TIDMOMI
Orosur Mining Inc. ("Orosur" or "the Company") (TSX/AIM: OMI), a
South American-focused gold producer, developer and explorer is
pleased to announce the results for the first half of its fiscal
2018 ("H1 18") and second quarter ended November, 2017 ("Q2 18" or
the "Quarter"). All dollar figures are stated in US$'000 unless
otherwise noted.
EXPLORATION AND DEVELOPMENT HIGHLIGHTS
-- Drilling in the APTA portion of the Anzá gold project in Colombia
commenced in October 2017, with first drill results announced
on
November 14, 2017, including 5.32m at 17.76 g/t in hole MAP-54.
Depth
potential is being confirmed with gold mineralization
intersected down
to 200m. Mineralized zones remain open.
-- In Uruguay, a final infill drilling campaign and block model were
finalised for San Gregorio Central ("SGC"), with mine
development
planned to start in Q3 18.
-- The Company is accelerating the preparation and permitting of Veta A
Underground, a new underground project with higher grades next
to the
San Gregorio CIL Plant.
-- The deadline for Asset Chile to move into Phase 2 in Anillo expired on
December 31, 2017 unexercised. As a result, Asset Chile will
forfeit
the 16% interest it had earned and Orosur is currently
evaluating
strategic alternatives to move ahead with the project with
external
and non-dilutive funding.
OPERATIONAL HIGHLIGHTS
-- Extended downtime of two long hole drill rigs used in stope production
at the SGW UG mine caused the deferral of 2,000 ounces of
production
planned for Q2 18. Development activities continued as planed at
the
SGW UG mine and the Company resumed full underground production
by the
end of November.
-- Q2 18 production was 7,052 oz of gold, compared to 6,852 oz in Q2 17.
As a result of the Company's focus on profitability and not
purely
ounces produced, the Company is targeting the lower end of
its
production guidance at San Gregorio for FY18, being 30,000
ounces of
gold.
-- Average cash operating cost was $867/oz, compared to $914/oz Q2 17.
The Company expects to achieve its annual guidance for cash
operating
cost of US$800 - US$900 per ounce.
-- The Uruguayan government continues to demonstrate its support for the
Company with an exemption granted on royalty payments (equal to
3% of
sales) for the period April 2017 to March 2018. This is forecast
to
total approximately US$1.0 million.
-- All-In-Sustaining Costs ("AISC") were $1,455/oz compared to $1,345/oz
in Q2 17, an increase of 8%. The increase was predominantly due
to
higher development, brownfield exploration and the construction
of the
fourth phase of the tailings dam.
FINANCIAL HIGHLIGHTS
-- Operating profit of the San Gregorio operation was $3,423 compared to
an operating profit of $2,261 in Q2 17. The improvement mainly
due to
lower operating costs.
-- Loss after tax was $251 compared to a profit of $942 in Q2 17. This
was mainly due to higher depreciation and the recognition of
a
provision for staff retrenchments following the Q2 production
deferral
at SGW UG.
-- Cash flow from operations before changes in working capital was $2,160
compared to $2,234 in Q2 17.
-- The Company invested $3,359 in capital expenditures and $1,704 in
exploration compared to $3,835 and $609 respectively in Q2 17.
The
Company significantly increased its investment in exploration
and
development in Uruguay with the aim of expanding reserves.
-- The Company's cash balance at November 30, 2017 was $2,064 compared to
$3,357 at May 31, 2017. The deferral of approximately 2,000
ounces of
planned production for the Quarter from the SGW UG mine caused
the
Company to draw on the full Santander line of credit in the
amount of
$1,500 during the Quarter.
-- The committed line of credit with Banco Santander available as at
November 30, 2017 was renewed for another year (until November
30,
2018).
Operational
&
Financial
Summary1
Q2 18 Q2 17 Diff YTD 18 YTD 17 Diff
Operating
Results
Gold Ounces 7,052 6,852 200 15,677 16,802 (1,125)
produced
Operating US$/oz 867 914 (47) 886 783 103
cash
cost3
AISC US$/oz 1,455 1,345 110 1,422 1,135 287
Average US$/oz 1,299 1,252 47 1,277 1,290 (13)
price
received
Financial
Results
(unaudited)
Net US$ '000 (251) 942 (1,193) (542) 3,701 (4,243)
profit/(loss)
after
tax
Cash US$ '000 2,160 2,234 (74) 3,614 7,029 (3,415)
flow
from
operations2
Cash & Nov. 30,2017 Aug 31,2017 Diff Nov. 30,2017 May 31,2017 Diff
Debt
Summary
(unaudited)
Cash US$ '000 2,064 4,533 (2,469) 2,064 3,357 (1,293)
balance
Total US$ '000 1,773 330 1,443 1,773 403 1,370
debt
Cash net US$ '000 291 4,203 (3,912) 291 2,954 (2,663)
of debt
1 Results are based on IFRS and expressed in US dollars
2 Before non-cash working capital movements
3 Operating cash cost is total cost discounting royalties
and capital tax on production assets.
H2 OUTLOOK
SG UG is a continuation at depth of the San Gregorio open pit
deposit, which produced approximately 536,000 oz at an average
grade of 2.12 g/t Au. Since November 2016, SGW UG has been the
primary source of ore feed to the plant. Mining in the SGW sector
is forecast to be complete in H2 18 when development and initial
production of SGC is scheduled to commence. SGC is planned to be
the main source of underground ore feed to the plant during H2
18.
To view the full release, showing all maps and figures, please
click here.
During Q2 18, 792 metres of diamond core were drilled around the
San Gregorio West underground mine aimed at improving accuracy and
planning of the mining in this sector. A 250 metre development
access ramp is necessary to fully access SGC from the SGW UG mine
and is under construction. The block model for SGC was finalized in
Q2 18, and shows that the mineralized structure is less
economically viable at current gold prices at depth and to the East
based on reductions in both ore grade and thickness. Due to this,
and amongst other measures, the Company has been working with SRK
Peru in order to optimize the mineplan for SGC, with a special
emphasis on profitability following the deferral of production from
SGW in Q2 18. The new design concentrates mining on the upper
levels of the mine to minimize additional and uneconomic
development. Additionally, an existing crown pillar between the
open pit and the UG mine is being evaluated for potential inclusion
in the mine plan.
The Company is accelerating the preparation and permitting of
Veta A, a new underground project that is 1.2 kilometres from the
plant, for development. Initial work indicates Veta A is currently
the highest grade source of underground ore available on the San
Gregorio mine complex. Veta A was previously mined as an open pit,
producing 29,000 oz with an average grade of 3.1 g/t between
September 2006 and March 2008. Current reserves are 9,440 oz
(122,328 tonnes @ 2.40 g/t Au). The Company is targeting a
significant increase in reserves following a positive drilling
campaign that proved the continuity and extension of the ore body
over 140 metres from the current defined reserves. A preliminary
study by SRK Consulting at Veta A supports its geotechnical
feasibility.
In addition to the redesign of underground production in San
Gregorio, the company has implemented a number of initiatives to
preserve cash. These include an 11% staff reduction at the end of
November, the recently granted royalty exemption by the Uruguayan
Government for a one year period and the deferral of planned
greenfield exploration in Uruguay.
Orosur remains focused on profitability over production and as a
result is targeting the lower end of its production guidance at San
Gregorio for FY18 at 30,000 ounces of gold, while maintaining its
operating cash cost guidance of between US$800 - US$900/oz. The
Company continuously considers and analyses strategic options to
develop its Uruguay, Colombian and Chilean assets to create
shareholder value.
The Company expects to conclude its first phase of drilling at
the APTA zone, which is part of the Anzá project in Colombia next
month. Additional drill results are expected by the end of
February. As announced in November 2017, preliminary results from
the current drilling campaign have demonstrated APTA's potential at
depth, with gold mineralization intersected to 200m, and along
strike. The broader Anzá potential (beyond APTA) has yet to be
tested at any of the four high priority identified targets with
coincident geochemical and geophysical anomalies.
To view the full release, showing all maps and figures, please
click here.
Ignacio Salazar, CEO of Orosur, said:
"The Company is concentrating on advancing exploration in
Colombia while maintaining profitability in Uruguay. We have built
the SGW UG mine, entirely financed from cash from operations, while
advancing exploration and development around it.SGC is well under
way and on track to commence production during Q3 18 and we are
swiftly advancing a new higher grade underground mine at Veta
A.While we are taking some tough measures to implement this plan,
we are getting some initial results already and are proud to count
on the support of the Uruguayan government which granted us a
second, and unprecedented, annual royalty exemption.
As announced in November, preliminary results in Colombia from
the current drilling campaign validate the APTA gold
potential.Depth potential has been confirmed at APTA with gold
mineralization intersected down to 200m.Mineralized zones remain
open.We plan to update the market in the next several weeks. In
addition to APTA, and in respect of the broader Anzá potential,
four high priority targets with coincident geochemical and
geophysical anomalies, remain untested."
Potential for a New UG Mine: Veta A Underground
Historically, Veta A was a relatively small high grade open pit,
located next to the now reclaimed San Gregorio tailings dam, which
was in operation from September 2006 until March 2008. The Veta A
open pit produced approximately 29,000 oz at average gold grades of
3.10 g/t.
To view the full release, showing all maps and figures, please
click here.
As open pit mining progressed, the mineralized body appeared to
run underneath the tailings dam. When operations approached this
physical barrier, mining was halted and the pit was backfilled with
waste and then reclaimed.
A preliminary geotechnical study of the Veta A deposit was
performed by SRK Consulting during the first Quarter with positive
results. During Q2 2018, drilling continued at Veta A, with 968
metres drilled (adding up to a total 1,665 metres drilled to date
for this campaign). The results are encouraging. Drilling
interceptions to date are shown below:
HOLE From (m) To (m) Metres Au g/t
VADD17-006 161.9 168.6 6.7 5.0
VADD17-007 165.2 167.1 2.0 3.3
VADD17-008 125.0 131.1 6.1 2.6
VADD17-009 170.5 175.3 4.9 1.8
VADD17-010 107.7 109.7 2.0 0.4
VADD17-011 107.6 110.2 2.6 5.8
VADD17-012 124.4 130.8 6.4 1.7
VADD17-013 97.5 99.0 1.5 1.5
VADD17-014 96.30 97.70 1.4 0.7
VADD17-015 155.4 157.0 1.6 1.6
VADD17-016 133.6 136.7 3.1 3.4
All 11 holes drilled to date at Veta A intersected
mineralization, confirming the extension of the mineralized body
for at least 140 metres downhole. The best mineralization
intercepts show the continuity of the mineralized trend to the
south-west down-deep. This indicates the strong potential for an
increase in the volume of the mineralized structure, which may
materially increase current reserves, albeit requiring further
work.
The block model was updated in-house during Q2 18 and a mine
plan design is in progress to advance with the feasibility
study.
To view the full release, showing all maps and figures, please
click here.
Qualified Person's Statement
The technical information related to the current assets of
Orosur Mining in this presentation has been reviewed by Miguel
Fuentealba, a Mining Engineer who is considered to be a Qualified
Person under NI 43-101 reporting guidelines. Mr. Fuentealba is a
graduate in Mining Engineering from the University of Santiago de
Chile and is an AusIMM Member and Qualified Person of Chilean
Mining Commission. Mr. Fuentealba has 20 years of professional
experience in the field of mining engineering, mine development and
management. Reserves and Resources stated in this announcement have
the meaning ascribed to such terms under N.I. 43-101, and have been
prepared on such basis and published in the Company's annual
information form dated August 29, 2017.
About Orosur Mining Inc.
Orosur Mining Inc. (TSX: OMI; AIM: OMI) is a fully integrated
gold producer, developer and explorer focused on identifying and
advancing gold projects in South America. The Company operates the
only producing gold mine in Uruguay (San Gregorio), and has
assembled an exploration portfolio of high quality assets in
Uruguay, Chile and Colombia.
The information contained within this announcement is deemed by
the Company to constitute inside information as stipulated under
the Market Abuse Regulation ("MAR"). Upon the publication of this
announcement via Regulatory Information Service, this inside
information is now considered to be in the public domain. If you
have any queries on this, then please contact Ignacio Salazar,
Chief Executive Officer of the Company (responsible for arranging
release of this announcement) on: +1 (778) 373-0100.
Forward Looking Statements
All statements, other than statements of historical fact,
contained or incorporated by reference in this news release,
including any information as to the future financial or operating
performance of the Company, constitute "forward-looking statements"
within the meaning of certain securities laws, including the "safe
harbour" provisions of the Securities Act (Ontario) and the United
States Private Securities Litigation Reform Act of 1995 and are
based on expectations estimates and projections as of the date of
this news release. There can be no assurance that such statements
will prove to be accurate. Such statements are subject to
significant risks and uncertainties some of which are described in
Section 8 of the Q2 2018 Management Discussion and Analysis, and
actual results and future events could differ materially from those
anticipated in such statements. Forward-looking statements include,
without limitation success of exploration activities; permitting
time lines; the failure of plant; equipment or processes to operate
as anticipated; accidents; labour disputes; requirements for
additional capital title disputes or claims and limitations on
insurance coverage. The Company disclaims any intention or
obligation to update or revise any forward looking statements
whether as a result of new information, future events and such
forward-looking statements, except to the extent required by
applicable law.
Orosur Mining Inc.
Condensed Interim Consolidated
Statements
of Financial Position
Thousands of United
States Dollars,
except where indicated
As at November 30, As at May 31,
2017 ($) 2017 ($)
Assets
Cash 2,064 3,357
Accounts receivable 1,706 1,519
and other assets
Inventories 12,457 13,157
Total current assets 16,227 18,033
Accounts receivable 304 550
and other assets
Property plant and equipment 18,331 16,160
and development costs
Exploration and evaluation costs 20,756 17,677
Deferred income tax assets 3,115 3,115
Restricted cash 227 229
Total non-current assets 42,733 37,731
Total assets 58,960 55,764
Liabilities and Shareholders'
Equity
Trade payables and other 14,158 14,518
accrued liabilities
Current portion of long-term debt 1,626 202
Warrants 577 -
Environmental rehabilitation 243 243
provision
Total current liabilities 16,604 14,963
Long-term debt 147 201
Environmental rehabilitation 5,349 5,405
provision
Total non-current liabilities 5,496 5,606
Total liabilities 22,100 20,569
Capital stock 63,461 61,162
Contributed surplus 5,880 5,836
Deficit (31,455 ) (30,913 )
Currency translation reserve (1,026 ) (890 )
Total shareholders' equity 36,860 35,195
Total liabilities and 58,960 55,764
shareholders' equity
Orosur Mining Inc.
Condensed Interim
Consolidated
Statements of profit/
(loss)
and Comprehensive
profit/ (loss)
Thousands of United
States
Dollars, except
for loss per share
amounts
Three months ended Six months ended
November 30, November 30,
2017 ($) 2016 ($) 2017 ($) 2016 ($)
Sales 9,028 10,765 20,979 23,423
Cost of sales (7,708 ) (9,567 ) (19,480 ) (18,810 )
Gross profit 1,320 1,198 1,499 4,613
Corporate (749 ) (704 ) (1,394 ) (1,143 )
and administrative
expenses
Restructuring costs (750 ) 164 (810 ) 288
Exploration expenses (17 ) (2 ) (26 ) (11 )
and
exploration written
off
Obsolescence (9 ) (12 ) (45 ) (100 )
provision
Other income 1 507 130 857
Net finance cost (59 ) (45 ) (146 ) (90 )
Derivative - 8 (10 ) (412 )
profit/(loss)
Net foreign exchange 11 (87 ) 262 (188 )
gain/(loss)
(1,572 ) (231 ) (2,039 ) (887 )
Profit/(loss) before (252 ) 967 (540 ) 3,726
income tax
Provision for 1 (25 ) (2 ) (25 )
income taxes
Net profit/(loss) (251 ) 942 (542 ) 3,701
for the period
Other comprehensive
profit/(loss)
Cumulative 142 (20 ) (136 ) (57 )
translation
adjustment
Total comprehensive (109 ) 922 (678 ) 3,644
profit/(loss)
for the period
Profit/(loss) per
common share:
Basic (0.00 ) 0.01 (0.00 ) 0.04
Diluted (0.00 ) 0.01 (0.00 ) 0.04
Orosur Mining Inc.
Condensed Interim Consolidated
Statements of Cash Flows
Thousands of United
States Dollars,
except where indicated
Six months ended November 30,
2017 ($) 2016 ($)
Net inflow/(outflow)
of cash related
to the following activities
Cash flow from operating
activities
Net profit/(loss) for the period (542 ) 3,701
Adjustments to reconcile
net income to net
cash provided from operating
activities:
Depreciation 4,064 2,829
Exploration and evaluation 26 11
expenses written off
Obsolescence provision 45 100
Fair value of derivatives (20 ) 186
Accretion of asset retirement 38 38
obligation
Stock based compensation 44 88
Gain on sale of property, (61 ) (14 )
plant and equipment
Other 20 90
Subtotal 3,614 7,029
Changes in working capital:
Accounts receivable 29 (249 )
and other assets
Inventories 656 211
Trade payables and other (360 ) 1,094
accrued liabilities
Net cash generated from 3,939 8,085
operating activities
Cash flow from financing
activities
Loan payments (129 ) (127 )
Investment in Anillo 69 -
Loans received 1,500 -
Proceeds from private placement 2,894 -
Net cash generated from/(used 4,334 (127 )
in) financing activities
Cash flow from investing
activities
Purchase of property, (6,164 ) (5,617 )
plant and equipment
and development costs
Environmental tasks (95 ) (145 )
Proceeds from the sale 10 18
of fixed assets
Exploration and evaluation (3,317 ) (1,158 )
expenditure assets
Net cash used in investing (9,566 ) (6,902 )
activities
Increase/(decrease) in cash (1,293 ) 1,056
Cash at the beginning of period 3,357 4,320
Cash at the end of period 2,064 5,376
Orosur Mining Inc.
Condensed Interim Consolidated Statements
of Changes in Shareholders' Equity
Thousands of United States Dollars,
except where indicated
Six months ended
November 30,
2017 ($) 2016 ($)
Capital stock
Balance at beginning of period 61,162 60,751
Exercise of stock options - 174
Grant of shares - 34
Private placement 2,299 -
Balance at end of period 63,461 60,959
Contributed surplus
Balance at beginning of period 5,836 5,925
Stock based compensation 44 83
recognized
Exercise of stock options - (102)
Balance at end of period 5,880 5,906
Deficit
Balance at beginning of period (30,913) (33,497)
Net profit/(loss) for the period (542) 3,701
Balance at end of period (31,455) (29,796)
Currency translation reserve (1,026) (1,041)
Shareholders' equity 36,860 36,028
at end of period
Orosur Mining Inc Ignacio Salazar, +1 (778) 373-0100 Chief
Executive Officer info@orosur.ca or Cantor Fitzgerald Europe -
Nomad & Joint Broker David Porter/Keith Dowsing Tel: +44 (0) 20
7894 7000 or Numis Securities Limited - Joint Broker John Prior /
James Black / Paul Gillam Tel: +44 (0) 20 7260 1000
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