Wednesday, 15 May 2013

Orvana Minerals Q2 results see improved production at EVBC mine, though costs bite

Orvana Minerals Corp. (TSE:ORV) was holding steady Tuesday after announcing fiscal second quarter results that reflected strong copper and gold production at its Spanish mine, which was offset somewhat by higher total costs. 
For the three months to March 31, the company swung to a net profit of US$6.5 million, or 5 cents per share, compared to a loss of US$8.0 million, or a loss of 6 cents per share, in the year-earlier period. 
Excluding an unrealized gain from the revaluation of the company's financial instruments, profit was US$0.9 million, versus an adjusted profit of US$2.8 million a year ago. 
Operating cash flows, a key metric in the industry, rose to $14.0 million from a loss of $5.6 million in the same quarter a year ago. Before changes in non-cash working capital, cash flows came in at $10.6 million.  
Revenue surged 42 per cent to $44.3 million from $31.2 million a year earlier. 
Production in the quarter totalled 18,144 ounces of gold, 3.9 million pounds of copper and 191,374 ounces of silver. Output of all three metals was up significantly from the figures a year ago, consisting of 12,755 ounces of gold, 3.0 million pounds of copper and 115,282 ounces of silver. 
"The second quarter of 2013 highlights our focus on stabilizing and optimizing operations, says interim president and CEO, Michael Winship, of the company, which operates the EVBC mine in Spain, the UMZ mine in Bolivia and is developing the Copperwood project in Michigan.
"We had record production numbers at our EVBC Mine and we will continue to implement changes to further improve our performance."
Indeed, production of all gold, copper and silver increased across the board at EVBC as it realized the benefit from a new hoisting and shaft system, but total cash costs also rose to $784 per ounce of gold sold, from $765 an ounce a year earlier. Total production costs climbed to $1,076 an ounce, from $1,033 an ounce.
Mining costs also jumped to $17.0 million from $8.3 million.
"We continue to pay down our debt, strengthening our balance sheet. With the volatility in the metals markets, we are also concentrating on driving down unit costs," said Winship in the release Tuesday, with the company adding that reviews have been started to reduce both operating and capital costs. 
Debt net of cash, cash equivalents and restricted cash for debt repayment was $50.9 million, while payment of long-term principal and interest was $8.8 million in the six months that ended March 31.
The company also spent $8.8 million in capital expenditures in the latest quarter, with $1.2 million of that going toward the development of its Cooperwood project in Michigan, US, where it recieved the last major permit necessary for the mine in February this year. 
Optimization work is now being done to the feasibility study, with a focus on additional metallurgical testing and mine design. It said Tuesday it is also looking at a number of options to enhance the value of the project for its shareholders, including mine financing, partnerships and a third party acquisition. 
Its long-term goal is to improve operations at its two main mines to boost operating cash flows in its effort to pay down debt.   
For its fiscal 2013 year, the company is looking to produce 75,000 ounces of gold, 18 million pounds of copper and 850,000 ounces of silver.

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