pcNewsWire – Orvana Minerals Corp. (TSX: ORV) has arranged debt financing in the aggregate amount of US $11.3 million from Banco BISA S.A. in Bolivia.
The primary use of these proceeds will be used to construct a major tailings storage facility expansion project that will add sufficient capacity to support up to an additional three years of operations beyond Q2 2018.
The pre-existing bank loan with BISA is not affected by the BISA Facilities and will continue to be repaid in the normal course with full repayment scheduled for September 2017. The principal balance outstanding on the BISA loan is $2.8 million as at June 30, 2017.
News Release
ORVANA PROVIDES UPDATE ON DON MARIO OPERATION; ANNOUNCES US$11.3 MILLION DEBT FINANCING
TORONTO, ONTARIO, July 4, 2017 – Orvana Minerals Corp. (TSX:ORV) (the “Company” or “Orvana”) is pleased to provide an update on its efforts to extend the life of its Don Mario operation in Bolivia. Further, the Company announces that it has arranged debt financing in the aggregate amount of US$11.3 million (the “Facilities”) from Banco BISA S.A. (“BISA”) in Bolivia. The primary use of these proceeds will be used to construct a major tailings storage facility expansion project (“TSF Project”) that will add sufficient capacity to support up to an additional three years of operations beyond Q2 2018.
Jim Gilbert, Chairman and CEO, stated “Don Mario was the foundational operation for Orvana, and has contributed significant gold production and free cash flow generation for many years. We are very pleased with the progress we are making to clearly define what we are hoping to be a profitable future for Don Mario. Currently, we are finalizing an open pit mine design for potential near-term mining of the Cerro Felix satellite deposit. In parallel, we are completing an advanced stage confirmatory test program on processing of significant existing surface mineral resource stockpiles. Management believes the conclusion of these projects at Don Mario will justify the planned TSF Project. In that regard, we have successfully arranged competitive debt financing with BISA, who continue to be a key local stakeholder of Don Mario, to fund the TSF Project. We are grateful for their ongoing support.”
Don Mario Update
Mining activities are currently taking place in the Lower Mineralized Zone (“LMZ”) that forms part of the existing open pit. The Company has been mining and processing LMZ ore since Q3 2016. Operational activities at LMZ are scheduled to end during Q2 2018. The Company is actively evaluating various projects that are at various stages of completion and management anticipates these will result in extension of operational life beyond Q2 2018. A summary of these ongoing projects is below:
Near-term projects:
Cerro Felix Mining:
Cerro Felix is a satellite mineral deposit located 500 m from the LMZ. The Company published resource estimates effective September 30, 2016. Estimates include an indicated mineral resource of approximately 490,000 tonnes grading 3.15 g/t gold, 0.09% copper and 2.53 g/t silver, containing approximately 49,600 ounces of gold, 0.97 million pounds of copper, and 40,000 ounces of silver 1.
From 2009 to 2011, approximately 207,000 tonnes of ore at an average grade of 1.77 g/t of gold was processed from mineralized zones north-west and south-east of the previously mined Upper Mineralized Zone (“UMZ”), including Cerro Felix.
Near surface mining activities have been undertaken in recent months. A total of 15,000 tonnes have been extracted and processed as part of a blended plant feed during FY 2017 to date.
An open pit mine design is currently being finalized, incorporating a recently completed geotechnical evaluation. The Company is aiming to commence pre-stripping activities during Q1 2018.
Mineral Stockpile processing:
As at September 30, 2016, Don Mario surface stockpiles contained a measured mineral resource of approximately 2.2 million tonnes, grading 1.84 g/t gold and 1.89% copper 2.
Don Mario has had a successful track record of processing this material as part of a blended feed into the processing plant (approximately 237,400 tonnes in FY 2016 and FY 2017 to date)
Initial test results have yielded positive indications towards the possibility of producing a copper concentrate from this material, and the Company is now completing further testing to optimize grade.
The Company has received positive commercial indications from potential third party off-takers for such copper concentrates.
Long-term projects:
Tailings re-processing:
Prior to commencement of mining from the LMZ, mining activities took place in the UMZ open pit from 2012 to early 2016. During this period, ore was processed through a flotation circuit and achieved an average gold recovery of approximately 55% in the production of copper concentrates. Management believes that tailings material deposited as a result of this process is therefore expected to contain significant gold content.
The Company has commenced an evaluation of reprocessing of tailings, to determine the viability of recovering gold from the material deposited in the tailings storage facility. Drilling is planned to obtain geotechnical and metallurgical parameters in order to select conceptual processing plan and develop a full economic case.
At the present time, the Company aims to execute this project subsequent to the completion of the near-term projects above.
Exploration – Las Tojas Deposit:
Las Tojas is a satellite deposit located approximately 12 km northwest from the Don Mario Mine.
Drilling of the Las Tojas deposit have been carried out by Orvana at various times between 1996 and 2008, during which 110 holes totalling 15,080 m of drilling was completed. Drilling was carried out along northeast-southwest oriented section lines spaced about 50 and 100 m apart. Orvana completed two additional drill holes at Las Tojas in 2015 and these tested depth extensions of the known mineralized zone. Both holes intersected narrow mineralized zones. The Las Tojas deposit is not included in any of the resource or reserve estimation work covered by the Company’s most recent Don Mario 43-101 Report or Annual Information Form.
A limited amount of material from Las Tojas was mined from 2009 to 2011 and was successfully processed through the carbon in leach circuit at that time.
A new drilling campaign, testing the southern extensions of previously mined areas of Las Tojas, is planned to be completed in the coming months with the objectives of establishing a NI 43-101 compliant mineral resource.
TSF Project
The TSF Project is required to support processing activities at Don Mario beyond Q2 2018. The TSF Project will include the construction of a 4 meter raise to provide storage capacity for up to 3 additional years. The Company engaged Amec Foster Wheeler (“AMEC”) to evaluate alternatives, provide design parameters and engineer the TSF Project. As a result, AMEC developed a capital cost estimate of US$9.7 million within 10% accuracy, including owner’s costs and 10% contingency. Execution of the TSF Project is expected to commence immediately to take advantage of the favorable dry season in Bolivia, with expected completion in Q2 2018.
BISA Facilities
The BISA Facilities are comprised of two separate agreements, both of which are secured by certain assets of Don Mario without recourse to Orvana.
Term facility
Principal amount of approximately US$8.34 million (denominated in Bolivianos);
Annual interest rate of 5.3% (fixed rate);
Scheduled drawdowns between closing and December 2017;
Quarterly interest payments; equal quarterly principal repayments commence April 2018 until January 2021.
Revolving working capital facility
Principal amount of up to approximately US$2.97 million (denominated in Bolivianos);
Renewable every 6 months until November 2020;
Annual interest rate determined at date of drawdown and dependent on form of drawdown;
Drawdown may be in the form of cash for up to US$1.97 million, bank guarantees for up to US$2.97 million, or a combination of the two up to the limit of US$2.97 million.
The pre-existing bank loan with BISA (the “BISA Loan”) is not affected by the BISA Facilities and will continue to be repaid in the normal course with full repayment scheduled for September 2017. The principal balance outstanding on the BISA Loan is $2.8 million as at June 30, 2017.
Scientific and technical information in this news release has been reviewed and approved by Gino A. Zandonai, a Qualified Person under the terms of National Instrument 43-101. Mr. Zandonai is independent of Orvana. Mr. Zandonai has verified the technical data disclosed in this news release not related to the current mineral resource estimates disclosed herein.
About Orvana
Orvana is a multi-mine gold and copper producer. Orvana’s operating assets consist of the producing gold-copper-silver El Valle and Carlés mines in northern Spain and the producing gold-copper-silver Don Mario mine in Bolivia. Additional information is available at Orvana’s website (www.orvana.com).
For further information please contact:
Jeff Hillis
Chief Financial Officer
T (416) 369-6281
E jhillis@orvana.com
