Orvana gets its gold-copper mine rolling in Spain

Orvana Minerals (ORV-T) got its El Valle-Boinas/Carles gold-copper mine and plant in northern Spain off the ground on May 31, and expects a first shipment in June. 

El Valle-Boinas/Carles currently operates at 70% capacity, as the company sinks a shaft into the deposit. Annual production is expected to exceed 100,000 oz. gold, 3,900 tonnes copper and 150,000 oz. silver, once the shaft is completed in March 2012.

“In the meantime, we’re ramping up to that capacity with the plant, which is totally refurbished, and is now in operation and we’re rolling,” says Malcolm King, Orvana’s vice-president and chief financial officer. 

With all permits in hand, the miner expects initial gold production at El Valle Boinas/Carles to amount to 70,000 oz. a year. Orvana also has 75,000 tonnes of stockpiled ore, which could last two months. 

The company notes that head grades from initial production at El Valle-Boinas/Carles would be lower than expected, because the plant is churning through lower grade skarn-type ore, compared to ore from higher-grade oxidized zones. 

The mine would produce both gold and copper concentrates, and also gold doré, King says, adding that the company already has offtake arrangements in place for the concentrates, and is working on a refining contract for the gold doré.

In March, Orvana said it selected MRI Trading AG of Zug, Switzerland, as an offtake provider for the gold and copper
concentrates. 

Based on a National Instrument 43-101 technical report prepared in April, El Valle-Boinas/Carles has reserves of 4.66 million tonnes grading 5.23 grams gold per tonne, 0.74% copper and 10.9 grams silver. 

The current mine plan calls for a seven-year mine life, King says, adding that “we are quite confident as we continue to prove
our resources, it will extend beyond that.” 

El Valle-Boinas/Carles hosts 7.3 million measured and indicated tonnes grading 5.1 grams gold and 0.65% copper, and another 8.8 million inferred tonnes of 4.96 grams gold and 0.40% copper. 

When asked if the local communities are receptive to the miner, King replies, “we have had strong support from the authorities at all levels and the local communities. We’re delighted to say that we were able to bring back the operation.” 

Orvana secured the project in September 2009 by buying Kinbauri Gold. Orvana is spending US$70 million to restart El Valle-Boinas/Carles. 

Rio Narcea Mines kicked out 840,000 oz. gold and 14,000 tonnes of copper from the operation between 1997 and 2006, before shutting it down. 

Lundin Mining (LUN-T) acquired Rio Narcea in 2007, and sold El-Valle-Boinas/Carles to Kinbauri. 

Although the Carles and El Valle gold deposits were mainly mined as open pits by Rio Narcea, Orvana is mining the project from underground. 

Located in Spain’s 45-km-long and 4-km-wide Narcea gold belt, mineralization at the mine is hosted in a series of sedimentary rocks characterized by mesothermal magnesium and calcic-rich skarn deposits, with younger epithermal vein mineralization. 

The company also owns the Don Mario copper-gold-silver mine in Bolivia, and the Copperwood copper-silver project in Michigan. In April, the miner started production at its new leaching-precipitation-flotation plant at Don Mario. In February Orvana updated its resources at Copperwood, which sit at 30.1 million measured and indicated tonnes grading 1.65% copper and 4.3 grams silver per tonne. 

 “The company has three solid projects, two of which will be generating revenue for the company in June: Don Mario and El Valle-Boinas/Carles,” writes Northern Securities analyst Matthew Zylstra in an e-mail to The Northern Miner. “The third, Copperwood, is early stage but has a large 43-101 compliant copper deposit, which looks like it could be put into production in 2014 or 2015.” 

Zylstra has a speculative buy on Orvana, with a 12-month target price of $5.70 per share.  

Analyst Gary Baschuk from Raymond James, who started covering the company on May 20, has an “outperform” rating on the stock and a 6- to 12-month price target of $4.90 per share. 

On June 6, analyst Laurie Curtis at Clarus Securities wrote in a research note that Clarus is increasing its 12-month target price on
Orvana from $5 to $6 per share, as the company commissions its second mine. 

On the El Valle-Boinas/Carles start-up news, the company’s shares gained 7% to close at $2.59. At presstime Orvana traded at $2.69.