Tuesday, 24 July 2012

Stonecap Securities increases price target for Orvana Minerals, "positioned to grow"

Stonecap Securities increased its price target for Orvana Minerals (TSE:ORV) Monday after visiting the miner's flagship EVBC mine in Spain.
The capital markets firm said the gold miner is "positioned to grow", with the company recently releasing June production results from EVBC.
June production at the Spanish mine was 4,976 ounces of gold, 549,000 pounds of copper and 14,000 ounces of silver, at an estimated cash cost of $600 per ounce of gold, net of by-product credits.
Total fiscal third quarter production from the mine was 14,000 ounces of gold, 1,468,000 pounds of copper, and 40,000 ouncse of silver, a "significant improvement" over the second quarter's output of 11,000 ounces of gold, 956,000 pounds of copper and 33,000 ounces of silver, Stonecap said.
On Stonecap's site visit, analyst Christos Doulis observed that the shaft has been completely reamed and is in the final stages of commissioning, as the electrical systems are installed.
The installation of an underground crusher is also expected to increase the throughput capacity of the mine.
Head grades have "consistently improved" at EVBC, the equities research firm said, and, at 3.3 grams per tonne gold, are now in line with run-of-mine forecasts.
"We believe that EVBC has not only turned the corner, but that with the shaft running in early August we should see production improve by ~20% and costs decrease," Doulis wrote in his research note.
"Operations at Orvana’s flagship EVBC continue to improve ahead of the shaft coming on-line and Orvana has had a second month with production of ~5koz Au, at an impressive preliminary cash cost of ~$600/oz."
Stonecap maintained its "outperform" rating on Orvana, and increased the price target to $2.10 from $2.00 previously, compared to its current trading price of 85 cents.
Orvana also owns and runs the Don Mario mine in Bolivia and recently completed a feasibility study and snagged a mine permit from the Michigan Department of Environmental Quality for its Copperwood copper project in Michigan, U.S.

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