 26,000 ounces per annum. This represents approximately 42% of EVBC's fiscal 2012 gold production or roughly one third of overall Orvana gold production in fiscal 2012.

Orvana through the Company's wholly-owned subsidiary, Kinbauri Espana, S.L.U. ("Kinbauri" or "EVBC") entered into a US$50 million 5-year term facility with Credit Suisse in October 2010.


Work continues on the Feasibility Study with release planned for early calendar 2012. The final metallurgical testing is nearly complete and indications are that recoveries and contained copper in concentrates can be improved from those reported in the Prefeasibility Study; viz. 87% and 23%, respectively. On September 1, the Michigan Department of Transportation ("MDOT") announced the funding for the upgrade of County Road 519, which is the main public access to the project site. MDOT will contribute $2.31M, Gogebic County $0.35M, and Orvana $0.84M. This important grant from the State of Michigan for improvement of the public road infrastructure will serve not only the proposed Copperwood mine, but also the timber and recreational industries in the area as well.

On September 23, Orvana submitted the mine permit application to the Michigan Department of Environmental Quality ("MDEQ") as prescribed by Part 632 of the Non-Ferrous Metallic Mine regulation of the State of Michigan. The application was declared administratively complete by the MDEQ on September 26 and it is now under review. The first public hearing will be held on November 9 in Ironwood, Michigan.

On October 21, the Wetlands Permit, or the Section 404 Permit under the Clean Water Act, was submitted. The National Pollution Discharge Elimination Permit is expected to be submitted this week.

New Resource/Reserve Reports

At Don Mario, a new NI 43-101 reserve report is being prepared based on current operating costs and improved gold, copper and silver prices with completion expected in December 2011.

At EVBC, a new NI 43-101 resource and reserve report is also being completed based on drill results reported over the past year and improved gold, copper and silver prices with completion expected in December 2011.

The new NI 43-101 reports will also provide long term grades and recoveries expected from both EVBC and Don Mario.

Working Capital

To smooth cash flows, Orvana and Kinbauri have entered into a working capital facility of up to US$7 million with Auramet Trading, LLC ("Auramet"). This facility will provide Kinbauri the option of receiving a periodic advance, as frequently as weekly at prevailing commodity prices on the date of the advance, in the amount of 90% of the value of metals in concentrate delivered into warehouse at the time of the advance. Currently, Kinbauri receives about US$6 million for concentrate every 6-7 weeks under the off-take agreement.

Conference Call

Orvana will release its financial results for the fiscal year ended September 30, 2011 on December 12 and will host a conference call on December 13, 2011 at 10:00am to discuss these results. Conference call details will be made available on our website at www.orvana.com under calendar of events and will be included in the December 12 results press release.

The information presented herein was compiled by or under the supervision of Dr. W.C. Williams, VP, Corporate Development of Orvana Minerals Corp, a qualified person for the purposes of National Instrument 43-101.

About Orvana

Orvana Minerals is a multi-mine gold and copper producer. Orvana's primary asset is the El Valle-Boinás/Carlés ("EVBC") gold-copper project in northern Spain, now in production. Orvana also owns and operates the Don Mario Mine in Bolivia where a newly completed leaching-precipitation-flotation ("LPF") plant is processing its copper-gold-silver Upper Mineralized Zone ("UMZ") deposit. Orvana is also advancing its major 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-Boinás/Carlés 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-Boinás/Carlés 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-Boinás/Carlés project; 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 March 31, 2011 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.

Contact Information

  • Orvana Minerals Corp.
    Natalie Frame
    Investor Relations
    (289) 200-7640

    Orvana Minerals Corp.
    Roland Horst
    Chief Executive Officer
    (416) 369-1629

    Orvana Minerals Corp.
    Carlos Mirabal
    Chief Operating Officer
    (416) 369-1629

    Orvana Minerals Corp.
    Malcolm King
    Vice President and Chief Financial Officer
    (416) 369-1629

    Orvana Minerals Corp.
    Bill Williams
    Vice President, Corporate Development
    (480) 522 7925