Equity Research | MINING PRECIOUS METALS

ORVANA MINERALS INC.

ORV-TSX: $2.33 OUTPERFORM Target Price: $5.25

Siglo De Oro Redux Initiating Coverage

Christos Doulis, CFA cdoulis@stonecapsecurities.com, 416.342.9992

Associate: Michael Hocking mhocking@stonecapsecurities.com, 416.342.9989 June 30, 2011

Table of Contents
Siglo De Oro Redux ............................................................................................................ 4 Overview ............................................................................................................................. 4 El Valle-Boinas/Carles ........................................................................................................ 4 History........................................................................................................................... 5 Don Mario UMZ................................................................................................................... 7 Copperwood........................................................................................................................ 9 Growing Production Profile ............................................................................................... 10 Commodity Price Forecasts .............................................................................................. 12 Valuation ........................................................................................................................... 12 A blend of NAV and CFPS multiples .......................................................................... 12 Sensitivity Analysis............................................................................................................ 13 Strong sensitivity to copper and gold, weak sensitivity to silver................................. 13 Investment Risks............................................................................................................... 15 Target Price Catalysts....................................................................................................... 16 Comparable Companies ................................................................................................... 16 Financial Position And Capital Structure........................................................................... 17 Cash and working capital ........................................................................................... 17 Share structure ........................................................................................................... 17 Conclusion ........................................................................................................................ 17 Appendix A: Financial Summary....................................................................................... 18 Appendix B: Management and Director Biographies........................................................ 19 Disclosure List................................................................................................................... 21

Orvana Minerals Inc.

Orvana Minerals Inc. (ORV-TSX, $2.33)

Outperform; Target: $5.25 Initiating Coverage
ORV-TSX Rating Risk 12-Month Target Price Projected Return Market Data 52-Week Trading Range (C$) Shares Outstanding, Basic (mm) Shares Outstanding, FD (mm) Market Capitalization (C$ mm) Net Debt (C$ mm) Enterprise Value (C$ mm) Financial Data Cash Debt Forecasts Calendar YE December 31st Per Share ($) EPS (fd) CFPS (fd) NAVPS Production Estimates Gold Price (US$/oz) Production (ozs Au) Production (ozs Ag) Production (mm lbs Cu)
Cash Costs (US$/oz Au) (net of credits) Cash Costs (US$/oz Au) (by-product)

$2.33 Outperform Speculative $5.25 125%

Siglo De Oro Redux

We are initiating coverage on Orvana Minerals Inc. (Orvana or the company) with an Outperform rating and a 12-month target price of $5.25 per share. Our recommendation is based on the following three points: 1. Forecast calendar 2011 production of ~44,000 ozs Au, ~316,000 ozs Ag and ~10 million lbs Cu from its Don Mario UMZ and EVBC mines, generating significant near-term cash flow. 2. Achieving potential annual production of 100,000+ oz Au in calendar 2012 as El Valle-Boinas/Carls (EVBC) moves to full production with the completion of a production shaft at the operation. 3. Continued growth through development of the Copperwood Cu project in Michigan with anticipated annual production of ~42 million lbs Cu beginning in calendar 2014.

$1.11 - $3.97 119.2 120.2 $278 $27 $304 $38.5 $65.0 2011E $0.27 $0.31 $4.20
$1,450 44,000 316,000 9.7 -$41 $594

2012E $0.80 $0.91

2013E $0.75 $0.88

$1,450 110,000 797,000 23.9 -$145 $437

$1,400 117,000 822,000 24.4 -$57 $459

Valuation
We have valued Orvana using a blend of P/NAV and P/CFPS multiples. Orvanas value is derived primarily from its growth profile (captured by NAV), but we acknowledge that its immediate cash flow (captured by 2011/2012 CFPS) will also impact the share price. As such we have blended our NAV ($5.20) and CFPS ($5.36) based targets on a 66/34 basis to derive a target price of $5.25.

Resources (gold ounces) P&P + M&I Resources (mm oz) Total Est. Resources (mm oz) EV/ Resource ounce gold Current Valuation (12 month forward looking) P/E P/CFPS P/NAV Target Valuation Company Profile Mining: Junior Gold
Source: Capital IQ, Company Reports, Stonecap Securities Inc.

1.5 3.0 $103 4.0x 3.5x 0.6x

Conclusion
Since its acquisition of the EVBC asset in mid 2009, Orvana has embarked on a process of transforming itself from a small Bolivian-focused gold mining company into a global metals producer. With EVBC and Don Mario Upper Mineralized Zone (UMZ) having recently achieved production status, the company offers investors significant near-term exposure to both precious and base metal production at an attractive valuation. We are initiating coverage with a $5.25 target price and an Outperform rating.

Blend of 1.2x NAV and 8x 2011 CFPS

This report was prepared by an analyst employed by a Canadian affiliate, Stonecap Securities Inc., who is not registered as a research analyst under FINRA rules. See the last page of this report for important disclosure information.

June 30, 2011

Orvana Minerals Inc.

Siglo De Oro Redux

The Spanish Golden Age (Spanish: Siglo de Oro, Golden Century) was a period of flourishing literature and the arts in Spain, coinciding with the political rise and decline of the Spanish Habsburg dynasty. During this time, the wealth of Spain increased dramatically as Spanish treasure ships plied their way across the Atlantic bringing the gold and silver of Spains colonies in the Americas back to Madrid. Orvana is a redux (meaning "brought back, restored", from the Latin reducere to bring back), of the Siglo De Oro in that Orvana has transformed itself into a global mining company with its primary asset (EVBC) in Spain and its other assets being located in Bolivia (Don Mario UMZ) and the United States (Copperwood). With the anticipated treasure of EVBC and Don Mario UMZ soon to be flowing into Orvanas coffers, we believe the company is poised on the cusp of entering its own Golden Age.

Overview
Orvana Minerals Inc. is a Canadian-based, emerging metals producer with assets in Bolivia, Spain and the United States. The companys flagship asset is the El ValleBoinas/Carls Au-Cu-Ag mine, located in Asturias Province, Spain. Orvana put EVBC back into production in June 2011. Orvanas two other assets are the Don Mario UMZ Cu-Au-Ag mine in Bolivia which began production in April 2011, and the advanced Copperwood Cu project in the United States which is slated to begin production in 2014.

El Valle-Boinas/Carles
EVBC is Orvanas flagship asset and is located in the Province of Asturias in northwestern Spain within the Rio Narcea Gold Belt. Orvana acquired EVBC for about $40 million cash in September 2009 through the takeover of Kinbauri Gold. EVBC has a plant and a mill with a 2,000 tonne per day capacity as well as extensive infrastructure including 4.3 km of underground workings and auxiliary facilities. In July 2010, the company tabled a technical report entitled Technical Report on the Boins and Carls Gold Mines, Asturias, Spain, which stated reserves (see Figure 2) and outlined a conceptual seven-year mine plan for the project. The seven-year mine plan generates annual production of approximately 105,000 ounces of gold, 8.6 million pounds of copper and 160,000 ounces of silver.

Orvana acquired a 2,000 tpd mill, a resource of 2.6 million ozs Au and extensive infrastructure for about $40 million cash

June 30, 2011

Orvana Minerals Inc.

Figure 1: Orvana EVBC location map

Source: Company reports

History
The Rio Narcea Gold Belt (which hosts the EVBC mine) was a major mining area under the Romans until the second century AD, and was later explored by various companies during the late 20th century and ultimately mined by Rio Narcea Gold Mines Ltd. between 1997 and 2006. Modern gold exploration in this area commenced during the 1970s. Boliden Minerals A.B., Exploraciones Mineras del Cantabrico S.A., Anglo American Company, Hullas del Coto Cortes, S.A., Concord Minera Asturiana, Rio Narcea Gold Mines Ltd., and Barrick Gold drilled over 70,000m at Carls, El Valle, Godn, and La Ortosa and conducted underground exploration at Carls between 1981 and 1996. Commencing in 1997, Rio Narcea mined the Carls and El Valle gold deposits by open-pit method, switched to underground mining in 2004 and closed the mine in 2006, producing about 950,000 ounces of gold and around 40 million pounds of copper. Rio Narcea Gold was acquired by Lundin Mining Corporation in 2007 for its nickel assets, and the EVBC assets were sold to Kinbauri Gold Corp. in 2007. Kinbauri undertook both surface and underground drilling at Carls and El Valle, increasing total resources at EVBC to 2.5 million ozs Au. Orvana acquired Kinbauri in September 2009 for about $40 million in cash and has since spent around $55 million at EVBC. On June 3, 2011, Orvana announced the commissioning of EVBC. The mine is expected to run at around 70% of capacity during 2011 and early 2012 while Orvana

June 30, 2011

Orvana Minerals Inc.

develops a 440m deep production shaft slated for completion in early 2012. On June 24, 2011, Orvana announced that EVBC has produced 450 tonnes of concentrate since commissioning of the mill and revenue from concentrate and dore sales is anticipated in July 2011. Our seven-year forecast production and cost profile for EVBC is presented in Figure 3.
Figure 2: Orvana EVBC-NI 43-101 compliant resources
Ore Mt 1.3 3.4 4.7 2.1 5.2 7.3 9.5 Au Grade gpt 4.1 5.7 5.2 4.1 5.5 5.1 4.9 Cont. Au ozs 172,000 612,000 784,000 280,000 922,000 1,202,000 1,478,000 Cu % 0.90 0.68 0.74 0.80 0.60 0.65 0.40 Cont. Cu mm lbs 25.8 51.0 76.7 37.0 68.8 105.8 83.8

Category Proven Probable Total P&P Measured Indicated Total Measured & Indicated Inferred Note: P&P are a subset of M&I
Source: Company reports

Figure 3: Orvana EVBC seven-year production and cost profile

140,000 120,000 100,000 80,000

$600 $550 $500 $450 Cash Cost per oz Au (US$/oz) - net of credits
6

Gold Production (ozs)

60,000 40,000 20,000 0

$400 $350 $300 2011 2012 Au (ozs) 2013 2014 2015 2016 2017 Cash Costs ($/oz Au net of credits)

Source: Stonecap Securities Inc.

Using our metals price forecasts, we estimate EVBCs life of mine (LOM) revenue mix to be 83% gold, 14% copper and 3% silver.

June 30, 2011

Orvana Minerals Inc.

Don Mario UMZ

The Don Mario mine is Orvanas initial mining asset, having been put into production in 2003. Don Mario is located in the east of Bolivia close to the border with Brazil (see Figure 4).Orvana initially exploited the Lower Mineralized Zone (LMZ) as an underground mine over a period of six years producing a total of 420,000 ozs Au (at cash losts of less than US$200/oz) prior to depletion in July 2009. Mill capacity was then increased from 750 tpd to 2,000 tpd and Orvana mined the lower grade Las Tojas deposit, via open pit, from 2009 to 2011, producing 47,620 ozs Au at a cash cost of ~US$855/oz Au. Processing of ore from the LMZ and Las Tojas deposits was by carbon-in-leach (CIL) and ultimately produced a dore product. Orvana began development of the Upper Mineralized Zone once it had finished exploitation of the Las Tojas deposit and achieved production at UMZ in April 2011. Mining of the UMZ deposit is via open pit, but requires more complex metallurgical processing due to four different ore types present. After significant testing, Orvana determined that use of a leach-precipitation-flotation (LPF) circuit to treat the porous, oxide and transitional material prior to flotation would allow for recovery of the copper from these ores and provided optimal economics for the project with sulphide ore being sent straight to the floatation circuit. The tailings from the LPF process would then be sent to the CIL circuit to produce dore.
Figure 4: Orvana Don Mario location

Source: Company reports

Figure 5 outlines existing NI 43-101 compliant resources at Don Mario UMZ while Figure 6 provides our forecast of Don Marios seven-year production and cost profile.

June 30, 2011

Orvana Minerals Inc.

Figure 5: Orvana Don Mario NI 43-101 compliant reserves and resources

Zone Porous Oxide Transition Sulfide Total Porous

Category Proven Probable Proven Probable Proven Probable Proven Probable Total Proven and Probable Measured Indicated Inferred Measured Indicated Inferred Measured Indicated Inferred Measured Indicated Inferred Total Measured & Indicated Total Inferred

Tonnes 198,180 315,535 742,580 980,363 837,474 928,079 716,651 984,480 5,703,342 206,034 326,664 44,323 769,028 1,051,185 190,401 922,323 1,072,146 83,832 851,632 1,210,430 7,062 6,409,442 325,618

Cu (%) 2.03% 2.04% 1.71% 1.79% 1.37% 1.27% 1.20% 1.16% 1.47% 1.98% 1.99% 2.54% 1.67% 1.69% 1.53% 1.28% 1.15% 0.91% 1.04% 0.98% 0.61% 1.34% 1.49%

Au (g/t) 1.47 1.39 1.62 1.68 1.52 1.39 1.19 1.08 1.41 1.43 1.35 1.44 1.57 1.58 1.27 1.42 1.25 0.81 1.03 0.92 0.66 1.29 1.16

Ag (g/t) 52.05 39.33 57.26 46.58 53.67 48.43 32.40 34.43 45.22 50.77 38.62 29.34 55.92 44.18 38.76 50.48 43.90 40.55 27.94 29.03 23.31 41.36 37.60

Oxide

Transition

Sulfide

Total Total

Note P&P is a subset of M&I

Source: Company reports

Figure 6: Orvana Don Mario UMZ seven-year production and cost profile
Cash cost per lb Cu (US$/lb) - net of credits
700,000 600,000

$0.40 $0.20 $0.00 -$0.20 -$0.40 -$0.60 -$0.80 -$1.00 2011 2012 2013 2014 2015 2016 2017 Payable Copper (lbs) Cash operating costs (U$/lb Cu net of credits)

Copper Production (lbs)

500,000 400,000 300,000 200,000 100,000 0

Source: Stonecap Securities Inc.

June 30, 2011

Orvana Minerals Inc.

While Don Mario LMZ and Las Tojas were (oxide) gold mines, Don Mario UMZ is a multi-ore type copper mine with significant precious metal credits. Using our price forecasts, we estimate Don Mario UMZs LOM revenue mix to be 56% copper, 24% gold and 20% silver.

Copperwood
Orvanas Copperwood project consists of mineral leases totaling 936 hectares (2,340 acres) located in the Upper Peninsula of the State of Michigan leased by Orvanas wholly owned subsidiary, Orvana Resources US Corp., in September and October of 2008 and September 2010. The project is located (see Figure 7) some 30 km southwest of the inactive White Pine Mine where over 3.7 billion pounds of copper and over 4.5 million ounces of silver were produced between 1953 and 1996. Mineralization at Copperwood is hosted in shales and siltstones of the basal Nonesuch Formation and is stratigraphically equivalent to the copper-bearing zone at the White Pine Mine. The copper mineralization occurs as very fine-grained chalcocite. Orvana has drilled about 18,000m to deliver a NI 43-101 compliant resource as outlined in Figure 8.
Figure 7: Orvana Copperwood location map

Source: Company reports

June 30, 2011

Orvana Minerals Inc.

Figure 8: Orvana Copperwood NI 43-101 compliant resources

Category Proven Probable Total P&P Indicated Satellites Inferred Satellites Total resource Inventory Million Tonnes 22.6 4.6 27.2 25.0 36.1 61.1 % Cu 1.37% 1.11% 1.37% 1.40% 1.30% 1.34% lbs Cu (millions) 682 113 821 771 1,034 1,804 gpt Ag 4.20 2.80 3.46

Note reserves are a subset of total resource inventory

Source: Company reports

Our model for Copperwood assumes mining of a total of 25.92 million tons grading 1.34% Cu and 3.5 gpt Ag. We envision Copperwood as a 5,000 short ton per day underground operation producing around 42 million lbs of copper per year and 100,000 ozs Ag per year at a LOM cost of US$1.29/lb copper (net of silver credits) and requiring $198.5 million of initial capex. On June 24, 2011, Orvana released the highlights of a prefeasibility study for the Copperwood project roughly in line with our model for the project. In addition to a traditional drill-and-blast mine, the prefeasibility study also evaluated the development of Copperwood using a continuous miner that indicated superior economics to the drilland-blast approach. However, evaluation of this approach is still at an early stage and will require more work before it can be determined if use of a continuous miner at Copperwood is an appropriate and optimal mining method.

Growing Production Profile

With EVBC and Don Mario UMZ both having recently achieved production, Orvana is on the cusp of entering the ranks of mid-tier metals producers. EVBC is expected to continue ramping up over the next year, particularly once the shaft at EVBC has been completed in early 2012, and successful development of the Copperwood project will provide additional production growth for Orvana in the future. Both Don Mario UMZ and EVBC have only recently entered production (in April and June, respectively) and these operations have yet to demonstrate to the market consistent production or cost metrics. As such, we feel that investors currently have an opportunity to buy Orvana shares at a significant discount to their ultimate value which we believe will be reflected in the market once both mines have demonstrated several quarters of sustained, profitable operations. Our seven-year production profile for Orvana is presented below in Figure 9. Figure 10 presents a summary of our mine models for EVBC, Don Mario UMZ and Copperwood.

June 30, 2011

10

Orvana Minerals Inc.

Figure 9: Orvana seven-year estimated production profile

70,000,000 60,000,000 50,000,000

900,000 800,000 700,000 600,000 500,000 400,000 300,000 200,000 Precious metal production (ozs)
11

Copper production (lbs)

40,000,000 30,000,000 20,000,000 10,000,000 0

100,000 0 2011 2012 Cu (lbs) 2013 2014 Au (ozs) 2015 2016 Ag (ozs) 2017

Source: Stonecap Securities Inc.

Figure 10: Orvana summary of Don Mario UMZ, EVBC and Copperwood mine models
EVBC Mine Life (years) Average annual gold production (ozs) Average gold head grade (gpt) Average annual silver production (ozs) Average silver head grade (gpt) Average annual copper production (lbs) Average copper head grade (%) LOM average cash cost (US$/oz Au) - byproduct basis Total gold produced (ozs) LOM average cash cost (US$/lb Cu) - byproduct basis Total Cu produced (lbs) LOM average mining cost per tonne (US$) LOM average processing cost per tonne (US$) LOM average G&A cost per tonne (US$)
Source: Stonecap Securities Inc.

Don Mario UMZ 10.5 13,000 1.37 441,000 43.48 13,121,000 1.37% -$1,581 136,000 $0.02 137,774,000 $4.78 $33.38 $4.15

Copperwood 15.0 NA NA 97,000 3.89 40,340,000 1.34% NA NA $1.29 605,102,000 $13.00 $12.25 $1.25

7.5 95,000 4.68 144,000 9.35 6,865,000 0.52% $396 665,000 -$8.62 48,054,000 $59.13 $21.00 $5.00

June 30, 2011

Orvana Minerals Inc.

Commodity Price Forecasts

Our gold, silver and copper price forecasts are presented below in Figure 11.
Figure 11: Stonecap gold, silver and copper price outlook
2011 SSI Au Forecast (US$/oz) SSI Ag Forecast (US$/oz) SSI Cu Forecast (US$/lb) $1,450 $38.00 $3.88 2012 $1,450 $38.00 $3.50 2013 $1,400 $38.00 $3.25 2014 $1,300 $28.00 $3.00 2015 $1,250 $26.00 $2.75 2016 $1,100 $26.00 $2.50 LT $1,100 $26.00 $2.50

Source: Stonecap Securities Inc.

Valuation
A blend of NAV and CFPS multiples
We have valued Orvana using a blend of P/NAV and 12-month forward looking CFPS multiples. We believe that Orvanas value is driven primarily by its growing production profile (captured by NAV), but we also acknowledge that near-term cash flow (captured by 2011/2012 calendar CFPS) will have an influence on short-term pricing. As such, we have blended our NAV-based target and CFPS based target on a 66/34 basis to derive our price target. Note that we use a calendar based reporting period (yearending December 31) while Orvanas year end is September 30. Our NAVPS estimate for Orvana is $4.20, which applies a discount rate of 5% for EVBC, 7% for Don Mario UMZ and 8% for Copperwood. We have used a 5% discount rate for EVBC as it is producing and in Spain, a jurisdiction we consider to have low political risk. Our 7% discount rate for Don Mario UMZ reflects our belief that although Don Mario UMZ has begun production, Bolivia has greater political risk relative to Spanish/U.S. assets. Our 8% discount rate for Copperwood reflects its prefeasibility stage. We have applied a 1.2x multiple to Orvanas operating NAVPS of $4.81 and included corporate adjustments of negative $0.61 per share (representing current working capital less debt and the NPV of corporate G&A) to generate a NAV-based target of $5.20 per share. Our NAV breakdown for Orvana is presented below in Figure 12. Our 2011 (calendar) CFPS estimate for Orvana is $0.31 while our 2012 (calendar) CFPS estimate is $0.91. Our CFPS estimate for the next 12 months (i.e., for H2 calendar 2011 and H1 calendar 2012) is $0.67 and we have applied an 8x multiple to this to generate a CFPS-based target of $5.36 per share. As Orvanas LOM revenue mix is dominated by copper (~63% of LOM revenue using our metals price forecasts), we have used an 8x multiple (which is in line with other junior base metals focused producers) rather than an ~12x multiple that we often use for precious metals focused junior miners. Our five-year (calendar, not Orvana fiscal) EPS and CFPS estimates for Orvana are presented in Figure 13.

Our target for Orvana is derived from a blend of CFPS and NAVPS multiples reflecting both near term-cash flow and Orvanas growth profile

June 30, 2011

12

Orvana Minerals Inc.

Blending our NAV and CFPS based targets on a 66/34 basis generates our $5.25 price target for Orvana shares.
Figure 12: NAV breakdown for Orvana

Projects

Location

Status

Valuation

Valuation
($ mm)

NAV
($/share)

Don Mario EVBC Copperwood Subtotal Operations Working Capital Debt NPV of Corp G&A Subtotal Corporate

Bolivia Spain USA

production production development

DCF @ 7% DCF @ 5% DCF @ 8%

$180.7 $290.3 $106.7 $577.7

$1.50 $2.41 $0.89 $4.81 $0.32 ($0.54) ($0.39) ($0.61)

incl. Cash and eq.

$38.5 ($65.0) ($46.8) ($73.3)

Net Asset Value (C$)

Source: Stonecap Securities Inc.

$504.4

$4.20

Figure 13: Five-year (calendar) EPS and CFPS forecasts for Orvana

2011 EPS CFPS $0.27 $0.31

2012 $0.80 $0.91

2013 $0.75 $0.88

2014 $0.88 $1.13

2015 $0.78 $1.06

Source: Stonecap Securities Inc.

Sensitivity Analysis
Strong sensitivity to copper and gold, weak sensitivity to silver
Using our metals price forecasts, we estimate Orvanas LOM revenue mix to be approximately 63% copper, 31% gold and 6% silver. As such, Orvana exhibits very strong sensitivity to copper, significant sensitivity to gold and weak sensitivity to silver. Figures 14, 15 and 16 outline the impact to our target price as well as NAVPS and 2011 and 2012 CFPS estimates for Orvana based on changes to our LOM metals price forecasts for copper, gold and silver. Note that while total NAV is most sensitive to Cu prices, 2011 and 2012 CFPS are most sensitive to Au prices, reflecting that Copperwood is scheduled for 2014 production.

June 30, 2011

13

Orvana Minerals Inc.

Figure 14: Orvana NAV and target price sensitivity to changes in the copper price
LOM Cu Price change -15% Target $5.25 $4.34 $4.62 $4.94 $5.25 $5.50 $5.81 $6.13 NAV $4.20 $3.25 $3.57 $3.88 $4.20 $4.51 $4.83 $5.14 2011 CFPS $0.31 $0.29 $0.29 $0.30 $0.31 $0.32 $0.33 $0.34 2012 CFPS $0.91 $0.85 $0.87 $0.89 $0.91 $0.93 $0.95 $0.97

Orvana offers excellent leverage to copper, good leverage to gold and weak leverage to silver prices.

-10% -5% 0% 5% 10% 15%

Source: Stonecap Securities Inc.

Figure 15: Orvana NAV and target price sensitivity to changes in the gold price
LOM Au Price change -15% -10% -5% 0% 5% 10% 15%
Source: Stonecap Securities Inc.

Target $5.25 $4.49 $4.69 $4.98 $5.25 $5.48 $5.75 $5.98

NAV $4.20 $3.56 $3.77 $3.98 $4.20 $4.40 $4.62 $4.83

2011 CFPS $0.31 $0.27 $0.28 $0.30 $0.31 $0.33 $0.34 $0.36

2012 CFPS $0.91 $0.79 $0.83 $0.87 $0.91 $0.95 $0.99 $1.03

Figure 16: Orvana NAV and target price sensitivity to changes in the silver price

LOM Ag Price change -15% -10% -5% 0% 5% 10% 15%

Source: Stonecap Securities Inc.

Target $5.25 $5.07 $5.17 $5.18 $5.25 $5.28 $5.29 $5.37

NAV $4.20 $4.08 $4.12 $4.16 $4.20 $4.23 $4.27 $4.31

2011 CFPS $0.31 $0.30 $0.31 $0.31 $0.31 $0.32 $0.32 $0.32

2012 CFPS $0.91 $0.89 $0.89 $0.90 $0.91 $0.92 $0.92 $0.93

June 30, 2011

14

Orvana Minerals Inc.

Investment Risks
With any company involved in developing or operating mining projects, there are multiple inherent risks of varying degrees than can impact its ultimate success. We have outlined the most relevant risk factors and we qualify them from lower to higher risk relative to other companies. Figure 17 outlines our assessment of the risk levels for Orvana. Production Risk: is the risk of a project being able to meet our production estimates for an operating asset. Projects with current production that consistently meets company forecasts or our estimates would have a lower risk profile, while those that are not yet producers or are just ramping up would have a higher relative risk profile. Established Resource or Reserves Risk: is the risk of a company being able to establish an economically viable resource or reserve or one that is in line with our estimates. A pre NI 43-101 compliant resource estimate project would have a higher relative risk profile, whereas a project with an established resource or reserves would have lower risk. Feasibility Study Risk: is the risk of a project being able to establish a viable project plan through an NI 43-101 compliant feasibility study or scoping study or a project plan that is in line with our estimates. Higher risk projects would be those that are not yet at the feasibility stage and whose results could differ materially from our estimates, while those at the feasibility stage would have a lower relative risk profile. Capital & Project Financing Risk: is the risk of a company being able to raise sufficient capital to continue to develop or construct a project. This risk can be a factor of prevailing capital market conditions or the amount of capital required to develop a project. A company with a fully financed project or not in need of external capital to continue or expand operations would have a lower risk profile, while one that has not yet raised the capital to develop its project would have higher risk. Construction Risk: is the risk of a company being able to successfully construct a project and bring it into operation once financing has been completed. Generally this risk is higher until a company begins commissioning or declares commercial production of a project. Regional, Political, or Ownership Risk: are the risks related to a project's location and ownership and may include whether the region is a mining friendly jurisdiction with clear permitting and mining laws, if the current political landscape is stable or changing, and any risk that may be related to the ownership of a project through operating licenses, options, or vendor agreements. Companies whose projects are in less certain regions or have disputed ownership claims would have a higher risk, while those that own their projects outright and are operating them in well established mining areas would have a lower risk profile. JV Partner Risk: is the risk related to the JV partner a company may have on a project. This risk can be in the form of the JV partner being the majority interest holder and operator. In this case, the partner may be a well-established senior

June 30, 2011

15

Orvana Minerals Inc.

producer, but may impact the timing and scope of development of a project to an extent that the minority partner may have little control. This risk can also be in the form of a minority partner that is unable to meet its funding or participation requirements and may impact the projects development. Companies that have a 100% interest in their projects would have a lower risk profile, while those that are minority partners would have a higher risk profile.
Figure 17: Relative risk table
Established Resource / Production Reserve Orvana Minerals Low Low Feasibility Study Medium Capital and Ownership, Project Political or Financing Construction Regional JV Partner Low Medium Medium Low

Source: Stonecap Securities Inc.

Our medium ratings for feasibility study and construction relate to the Copperwood project while our medium rating for political risk reflects Don Mario UMZs location in Bolivia. Don Mario represents around 31% of our operating NAV estimate for Orvana while Copperwood represents around 18%.

Target Price Catalysts

The following catalysts are expected to help propel Orvana shares to our target price level: 1. Achieving production milestones at EVBC. While EVBC has achieved production, it has yet to achieve commercial production. Furthermore, until the shaft is complete at EVBC, the mine will only be able to operate at around 70% of capacity and as such completion of the shaft in early 2012 should act as a catalyst for Orvanas shares. Once EVBC has demonstrated steady state production for several months its value should be better reflected in Orvanas share price. 2. Achieving production milestones at Don Mario UMZ. While Don Mario UMZ has achieved production, it has yet to achieve commercial production. Once the mine has achieved steady state production for several months its value should be better reflected in Orvanas share price. 3. Successful advancement of the Copperwood project. Copperwood ultimately provides Orvanas future growth and as the project is de-risked its value should be better reflected in Orvanas share price. 4. Continued upside momentum in the prices for metals would induce investors to allocate more capital to the metals space.

Comparable Companies
Figure 18 illustrates where Orvana trades relative to its peers in the emerging coppergold producer space. We note that Orvana is currently trading at a discount to its peers on a P/CFPS and a P/NAV basis.
June 30, 2011 16

Orvana Minerals Inc.

Figure 18: Orvana comparable companies

Intermediate copper-gold producer comparables Ticker Nevsun Resources Ltd. Dundee Precious Metals Inc. Northgate Minerals Corp. Imperial Metals Corp. OceanaGold Corporation Minera Andes Inc. Aura Minerals Inc. Rio Alto Mining Limited La Mancha Resources, Inc. Average Median Orvana Minerals Corp.
1

Valuation Shares O/S (M) 197 125 292 37 262 278 211 152 143 Enterprise Value ($M) $1,135 $932 $603 $672 $711 $671 $414 $302 $277 2011E Au EV/ Au EV/ 2011 1 1 1 Prod'n 2011 P/CF 2012 P/CF P/NAV Resource Production (000 oz) 919.0 122.5 200.0 45.4 270.0 19.6 210.0 75.0 135.0 $700 $95 $120 $44 $73 $32 $66 $96 $87 $146 $87 $101 $1,235 $7,608 $3,014 $14,812 $2,632 $34,212 $1,971 $4,025 $2,051 $7,951 $3,014 $6,843 4.7x 9.2x 8.1x 7.5x 4.6x 8.9x 5.8x 8.4x 5.4x 7.0x 7.5x 5.8x 4.3x 6.3x 4.8x 8.4x 4.8x 7.1x 3.4x 4.1x 4.8x 5.3x 4.8x 2.2x

Close $5.78 $7.78 $2.58 $19.30 $2.65 $2.41 $2.01 $2.08 $2.34

TSX:NSU TSX:DPM TSX:NGX TSX:III TSX:OGC TSX:MAI TSX:ORA TSXV:RIO TSX:LMA

0.8x 0.6x 0.6x 0.5x 0.7x 0.4x 0.5x 0.3x 0.6x

0.6x 0.6x 0.4x

TSX:ORV

$2.33

117

$301

44.0

Consensus estimates

Source: Stonecap Securities Inc.

Financial Position And Capital Structure

Cash and working capital
As at March 31, 2011, Orvana had working capital of $15.4 million including $23.5 million of cash and equivalents. Subsequent to March 31, 2011, Orvana completed a US$15 million, six-month term bridge loan with Fabulosa Mines Ltd.

Share structure
As at June 3, 2011, Orvana had 119 million shares issued and outstanding. Using the fully diluted treasury method and the share price at the time of this reports publication, Orvana has a total of 120.2 million shares outstanding. Orvanas single largest shareholder is Fabulosa Mines Ltd., a private mining company owning approximately 52.4%. Other major shareholders of Orvana include Dimensional Funds, Sprott Asset Management and Fidelity Investments.

Conclusion
Orvana offers investors exposure to both immediate (precious and base) metal production as well as a strong growth profile. As EVBC and Don Mario UMZ ramp up production during 2011 and 2012, we expect the market to more accurately reflect the value of these assets in Orvanas share price. We are initiating coverage with a $5.25 target price and an Outperform rating.

June 30, 2011

17

Orvana Minerals Inc.

Appendix A: Financial Summary

Orvana Minerals Income Statement (Calendar Year End) - Orvana actual year end September 30th All in C$ millions Revenue (net of smelting costs) Operating Costs G&A Costs Other Costs Depreciation/Amortization Operating Earnings Income Tax Net Income EPS (basic) C$ EPS (f.d.) C$ CFPS (basic) C$ CFPS (f.d.) C$ 2011E $110.5 $46.4 $4.0 $1.1 $5.0 $54.1 $21.4 $32.6 $0.27 $0.27 $0.32 $0.31 2012E $266.2 $94.6 $4.0 $1.2 $13.3 $153.1 $57.2 $95.9 $0.80 $0.80 $0.92 $0.91 2013E $266.0 $100.6 $4.0 $1.3 $15.5 $144.6 $54.0 $90.6 $0.76 $0.75 $0.89 $0.88 2014E $330.4 $146.1 $4.0 $0.8 $29.7 $149.8 $52.7 $97.1 $0.81 $0.81 $1.06 $1.05 2015E $319.4 $151.1 $4.0 $0.5 $32.7 $131.0 $46.0 $84.9 $0.71 $0.71 $0.99 $0.98 2016E $300.6 $154.4 $4.0 $0.0 $34.7 $107.5 $38.1 $69.5 $0.58 $0.58 $0.87 $0.87

Consolidated Statement of Cash Flows Net Income Non-cash items CAPEX Operating cash flow Free cash flow Summary Operating Data Au Price (US$/oz) Silver Price (US$/oz) Copper Price (US$/lb) Don Mario UMZ Mine Au Production (ozs) Ag Production (ozs) Cu Production (lbs) EVBC Mine Au Production (ozs) Ag Production (ozs) Cu Production (lbs) Copperwood Cu Production (lbs) Ag Production (ozs)

2011E $32.6 $5.0 $11.0 $37.6 $26.6

2012E $95.9 $13.3 $0.5 $109.2 $108.7

2013E $90.6 $15.5 $0.8 $106.1 $105.3

2014E $97.1 $29.7 $2.9 $126.8 $123.9

2015E $84.9 $32.7 $0.5 $117.6 $117.2

2016E $69.5 $34.7 $0.6 $104.2 $103.6

$1,450 $38.0 $3.88

$1,450 $38.0 $3.50

$1,400 $38.0 $3.25

$1,300 $28.0 $3.00

$1,250 $26.0 $2.75

$1,100 $26.0 $2.50

11,067 252,719 7,305,929

20,468 624,217 17,306,521

16,327 635,983 17,703,920

14,262 537,469 14,315,650

13,924 537,274 13,112,372

14,574 504,839 13,689,231

33,162 63,355 2,417,783

90,028 172,829 6,608,122

100,446 186,072 6,675,762

95,254 177,873 6,788,405

95,979 167,590 6,902,320

109,030 133,484 6,063,340

0 0

0 0

0 0

37,352,000 90,044

42,021,000 101,300

42,021,000 101,300

Source: Stonecap Securities Inc.

June 30, 2011

18

Orvana Minerals Inc.

Appendix B: Management and Director Biographies

Roland Horst, CEO and Director Mr. Horst has been Chief Executive Officer and a Director of the company since March 2010. Mr. Horst has 35 years of mining industry experience as a Chief Executive Officer, investment banker, corporate banker and geologist, including 14 years as a CEO of both public and private companies involved in mining production, development and exploration in Canada, Brazil and Chile. Carlos Mirabal, President and Chief Operating Officer Mr. Mirabal has been President and Chief Operating Officer of the company since March 2010 and a Director since October 2006. Mr. Mirabal was President and Chief Executive Officer of the company from October 2006 to February 2010. Prior to joining Orvana, Mr. Mirabal was Vice President of Operations of Sinchi Wayra S.A. (formerly Compania Minera del Sur S.A. (Comsur)), a Bolivian mining company. Malcolm King, VP and Chief Financial Officer Mr. King has been Vice President and Chief Financial Officer of the company since February 2006, and was a Director of the company from May 2006 to December 2007. Mr King was Vice President and Controller of the company from June 2005 to February 2006. Prior to joining Orvana, Mr. King was Chief Financial Officer and a Director of IQ-Ludorum plc, and Vice President, Finance and Vice President & Corporate Comptroller of the Telemedia group. Bill Williams, VP Corporate Development and President Orvana USA Dr. Williams has been Vice President, Corporate Development of the company since March 2008. He received his Ph.D. in Economic Geology from the University of Arizona after spending eight years in the oil & gas industry with Tenneco Oil Company. Since then he has held various positions in minerals exploration and project development throughout the Americas with Western Mining, Northern Orion, Phelps Dodge and Freeport-McMoRan. Prior to joining Orvana, he was Vice President, Americas for Freeport-McMoRan Exploration Corporation. C. Kent Jesperson, Director Mr. Jespersen has director experience on many boards of directors in the energy and technology sectors. He is currently Chairman of CCR Technologies Ltd. and serves on the boards of TransAlta Corporation, Axia NetMedia Corporation and Matrikon Inc. He is also past Chairman of North American Oil Sands Corporation, Geac Inc., C.D. Howe Institute and Institute of the Americas. He has been Chairman of the Board of the company since December 2007. Peter Bradshaw, Director Dr. Bradshaw has been Director, President and Chief Executive Officer of First Point Minerals Corp. since June 1996. Prior to starting First Point Minerals, Dr. Bradshaw was Vice President of Orvana Minerals from August 1986 to August 1995 and Exploration Manager for Australasia for Placer Dome from 1979 to 1986. He has been a Director of the company since May 2006.

June 30, 2011

19

Orvana Minerals Inc.

Richard Garnett, Director Dr. Garnett spent the years of 1962 to 1990 working worldwide with the Rio Tinto and, later, Anglo-American/ De Beers group of companies, as both a mining engineer and a geologist. Since then he has run his own Torontobased mining consultancy company, Valrik Enterprises Inc., and has been chairman or director of several mining companies. He recently received the PDACs Thayer Lindsley award for the 1989 discovery of Donlin Creek and he played a leading role in the 1994 discovery of Voiseys Bay. Dr. Garnett has been a Director of the company since February 2009. James Gilbert, Director Mr. Gilbert is President and CEO of Minera S.A., a private mining and metals investment company, and has 20 years of experience in mining and metals finance and investment. Prior to joining Minera, Mr. Gilbert was the Chief Investment Officer of Gerald Metals Inc., the global commodities trading firm based in Stamford, Connecticut. Prior to joining Gerald Metals, he was a Director of the mining and metals investment banking group at Rothschild Inc., in Washington D.C., and a Director of Corporate Finance at Coopers & Lybrand in New York. Mr. Gilbert has been a Director of the company and a member of the Compensation and Nominating Committee since August 2009. Robert Logan, Director Mr. Logan runs a private investment company and sits on both public and private company boards. Previously, Mr. Logan spent 20 years in investment banking based in New York, Toronto and London. His banking experience focused on funding and risk managing significant growth initiatives for many natural resource companies and projects. Mr. Logan is a member of the National Association of Corporate Directors and holds an ICD.D designation from the Institute of Corporate Directors. He has been a Director of the company since December 2007. Robert, Mitchell, Director Mr. Mitchell is a retired partner from Ernst & Young LLP, rejoined as a Director of the company in April 2007 and is Chairman of the Audit Committee. Mr. Mitchell was a Director of the company from December 2003 to June 2006. He is also a director and member of the audit committee of another public company. Jorge Szasz, Director Mr. Szasz is an independent consultant. Prior to this, Mr. Szasz was Vice President Finance, Administration and Commercialization of Sinchi Wayra S.A., a Bolivian mining company. Mr. Szasz also worked with PricewaterhouseCoopers for ten years in Audit. He was a director and Chief Financial Officer of the company from 2002 to 2005. Mr. Szasz rejoined as a director of the company in February 2010.
Biographies are sourced from company reports.

June 30, 2011

20

Orvana Minerals Inc.

Company Name Orvana Minerals Inc.

Disclosures 6

A member of the research team has visited the subject company's operations: On April 19, 2011, we toured the Don Mario UMZ operation. On June 13, 2011, we toured the EVBC operation. Disclosure List 1. Within the last 12 months, Stonecap or its affiliates have provided investment banking and/or related services for the subject issuer. 2. Within the last 12 months, a director, officer, or analyst with Stonecap has provided services for remuneration, other than investment advisory or trading services, to the subject issuer. 3. Stonecap or its affiliates is a market maker, or is associated with the specialist that makes a market in the securities of the subject issuer. 4. Stonecap or its affiliates collectively beneficially own 1% or more of any class of the issuers equity securities. 5. An employee, officer, or director of Stonecap is a member of the Board of Directors, Officer of, or an advisor to, the subject issuer. 6. The subject company paid for a part, or all, of the research analyst's or associates travel expenses. Investment Rating Guidelines Outperform: The stock's risk adjusted total return is expected to materially outperform sector peer returns over the next 12 months. Sector Perform: The stock's risk adjusted total return is expected to approximate sector peer returns over the next 12 months. Underperform: The stock's risk adjusted total return is expected to materially underperform sector peer returns over the next 12 months. Under Review: The stock rating is under review, pending evaluation of material new information. Risk Qualifier Guidelines Average: Operational and financial risks are assessed as being in line with sector peer levels. Above Average: Operational and financial risks are assessed as being significantly above sector peer levels. Speculative: Operational and financial risks are assessed as being exceptionally high, low predictability of financial results. Analyst Certification Each analyst of Stonecap Securities Inc. whose name appears in this research report hereby certifies that (i) the recommendations and opinions expressed in the research report accurately reflect the research analysts personal views about any and all of the securities or issuers discussed herein that are within the analysts coverage universe and (ii) no part of the research analysts compensation was, is, or will be, direct or indirectly related to the provision of specific recommendations or view expressed by the research analyst in the research report. Distribution Policy Stonecap Securities Inc.s research is distributed to our clients and prospective clients at the same time via email, which contains either .pdf files or links to our website. Hard copies of our research are also available in limited quantities. In addition, our research is available via third party aggregators such as Bloomberg, Thomson Reuters, First Call, Research Direct and themarkets.com. Our research library is available to our clients on our website at www.stonecapsecurities.com. To receive Stonecap Securities research, please contact your institutional sales professional. Disclaimer This report has been prepared by Stonecap Securities Inc. (Stonecap) Opinions, estimates and projections contained herein are our own as of the date hereof and are subject to change without notice. The information contained herein is for information purposes only and this report is not, and is not to be construed as, an offer to sell or a solicitation of an offer to buy any securities. The information and opinions contained herein have been compiled or derived from sources believed reliable, but no representation or warranty, expressed or implied, is made as to their accuracy or completeness. Neither Stonecap nor its affiliates accepts any liability whatsoever for any loss arising from any use of this report or its contents. Stonecap and/or its affiliates may have acted as financial adviser and/or underwriter for certain of the issuers mentioned herein and may have received remuneration for such services. Stonecap, its affiliates and/other respective officers, directors and employees may from time to time acquire, hold or sell positions in the securities mentioned herein as principal or agent. NBF Securities (USA) Corp. is acting as Chaperone (as required under FINRA Rule 15 a-6) to Stonecap Securities Inc. in connection with the trading of securities herein. All orders will be processed through Stonecap Securities Inc. as NBF Securities (USA) Corp.s agent to purchase or sell any securities that are the subject of the transactions and which are traded on Canadian markets. The Research Analyst who prepared this report receives compensation that is based, in part, upon Stonecaps overall investment banking revenues. U.S. Disclosure The firm that prepared this report is not subject to U.S. rules with regard to the preparation of research reports and the independence of analysts. SCS (USA) Inc. is a U.S. registered broker-dealer and affiliate of Stonecap Securities Inc. SCS (USA) Inc. accepts responsibility for the contents of this research report, subject to the terms and limitation as set out above. U.S. domiciled institutions seeking to effect a transaction in any security discussed in this report should contact a General Securities Representative of SCS (USA) Inc. directly.

June 30, 2011

21

Stonecap Securities Inc. 181 Bay Street, Suite 900 P.O. Box 779 Toronto, ON M5J 2T3 416.342.8590 www.stonecapsecurites.com