Orvana Minerals Corp. (TSE:ORV) has swung to a profit in its fiscal first quarter as revenue more than doubled on a sharp rise in production at its mines from a year earlier, with one of its mine not yet in commercial production in the same period of 2012.
So far this year, the miner's stock has improved over 9%, and rose Friday morning by over 2% to 97 cents in Toronto.
The company's primary asset is the El Valle-Boinas/Carles (EVBC) gold-copper mine in northern Spain. It also owns and operates the Don Mario Mine in Bolivia, processing its copper-gold-silver Upper Mineralized Zone (UMZ) deposit, and is advancing its Copperwood copper project in Michigan, USA.
For the quarter that ended December 31, the miner said net income was $13.6 million or 10 cents per share, compared to a loss of $4.5 million or 3 cents per share, a year earlier. Orvana also saw improvement in profit on a quarterly basis.
Adjusted profit for the latest period, which excludes an unrealized gain from the revaluation of its financial instruments, was $4.3 million or 3 cents per share, from an adjusted loss of $3.3 million or 2 cents per share, in the year ago period.
Total revenue rose 121% to $34.03 million from $15.37 million a year ago.
"Our first quarter of fiscal 2013 results were affected by not selling the 1,000 tonnes of concentrate in the EVBC inventory until early January, but overall we are pleased with our performance," said president and CEO Bill Williams in a statement Friday.
"Operations continued to improve, including the production of over 6,000 ounces of gold at the EVBC Mine in December. We expect Q2 to be a strong quarter."
In the latest quarter, the company produced 17,759 ounces of gold, 4.4 million pounds of copper and 233,452 ounces of silver, compared to output of 9,937 ounces of gold 3.2 million pounds of copper and 82,654 ounces of silver in the first quarter last year.
Orvana said it sold 13,035 ounces of gold in the latest period, up from 8,276 ounces a year earlier, at a price of $1,684 an ounce versus 1,588 an ounce.
Average realized prices for copper were lower at $3.17 per pound, but the realized price for silver almost tripled to $29.20 an ounce.
At its EVBC mine in Spain, operating performance improved as the company mined 163,051 tonnes of ore compared to 123,858 tonnes a year earlier, with recovery rates for all three of its producing metals increasing.
Total cash costs at the mine, per ounce of gold sold, also fell sharply to $847 from $1,244.
The UMZ mine in Bolivia, which only started production in January of last year, has also been steadily improving production with ore tonnage mined at 483,042, compared to 336,772 tonnes in the prior quarter. Recovery rates for all three metals improved slightly on a sequential basis.
Looking ahead, the company said its short term focus is operational optimization at the EVBC and UMZ mines to generate increasing operating cash flows in order to pay down debt, and set a foundation for growth.
Orvana has roughly $14 million in payments due this year to Credit Suisse, as well as its Fabulosa credit line - with a principal of $5.7 million as at December 4 - due at year-end.
It had $51,000 in operating cash flows at the end of the quarter, or $8.19 million before non-cash changes to working capital.
Orvana is forecasting 2013 production of 75,0000 ounces of gold, 18 million pounds of copper and 850,000 ounces of silver.
The company has also provided cash cost guidance of about $800 per ounce of gold, net of credits at EVBC and co-product cash costs of below $1,000 per gold ounce, $20 per ounce of silver and $2 per pound of copper at UMZ.
At EVBC, the company said it will work on improving head grade, increasing gold production and reducing total cash costs per ounce of gold. The shaft, which became operational in the latest period, is expected to allow "more efficient ore haulage", resulting in increased output and lower costs.
The miner added it would also focus on improving recoveries at the UMZ mine.
The company is also awaiting a decision by the Michigan Department of Environmental Quality (MDEQ) regarding its Wetlands permit at its Copperwood project in the state.
Over the last year, it has been applying for permits that will allow for mining this copper deposit, with a decision from MDEQ expected before the end of this month. It spent $1.07 million at the project in the latest period, compared to $5.8 million last year.
The company's long term goal is to use future cash flow to build value, both through organic growth and possibly through strategic acquisitions focused mainly on advanced-stage gold and copper properties.
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