Big loss for Q3 but AISC looking better for the rest of this year.
Orvana Minerals Corp.
TSX : ORV
Orvana Minerals Corp.
August 13, 2014 06:01 ET
Orvana Releases Financial and Operating Results for the Third Quarter of Fiscal 2014
TORONTO, ONTARIO--(Marketwired - Aug. 13, 2014) - Orvana Minerals Corp. (TSX:ORV) (the "Company" or "Orvana") announced today financial and operating results for the third quarter ended June 30, 2014 ("Q3 Fiscal 2014").
The Company recorded a net loss of $25.9 million in Q3 Fiscal 2014 compared with net income of $11.3 million in the third quarter of fiscal 2013 and adjusted net income(1) of $0.9 million in Q3 Fiscal 2014 compared with adjusted net loss(1) of $0.6 million in the third quarter of fiscal 2013.
In a separate release issued today, Orvana announced that the Company has received updated mineral resources and reserves estimates (the "MRMR Update") for El Valle-Boinás/Carlés ("EVBC") gold-copper mines in northern Spain, showing a year-over-year decrease in reserves and resources. The Company also received an updated life-of-mine plan (the "LOMP Update"), using proven and probable mineral reserves, which reflects a shortened mine life. In addition, the Carlés Mine is being placed on care and maintenance by the end of 2014. As a result of the MRMR Update and in accordance with its usual policy, Orvana conducted a carrying value assessment of EVBC as at June 30, 2014 and recognized a non-cash impairment loss in respect of EVBC of $25.5 million in the third quarter of fiscal 2014. This impairment represents a reduction in the EVBC book value and has no impact on Orvana's cash flows. For further information relating to the MRMR Update and the LOMP Update please refer to the release titled Orvana Announces Decrease in Resources and Reserves at EVBC and Updates Life-of-Mine Plan.
The unaudited condensed interim consolidated financial statements for the third quarter of fiscal 2014 (the "Q3 2014 FS") and Management's Discussion & Analysis related thereto (the "Q3 2014 MD&A") are available on SEDAR at www.sedar.com and at www.orvana.com.
Q3 2014 Operating and Financial Highlights
Completion of the sale of the Copperwood project in Michigan ("Copperwood") with cash received on closing of $13.0 million and a secured promissory note of $7.0 million to be paid in December 2014.
Repayment of outstanding short-term debt of $6.5 million from Copperwood sale proceeds.
Amendment of the maturity date of the long-term debt in respect of the EVBC Mines (the "EVBC Loan") from September 30, 2016 to November 30, 2014. Repayment of $32.6 million under the EVBC Loan in principal and interest from October 2013 to July 2014.
Impairment charge of $25.5 million relating to the EVBC Mines as a result of the MRMR Update and the LOMP Update.
Concluded annual union negotiations at the Don Mario Mine in July 2014.
Production of 21,532 ounces of gold, 4.8 million pounds of copper and 211,459 ounces of silver (or 36,258 gold equivalent ounces) and sales of 18,790 ounces of gold, 4.7 million pounds of copper and 217,988 ounces of silver compared with production of 22,319 ounces of gold, 4.6 million pounds of copper and 303,704 ounces of silver and sales of 20,480 ounces of gold, 4.1 million pounds of copper and 303,733 ounces of silver in the third quarter of fiscal 2013.
Revenue of $34.1 million in the third quarter of fiscal 2014 compared with revenue of $37.0 million in the third quarter of fiscal 2013, primarily due to lower sales volumes of gold and silver in the third quarter of fiscal 2014.
Decrease in mining costs of $3.2 million or 12% from $27.7 million to $24.5 million, primarily due to lower sales volume in the third quarter of fiscal 2014.
Cash flows provided by operating activities from continuing operations of $8.8 million in the third quarter of fiscal 2014 compared with $10.8 million in the third quarter of fiscal 2013 and cash flows provided by operating activities before changes in non-cash working capital of $8.9 million in the third quarter of fiscal 2014 compared with $4.6 million in the third quarter of fiscal 2013. (1)
Working capital of $12.6 million at June 30, 2014 compared with $30.7 million at March 31, 2014 primarily due to the reclassification of the EVBC Loan as current.
Decrease in debt net of cash, cash equivalents and restricted cash for debt repayment from $40.0 million at March 31, 2014 to $25.0 million at June 30, 2014 and $12.7 million as at the date of the MD&A.
Capital expenditures of $14.4 million for the first nine months of fiscal 2014 consisting primarily of primary mine development at the EVBC Mines, EVBC hoist repairs and upgrades costs, the addition of gravity gold concentrators at the Don Mario Mine and tailings dam raises at both EVBC and the Don Mario Mine compared with $17.3 million for the first nine months of fiscal 2013.
Re-commissioning of the upgraded hoisting system at the Boinás Mine.
Reduction in cash operating costs and all-in-sustaining costs of 21% and 23%, respectively, at EVBC compared with the second quarter of fiscal 2014. All-in sustaining costs (by-product) of $1,108 per ounce of gold at EVBC compared with $1,043 in the third quarter of fiscal 2013. (1)
All-in sustaining costs (co-product) of $884 per ounce of gold, $2.51 per pound of copper and $15.68 per ounce of silver at the Don Mario Mine compared with $1,008 per ounce of gold, $2.34 per ounce of copper and $17.43 per pound of silver in the third quarter of fiscal 2013. (1)
Appointment of Neil Ringdahl as Chief Operating Officer in June 2014.
(1) For further information regarding adjusted net income (loss), cash flows from operating activities before changes in non-cash working capital, cash operating costs and all-in sustaining costs ("AISC") and detailed reconciliations of such non-IFRS measures, please see the "Other Information - Non-IFRS Measures" section of the Q3 2014 MD&A filed on SEDAR and posted to Orvana's website at www.orvana.com.
Outlook
In recent months, the Company has achieved the following:
Improved operating performance
Management has focused on operational optimization in 2014 across all business areas, which has led to more efficient operations with improving margins and higher grade production.
Year-over-year costs at the Don Mario Mine have been reduced and production has increased 39% in gold and 32% in copper.
Capital expenditures have decreased by approximately 16% in the first nine months of fiscal 2014 compared with the first nine months of fiscal 2013. Asset upgrades include hoisting capacity at EVBC and the gold gravity concentrators at the Don Mario Mine.
Led by a new senior management team at EVBC, optimization of head grades resulted in an average gold grade processed through the EVBC plant in June of 4.66 grams per tonne, the highest monthly average since the start of commercial production, and in July of 4.41 grams per tonne.
The focus on improved execution and grade optimization has contributed to stronger EVBC operating results in recent months, with gold production of 6,391 ounces in June and 7,332 ounces in July, a record in the history of EVBC. While this level of production is likely to be unsustainable over the next five months with the transition from the Carlés Mine to the Boinás Mine, this strategy is proving profitable even as the new LOMP was being developed.
Streamlined asset base
Copperwood sold in June 2014 as it was a non-core asset outside of Orvana's principal jurisdictions of Europe and Latin America.
Focus on the balance sheet
Short-term debt of $6.5 million was repaid in June 2014 from Copperwood sale proceeds.
The maturity date of the EVBC Loan has been amended to November 30, 2014 from September 30, 2016. Orvana expects to repay the remainder $17.6 million in principal currently outstanding by November 30, 2014.
The Company's debt net of cash, cash equivalents and restricted cash for debt repayment has decreased to $12.7 million currently, increasing financial flexibility.
We would like to remind readers th
