Orosur Mining Inc. (“Orosur” or “the Company”) (TSX: OMI) (AIM:
OMI) announces the results for the fiscal year ended May 31, 2018
(“FY18”). All dollar figures are stated in US$ unless otherwise
noted.
FY18 Highlights
Operational
- FY18 production of 27,586 oz of gold,
in line with the updated guidance (27,000 - 30,000 oz), (FY17:
35,371 oz). The grade mined and processed at San Gregorio was
lower than anticipated, leading to higher costs and reduced gold
production.
- 875,440 tonnes of ore were processed at
a grade of 1.01 g/t with recovery averaging 94.97% (FY17: 978,529
tonnes at a grade of 1.21 g/t with recovery averaging 93.41%).
- The average gold price realized for the
year was $1,280/oz (FY17: $1,258/oz), an increase of 2%.
- Cash operating costs for the year were
$970/oz (FY17: $829/oz), an increase of 17%, due primarily to lower
production and lower ore grades. These results are in line with the
updated guidance of US$900 – US$1,000oz for the year.
- All-in-sustaining costs (“AISC”) were
$1,453/oz (FY17: $1,228/oz). The increase was due to the higher
unit operating costs from the lower ore grades processed during the
period and additional brownfield exploration.
Financial
- Restructuring costs of $2.8mm (FY17:
nil) were recognized as a provision for layoffs representing a
significant reduction in staff which left the Company with 70
employees at the end of July, as part of the initiatives to
preserve cash.
- The Company invested $9.8mm in capital
and $5.2mm in exploration (FY17: $10.6mm and $2.6mm, respectively).
The Company significantly increased its investment in exploration
as a result of the drilling campaign in Colombia.
- Operating loss of $1.1mm including
higher depreciation of $8.9mm. Loss after tax and after impairment
and discontinued operations was $36.9mm (FY17: profit of $2.7mm)
including the recognition of the provision for layoffs ($2.8mm),
write off of exploration projects ($6.0mm), loss for discontinued
operation ($6.5mm), impairment ($11.0mm) and obsolescence provision
of spare parts and consumables inventories ($4.7mm).
- Cash flow generated by operations
before working capital investment was $3.4mm (FY17: $9.7mm).Cash
balance at the end of FY18 $1.4mm (FY17: $3.4mm) with net working
capital deficiency (current assets less current liabilities
including cash) of $10.6mm (FY17: Positive net working capital of
$3.1mm). Excluding Loryser assets and liabilities, the Company had
total cash and cash equivalents of US$0.1mm at the end of FY18.
Total debt of $1.9mm (FY17 $0.4mm). The increase is due mainly to
Loryser, the Company’s primary operating subsidiary drawing the
$1.5mm line of credit. At present, the Company has a cash balance
of $0.45mm and total debt of $1.9mm.
Exploration
- In Colombia, the Company reported high
grade results of its 2018 step-out drilling campaign at APTA
including 5.00g/t Au over 23m, 4.89 g/t over 13.9m, 4.86 g/t Au
over 25.0m, 9.42g/t Au over 7m, 9,62g/t over 6m and 5.28 g/t over
12m.
- Drilling extended the mineralized zone
at APTA down dip, up dip and along strike. Mineralized zones remain
open along strike and at depth at APTA.
- To date, Orosur has reported 18 holes
(MAP_54 to MAP_71) totaling 6,314 metres at APTA and as at June 7,
2018 announced the completion of a further 3,045m of diamond
drilling at its Charrascala target successfully encountering gold
in the system, including intersects of 3.43 g/t Au and 30.60 g/t Ag
over 1.5m and 2.62 g/t Au and 14.30 g/t Ag over 0.90m.
Corporate
- On June 14, 2018 the Company applied
for the Loryser Reorganization Proceedings and creditor protection,
in the interest of Loryser, the Company and their
stakeholders.
- Loryser continued production at SG UG
until the end of July after which, during August, it is placing the
mine in care and maintenance. Loryser will remain able to enter
into transactions with its suite of Uruguayan assets. Orosur is
currently conducting conversations with the Government and third
parties to analyze different options to continue its operations in
Uruguay.
- In Chile, the Company is discontinuing
its operational unit. On July 2018, the Company sold its remaining
25% interest in Talca for consideration of $120k. With this sale,
the Company is left with no interest or obligation in Talca. In
respect of the Anillo project, Asset Chile forfeited the 16%
interest it had earned and Fortune Valley returned the project to
Codelco.
- The Company continues to advance
discussions to finance the next stage of exploration at the Anzá
project in Colombia. In connection with these discussions, and as
announced on July 10, 2018, a sophisticated international mining
company has advanced $250k to subscribe for 3,603,077 common shares
of Orosur at a price of CAD$0.091 per share. The subscription price
represents a 102% premium to the closing price of the Company's
common shares on the Toronto Stock Exchange on July 9, 2018.
Ignacio Salazar, CEO of Orosur, commented:
“FY18 has been a challenging year for Orosur. The weaker
mineralization encountered at our SGW UG mine in Uruguay placed the
Company in a precarious situation, leading to weak operating and
financial performance for the year and also a number of financial
impairments. The Company reacted quickly and decisively;
drastically reducing costs and restructuring its various business
units. In mid-June, the Company applied to place its key operating
subsidiary in Uruguay, Loryser, into voluntary creditor protection.
This process is underway and the Company is making every effort to
arrive at a fair and balanced plan in the interest of all our
stakeholders. In Chile, we have returned the Anillo project to
Codelco and sold the remaining 25% interest in Talca.
“In Colombia, the drilling campaign in Anzá resulted in a number
of high grade gold intercepts, providing support for our geological
model as well as materially extending the known extent of
mineralisation. The drilling started in October 2017 and was
completed in early June 2018 and the Company has been planning the
next stages of exploration as well as hosting advanced negotiations
with a sophisticated senior mining company interested in
progressing the Anzá project with the Company. This is an exciting
development for Orosur and we look forward to updating the market
shortly.”
Operational & Financial
Summary1 Fiscal Year (FY) ended May
31 2018 2017 Change
Operating Results Gold produced Ounces 27,586
35,371 7,785 Operating Cash cost3 US$/oz
970 829 141 Total Cash cost US$/oz
989 882 107 AISC US$/oz 1,453
1,228 225 Average price received US$/oz
1,280 1,258 22
Financial Results Revenue
US$ ‘000 37,100 44,226 (7,126) Net
income (loss) before tax US$ ‘000 (27,180)
2,337 (29,517) Cash flow from operations2 US$ ‘000
3,361 9,664 (6,303)
Cash & Debt at the end of the period 2018
2017 Diff Cash balance US$ ‘000
1,390 3,357 (1,967) Total Debt US$ ‘000
1,941 403 1,538 Cash net of debt US$
´000 (551) 2,954 (3,505)
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.
FY19 Outlook
As a consequence of the weaker mineralization encountered at our
SGW UG mine in Uruguay and the consequently difficult financial
situation of the Company, the Board adopted an aggressive strategic
plan which has been implemented during FY18, with the main
objective to restructure its businesses, recapitalize and transform
the Company by reducing corporate structure and costs in Uruguay,
advancing Colombia and reducing its activities in Chile. In this
process, Orosur has been actively considering options and potential
partnerships to create shareholder value and is currently in
advanced discussions on several alternatives to bolster capital
resources to develop its assets.
During FY19, the Company expects to produce between 2,500 -
3,500 ounces of gold, with operating costs of US$1,000 - US$1,100
per ounce from the San Gregorio mine in Uruguay in Q119, after
which point all production is expected to be ceased and is not
expected to resume in FY19, with operations placed on care and
maintenance. All future production shall depend on material
developments in the funding and environmental permitting of the
Veta A Underground project in Uruguay and the ongoing discussions
with the government of Uruguay and other third parties.
Orosur is focusing on financing the next stages of exploration
of the high grade Anzá project in Colombia and is in the process of
advancing a strategic alliance with a sophisticated international
mining Company.
The Company anticipates that reaching a fair and balanced
solution in Uruguay in the interest of all our stakeholders while
partnering and advancing the next stages of exploration at the Anzá
project will be the primary focus of the Company during FY19.
END
Qualified Person
The technical information related to the current assets of
Orosur in this announcement has been reviewed and approved by
independent Mining engineer Miguel Fuentealba, a qualified person
as defined by National Instrument 43-101.
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 in
Colombia and Uruguay.
Forward Looking Statements
All statements, other than statements of historical fact,
contained in this news release constitute "forward-looking
statements" within the meaning of applicable securities laws,
including but not limited to the "safe harbour" provisions of 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. Forward-looking statements include, without
limitation the expected completion of a US$250,000 subscription for
common shares, the negotiation and execution of definitive
agreements with respect to the Anzá project, the ability to advance
the Anzá property, the approval of the TSX and other approvals, the
ability to continue operations in Uruguay, and the ability to find
a fair and balanced reorganisation plan in the interests of all
stakeholders. There can be no assurance that such statements will
prove to be accurate. Actual results and future events could differ
materially from those anticipated in such forward looking
statements. Such statements are subject to significant risks and
uncertainties including the outcome of current discussions and
negotiations with respect to the Company’s assets in Uruguay and
Colombia, the results of future exploration in Colombia, the
ability to successfully permit and develop the Veta A underground
project and other risks and uncertainties which are described in
Section 8 of the Q4 2018 Management Discussion and Analysis. The
Company’s continuance as a going concern is dependent upon its
ability to obtain adequate financing and to reach profitable levels
of operations. These material uncertainties may cast significant
doubt upon the Company’s ability to realize its assets and
discharge its liabilities in the normal course of business and
accordingly the appropriateness of the use of accounting principles
applicable to a going concern. Although the Company has been
successful in the past in obtaining financing there is no assurance
that it will be able to obtain adequate financing in future or that
such financing will be on terms advantageous to the Company. 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.
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 Ryan Cohen, VP
Corporate Development of the Company (responsible for arranging
release of this announcement on behalf of the Company) on: +1 (778)
373-0100.
– Financial Statements Follow
–
Orosur Mining Inc.
Consolidated Statements of Financial
Position
(Thousands of United States Dollars,
except where indicated)
As at May 31 2018($) As
at May 31 2017($)
Assets Cash
1,390 3,357
Accounts receivable and other assets
1,550 1,519 Inventories
6,100 13,157 Asset held for sale
120 -
Total current assets 9,160 18,033 Accounts
receivable and other assets
73 550 Property plant and
equipment and development costs
6,578 16,160 Exploration and
evaluation costs
9,755 17,677 Deferred income tax assets
- 3,115 Restricted cash
201 229
Total
non-current assets 16,607 37,731
Total
Assets 25,767 55,764
Liabilities and
Shareholders’ Equity Trade payables and other accrued
liabilities
17,845 14,518 Current portion of long-term debt
1,730 202 Warrants
68 - Environmental rehabilitation
provision
139 243
Total current liabilities
19,782 14,963 Long-term debt
211 201
Environmental rehabilitation provision
5,283 5,405
Total non-current liabilities 5,494 5,606
Total liabilities 25,276 20,569
Capital stock
63,290 61,162 Contributed surplus
5,893 5,836 Deficit
(67,780) (30,913) Currency
translation reserve
(912) (890)
Total
shareholders’ equity 491 35,195
Total
liabilities and shareholders’ equity 25,767
55,764
Orosur Mining Inc.
Consolidated Statements of
Profit/(Loss) and Comprehensive Profit/(Loss)
(Thousands of United States Dollars except
for earnings per share amounts)
For the years ended May 31
Note 2018 ($) 2017 ($)
Sales
37,100
44,226
Cost of sales
(38,170) (40,271)
Gross
profit/(loss) (1,070) 3,955 Corporate and
administrative expenses
(2,231) (2,037) Restructuring costs
(2,840) 143 Exploration expenses
(207) - Exploration
and evaluation costs written off
(5,999) (131) Impairment of
assets
(11,083) - Inventory write-downs
(1,161) -
Obsolescence provision
(4,678) (113) Other income
995
1,525 Finance cost net
(177) (164) Gain/(loss) on fair value
of financial instruments, net
680 (458) Foreign exchange
gain/(loss)
591 (383)
(26,110) (1,618)
Profit/(loss) before income tax (27,180) 2,337
Recovery (expense) for income taxes
(3,121) 557
Total profit/(loss) for continuing operations
(30,301) 2,894
Other comprehensive
profit/(loss) Cumulative translation adjustment
(22) 93
Total comprehensive
profit/(loss) from continuing operations (30,323)
2,988 Loss from discontinued operations
(6,544) (310)
Total
comprehensive loss from discontinued operations (6,544)
2,678
Total comprehensive (loss)/
profit for the year (36,867) 2,678
Basic and diluted net profit/(loss) per share Continuing
operations
(0.26) 0.03 Discontinued operations
(0.06)
(0.00)
Orosur Mining Inc.
Consolidated Statements of Cash
Flows
(Thousands of United States Dollars,
except where indicated)
For the years ended May 31
Note 2018 ($) 2017 ($)
Net
inflow (outflow) of cash related to the following activities
Cash flow from operating activities Net profit/(loss)
for the year
(36,845) 2,585 Adjustments to reconcile net
income to net cash provided from operating activities: Depreciation
8,901 7,143 Impairment of assets
11,083 - Inventory
write-downs
1,161 - Exploration and evaluation costs written
off
5,999 131 Loss from discontinued operations
6,544
310 Obsolescence provision
4,678 113 Fair value of
derivatives
(399) 458 Accretion of asset retirement
obligation
(10) 18 Deferred income tax assets
3,115
(581) Stock based compensation
57 93 Loss/(gain) on sale of
property, plant and equipment
(828) (241) Other
(95)
(55)
Subtotal 3,361 9,664 Changes in working
capital Accounts receivable and other assets
112 (211)
Inventories
1,217 (1,200) Trade payables and other accrued
liabilities
3,146 3,932
Net cash generated from
operating activities 7,836 12,185
Cash
flow from investing activities
Purchase of property, plant and equipment
and development costs
(9,712) (10,621) Payments for environmental rehabilitation
(122) (213) Proceeds from the sale of fixed assets
782 240 Exploration and evaluation expenditure assets
(5,183) (2,604)
Net cash used in investing
activities (14,235) (13,198)
Cash flow
from financing activities Proceeds from private placement, net
of issuance costs
2,894 - Loan proceeds
1,740 320
Loan payments
(202) (270)
Net cash generated from
financing activities 4,432 50 Decrease in
cash
(1,967) (963) Cash at the beginning of year
3,357 4,320
Cash at the end of year
1,390
3,357
View source
version on businesswire.com: https://www.businesswire.com/news/home/20180829005736/en/
For further information, please contact:Orosur Mining
IncIgnacio Salazar, Chief Executive OfficerRyan Cohen, VP
Corporate Development+1-778-373-0100info@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