Resource Intelligence Article
Hot Stocks: Cash flow imminent at Orvana Minerals new, six-million-tonne deposit
Orvana Mineral’s (TSX:ORV) share-price increase of almost36% over the past six months is giving investors due cause to beexcited. The spike is being driven by company expectations to reach anumber milestones over the next few months.Itis important to note that Orvana’s story is more than one ofexploration. Orvana is a proven gold miner with cash flow and income.We’re keen about companies with cash cows, which, in Orvana’s case, isthe Don Mario mine in Eastern Bolivia. The mine’s lower mineralized zonegenerated significant cash flow for Orvana from 2003 to 2009, when itproduced 420,000 ounces of gold. Now that it’s depleted, the uppermineralized zone (UMZ), which contains copper, gold and silver credits,is taking over. Production started in April, so cash flow is imminent.This strengthens Orvana’s balance sheet and minimizes the risk of stockdilution.
“This is a new deposit that has a 10-year mine life,” CEO RolandHorst told us in February. “It will produce on average about 14.5million lbs of copper, about 14,000 oz of gold and 460,000 oz of silver.The payback is fairly quick, probably less than a year. It has aboutsix-million tonnes, so it looks to be a fairly finite resource at thispoint, but it is very profitable.”
Orvana is also advancing its El Valle-Boinas/Carles (EVBC)gold-copper mine in northern Spain, which the company has described asthe “largest and most promising project to date.” The company expects torecover over 2.4 million oz of gold and over 144.7 lbs of copper.
Orvana initiated the start-up and commissioning of the mill May 31,2011. To date, more than 450-tonnes of copper-gold-silver concentratehave been produced with the first shipments trucked to port. The firstrevenues are expected this month. The mill is producing at 70% capacity,or about 1400 tonnes per day, but production will increase to around1900 tonne per day when the shaft is completed in early 2012, increasingto its full annual target production levels of over 100,000 ouncesgold, 3,900 tonnes copper and over 150,000 ounces of silver.
The company’s other high-potential asset is the Copperwoodcopper/silver project in Michigan, which is expected to deliver morethan 961.8 million lbs of copper and more than 4.3 million oz ofsilver. A Preliminary Economic Assessment, released July of 2011,contemplates a 14-year underground operation.
Horst anticipates around $500 million in revenues in the next fiveyears. “Overall from Spain and Bolivia we would be producing about120,000 ounces annually from 2012 onwards. At current gold prices you’relooking at $150 million from the gold side of the equation. From thecopper side of the equation you’re looking at about 13,000 tonnes ofcopper and that is substantial revenue from copper as well. We arelooking for acquisitions and we intend to grow these projects internallyand also develop Copperwood. Copperwood is a major project that we’lllook at in 2013 in 2014 and substantial revenue will come out of thatproject as well,” he said.
Evaluate Orvana’s project values and more here.