TIDMOMI
Orosur Mining Inc. ("Orosur" or "the Company") (TSX/AIM: OMI), a
South American-focused gold producer, developer and explorer
announces its unaudited results for its third quarter ended
February 28, 2018 ("Q3 18" or the "Quarter"). All dollar figures
are stated in US$'000 unless otherwise noted.
HIGHLIGHTS
-- In Colombia, high grade drilling continued at APTA during the Quarter
with results from the current diamond drilling campaign
including 4.89
g/t Au over 13.9m, 4.86 g/t Au over 25.0m, 9.42 g/t Au over
7.0m, 9.62
g/t Au over 6.0m and 5.28 g/t Au over 12.0m.
-- This campaign has already extended the known mineralization at APTA
down dip, up dip and along strike with early indications at
the
present drilling at Charrascala appearing promising.
-- In Uruguay, following definition of a weaker mineralized structure at
San Gregorio (SG) UG at depth and to the East in Q2 18, the mine
plan
and sequencing was redesigned with SRK to optimise
economics,
including the cancellation of development of deeper stopes from
the
previous mine plan and incorporation of marginal stopes from
current
levels at SGW into Q3 18.
-- As a result, Q3 18 production grades declined and production in the
Quarter was 6,859 oz of gold, which is below original
expectations,
and compares to 7,820 oz in Q3 17.
-- In the current quarter, the Company expects an improvement in grades
and lower capital expenditure. However, as a result of the
lower
grades processed in Q2 18 and Q3 18, and with an increased focus
on
profitability and not purely ounces produced, the Company's
production
guidance has been reduced to 27,000 - 30,000 oz Au from 30,000
oz, as
well as an increase in the operating cash cost guidance to
US$900 -
US$1,000/oz from US$800 - US$900/oz.
-- Development work in Q3 18 focused on the shift of mining activities
from SGW to SG Central and included the completion of a 230m
tunnel to
provide access to the first planned stope at SGC towards the end
of
the Quarter. The Company also finalised the pre-stripping of
the
Sobresaliente open pit which is planned to be mined in Q4 18 as
well
as finalised the fourth phase of the tailings dam which is
planned to
provide tailings storage for the next 36 months.
-- During the Quarter, and in large part due to the performance of the SG
UG, the Company commenced the implementation of a strategic
initiative
to reduce costs and corporate structure aimed at improving
profitability and preserving cash. The Company continuously
considers
strategic options and is currently in discussions regarding
several
alternatives to bolster capital resources available for its
suite of
projects.
COLOMBIA EXPLORATION HIGHLIGHTS
On February 20th and April 4th, the Company reported high grade
drilling and assay results from its current step-out drilling
campaign at APTA in Colombia from 18 holes drilled to date (MAP_054
to MAP_071) totaling 6,314 metres, including 4.89 g/t Au over
13.9m, 4.86 g/t Au over 25.0m, 9.42 g/t Au over 7.0m, 9.62 g/t Au
over 6.0m and 5.28 g/t Au over 12.0m. Recent drilling in this
campaign has extended the known mineralization at APTA down dip, up
dip and along strike. Mineralization remains open along strike and
at depth at APTA. Of the 18 holes drilled to date in this
exploration campaign, 6 holes (33%) have intercepted mineralised
intervals grading in excess of 10 g/t Au.
Orosur is presently finalising the last phase of this
exploration campaign focusing on maiden scout drilling at
Charrascala, the highest priority untested target, located 1.5 km
to the west of the APTA discovery. Preliminary indications at
Charrascala appear positive, with drilling of the first hole having
encountered sulphide polymetallic mineralization (pyrite,
chalcopyrite and sphalerite) associated with a set of structures
with intense silicification. Assay results of the five planned
drill holes at Charrascala are expected to be received during May
2018 and announced shortly thereafter.
OPERATIONS IN URUGUAY AND FY18 OUTLOOK
The broader San Gregorio underground mine (SG UG) is a
continuation of the San Gregorio open pit deposit at depth. The
historic open pit produced approximately 536,000 oz of gold at an
average grade of 2.12 g/t Au. Since November 2016, the SG UG West
(SGW) 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 SG UG Central (SGC)
commences. SGC is planned to be the main source of underground ore
feed to the plant during the remainder of H2 18 and H1 19. The
current mine plan then assumes continuation of ore production
shifting from SGC to SG UG East, followed by the Veta A underground
project.
To view the full release, showing all maps and figures, please
click here.
In Q2 18, a revised block model for SGC was finalized showing
that the mineralized structure to be less economically viable at
depth and to the East of the sector with reductions in both ore
grade and thickness. To date, SG UG has produced 465,943 tonnes at
1.49 g/t Au (approximately 22Koz Au), representing approximately a
30% reduction in grade from historical SG open pit operations,
which delivered an average of 2.12 g/t Au.
Following definition of this weaker mineralized structure at SG
UG, the Company redesigned the mine plan with SRK Argentina ("SRK")
and changed its sequencing for Q3 18. Development into deeper
stopes was removed from the mine plan and marginal stopes from
current levels at SGW were incorporated into Q3 18 in order to
optimise economics based on development costs already incurred. As
a consequence of these initiatives, Q3 18 grades declined and
production was approximately 2,000 oz below expectations. In an
effort to partially compensate for this production shortfall,
additional remnants from open pit reserves were mined during the
Quarter.
Primarily as a consequence of these lower grades, Q3 18
production was 6,859 oz of gold, compared to 7,820 oz in Q3 17 with
average cash operating costs for the Quarter of $1,065/oz, compared
to $858/oz in Q3 17.
During the Quarter, development work focused on the shift of
mining activities from SGW to SGC completing a 230m tunnel, which
provided access to the first planned stope at SGC towards the end
of the Quarter. In addition, the Company finalised the
pre-stripping of the Sobresaliente open pit which is planned to be
mined in Q4 18 as well as finalised the fourth phase of the
tailings dam which will provide tailings storage for the next 36
months, or until March 2021, on the basis of the current mine plan.
All-In-Sustaining Costs ("AISC") were $1,395/oz compared to
$1,289/oz in Q2 17, an increase of 8%.
The Company expects in Q4 an improvement in grades and lower
capital expenditure. However, with the lower grades processed in Q2
18 and Q3 18 and with an increased focus on profitability and not
purely ounces produced, the FY 18 production guidance has been
reduced to 27,000 - 30,000 oz Au from 30,000 oz and the Company's
operating cash cost guidance increased to US$900 - US$1,000/oz from
US$800 - US$900/oz.
During the Quarter, and in large part due to the performance of
the SG UG, the Company commenced the implementation of a strategic
initiative to reduce costs in Uruguay and corporate structure aimed
at improving profitability and preserving cash. As part of this
initiative, during Q3 18, greenfield exploration was suspended and
non-essential corporate and support costs have been drastically
reduced, with Directors and officers agreeing to reduce their fees
and salaries by 20%. Further, the Company plans to discontinue
mining from marginal open pits during Q4 18. As a part of this
initiative, a reduction of 120 staff members has occurred from
November 2017 to the end of March 2018.
The Company is currently accelerating its preparation of Veta A,
a new underground project that is 1.2km from the plant. In March
2018, the Company submitted a permit application to DINAMA, the
environmental agency in Uruguay. Initial work indicates Veta A is
currently the highest-grade source of underground ore available in
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. Reserves at the end of May
2017 were 9,440 oz (122,328 tonnes at 2.40 g/t Au) and the Company
is targeting a significant increase in reserves after proving the
continuity and extension of the ore body over 140 metres from the
current defined reserves while it remains still open at depth and
along strike.
The Company continuously considers and analyses strategic
options and potential partnerships to develop its Uruguayan,
Colombian and Chilean assets to create shareholder value and is
currently in discussions on several alternatives to bolster capital
resources at its suite of projects.
Q3 18 FINANCIAL SUMMARY
-- Operating profit was $1,168 compared to an operating profit of $1,848
in Q3 17.
-- Loss after tax was $1,976 compared to a profit of $363 in Q3 17. This
was mainly due to higher depreciation and the recognition of
a
provision for staff retrenchments.
-- Cash flow from operations before changes in working capital was $(155)
compared to $1,674 in Q2 17.
-- The Company invested $1,753 in capital expenditures and $1,236 in
exploration compared to $3,218 and $449 respectively in Q2 17.
The
Company significantly increased its exploration as a result of
the
current drilling campaign in Colombia.
-- The Company's cash balance at February 28, 2018 was $1,392 compared to
$3,357 at May 31, 2017. The Company has drawn on the Santander
line of
credit in the amount of $1,500 during Q3 18.
Operational & Financial Summary1
Q3 18 Q3 17 Diff YTD 18 YTD 17 Diff
Operating Results
Gold produced Ounces 6,859 7,820 (961) 22,536 24,623 (2,087)
Operating cash cost3 US$/oz 1,065 858 207 943 807 136
AISC US$/oz 1,395 1,289 106 1,416 1,184 232
Average price received US$/oz 1,288 1,198 90 1,280 1,263 17
Financial Results (unaudited)
Net profit/(loss) after tax US$ '000 (1,976) 363 (2,339) (2,518) 4,064 (6,582)
Cash flow from operations2 US$ '000 (155) 1,674 (1,829) 3,459 8,703 (5,244)
Cash & Debt Summary (unaudited) Feb. 28, 2018 Nov 30, 2017 Diff Feb. 28, 2018 May 31, 2017 Diff
Cash balance US$ '000 1,392 2,064 (672) 1,392 3,357 (1,965)
Total debt US$ '000 1,726 1,773 (47) 1,726 403 1,323
Cash net of debt US$ '000 (334) 291 (625) (334) 2,954 (3,288)
1 Results are based on IFRS and expressed in US dollars2 Before non-cash working capital movements3 Operating cash cost is total cost discounting royalties and capital tax on production assets.
Ignacio Salazar, CEO of Orosur, said:
"In Uruguay, we are taking drastic measures to restore
profitability. As of today, SG Central is now in production, and we
are quickly advancing a new higher-grade underground mine at Veta
A.The Company is currently contemplating several strategic
alternatives to advance its projects and unlock the value of our
assets for the benefit of our shareholders.
We are delighted with exploration progress in Colombia. Anzá is
located in the most prospective district in Colombia.Our strategy
for this drilling campaign is to demonstrate the potential scale of
the project and the results to date from APTA together with the
quality of the other untested targets in our 200km² property
support this approach."
Qualified Person's StatementThe 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.
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 StatementsAll 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, 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 February 28,2018 ($) As at May 31,2017 ($)
Assets
Cash 1,392 3,357
Accounts receivable 1,611 1,519
and other assets
Inventories 12,722 13,157
Total current assets 15,725 18,033
Accounts receivable 224 550
and other assets
Property plant 18,201 16,160
and equipment
and development costs
Exploration and 22,088 17,677
evaluation
costs
Deferred income 3,115 3,115
tax assets
Restricted cash 231 229
Total non-current 43,859 37,731
assets
Total assets 59,584 55,764
Liabilities and
Shareholders'
Equity
Trade payables 16,730 14,518
and other
accrued liabilities
Current portion of 1,606 202
long-term debt
Warrants 577 -
Environmental 243 243
rehabilitation
provision
Total current 19,156 14,963
liabilities
Long-term debt 120 201
Environmental 5,348 5,405
rehabilitation
provision
Total non-current 5,468 5,606
liabilities
Total liabilities 24,624 20,569
Capital stock 63,461 61,162
Contributed surplus 5,886 5,836
Deficit (33,431) (30,913)
Currency translation (956) (890)
reserve
Total shareholders' 34,960 35,195
equity
Total liabilities and 59,584 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 endedFebruary 28, Nine months endedFebruary 28,
2018 ($) 2017 ($) 2018 ($) 2017 ($)
Sales 8,555 8,845 29,534 32,268
Cost of sales (9,234) (8,376) (28.714) (27,186)
Gross profit/(loss) (679) 469 820 5,082
Corporate and administrative expenses (382) (457) (1,776) (1,688)
(597) (144) (1,407) 144
(6) (6) (32) (17)
(417) - (417) -
9 (1) (35) (101)
92 471 222 1,328
Net finance cost (63) (53) (209) (143)
Derivative loss - - (10) (412)
Net foreign exchange gain/(loss) 67 78 328 (110)
(1,297) (112) (3,336) (999)
Profit/(loss) before income tax (1,976) 357 (2,516) 4,083
Recovery (provision) for income taxes - 6 (2) (19)
Net profit/(loss) for the period (1,976) 363 (2,518) 4,064
Other comprehensive profit/(loss)
Cumulative translation adjustment 70 109 (66) 52
Total comprehensive profit/(loss) (1,906) 472 (2,584) 4,116
for the period
Profit/(loss) per common share:
Basic (0.02) 0.00 (0.02) 0.04
Diluted (0.02) 0.00 (0.02) 0.04
Orosur Mining Inc.
Condensed Interim Consolidated
Statements of Cash Flows
Thousands of United States Dollars,
except where indicated
Nine months ended February 28,
2018 ($) 2017 ($)
Net inflow/(outflow) of cash related
to the following activities
Cash flow from operating activities
Net profit/(loss) for the period (2,518) 4,064
Adjustments to reconcile
net income to net
cash provided from operating
activities:
Depreciation 5,911 4,208
Exploration and evaluation 32 17
expenses written off
Obsolescence provision 35 101
Fair value of derivatives (20) 181
Accretion of asset retirement 57 57
obligation
Stock based compensation 50 49
Gain on sale of property, (65) (187)
plant and equipment
Other (23) 213
Subtotal 3,459 8,703
Changes in working capital:
Accounts receivable and other assets 234 (259)
Inventories 397 (220)
Trade payables and other 2,212 395
accrued liabilities
Net cash generated from 6,302 8,619
operating activities
Cash flow from financing activities
Loan payments (176) (191)
Investment in Anillo 69 -
Loans received 1,500 -
Proceeds from private placement 2,894 -
Net cash generated from/(used 4,287 (191)
in) financing activities
Cash flow from investing activities
Purchase of property, (7,897) (8,829)
plant and equipment
and development costs
Environmental tasks (114) (152)
Proceeds from the sale 10 240
of fixed assets
Exploration and evaluation (4,553) (1,607)
expenditure assets
Net cash used in investing activities (12,554) (10,348)
Increase/(decrease) in cash (1,965) (1,920)
Cash at the beginning of period 3,357 4,320
Cash at the end of period 1,392 2,400
Orosur Mining Inc.
Condensed Interim Consolidated
Statements
of Changes in Shareholders' Equity
Thousands of United States Dollars,
except where indicated
Nine months ended February 28,
2018 ($) 2017 ($)
Capital stock
Balance at beginning of period 61,162 60,751
Exercise of stock options - 326
Grant of shares - 33
Private placement 2,299 -
Balance at end of period 63,461 61,110
Contributed surplus
Balance at beginning of period 5,836 5,925
Stock based compensation 50 90
recognized
Exercise of stock options - (183)
Balance at end of period 5,886 5,832
Deficit
Balance at beginning of period (30,913) (33,497)
Net profit/(loss) for the period (2,518) 4,064
Balance at end of period (33,431) (29,433)
Currency translation reserve (956) (932)
Shareholders' equity 34,960 36,577
at end of period
Orosur Mining Inc.Ignacio Salazar, +1 778-373-0100Chief
Executive Officerinfo@orosur.caorCantor Fitzgerald Europe - Nomad
& Joint BrokerDavid Porter / Keith Dowsing, +44 (0) 20 7894
7000orNumis Securities Limited - Joint BrokerJohn Prior / James
Black / Paul Gillam, +44 (0) 20 7260 1000
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April 16, 2018 02:00 ET (06:00 GMT)
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