TIDMOMI
Orosur Mining Inc. ("Orosur" or "the Company") (TSX/AIM: OMI),
the South American-focused gold producer, developer and explorer is
pleased to announce its unaudited results for the third quarter
ended February 28, 2017 ("Q3 17" or the "Quarter") and an update of
its exploration and development activities. All dollar amounts
referred to in this announcement are stated in US dollars.
OPERATIONAL HIGHLIGHTS
-- Successful completion of first full quarter of production of Orosur's
new mine, San Gregorio West Underground ("SGW UG").
-- Availability of services at SGW UG, such as water, power, access and
ventilation as well as operational factors such as fortification
and
development works have been implemented successfully.
-- Q3 2017 production was 7,820 oz of gold, in line with the 7,274 ounces
produced during Q3 2016, and also in line with full year
guidance of
35,000 to 40,000 oz. The Company views this positively
considering
production is typically lower during the ramp up of new
mines.
FINANCIAL HIGHLIGHTS
-- Quarterly cash operating costs were $858/oz (6% reduction from Q2), in
line with expectations and guidance for FY 17, which remains
$800 to
$900/oz. As of a result of the additional development capex
associate
with the SGW UG mine, including ramp, access and ventilation
shaft
work, All-In-Sustaining Costs ("AISC") were $1,289/oz compared
to $978
oz in Q3 16.
-- Year to date ("YTD") aggregate capex of $9.0M due to the Company's
higher than anticipated investments following the
exploration
successes at SG UG East and Central and the Company's strategy
to
develop a larger UG mine at and around SGW.
-- The Company remains committed to developing SG UG without any external
funding as planned and the total cash balance at Quarter end was
$2.4M
(compared to FY 16: $4.3M),with total debt remaining at $0.2M
compared
to $0.4M at May 31, 2016.
-- Cash generated from operations YTD amounts to $8.7M (YTD 16: $5.9M).
-- YTD net profit after tax is $4.1M (YTD 16: profit of $0.5M).
Average gold price of $1,198/oz compared with $1,143/oz during
Q3
2016
OUTLOOK
-- Exploration drilling in and around the San Gregorio UG area has
yielded positive results, successfully intersecting gold
mineralization in every hole, which is expected to
significantly
enhance mine economics and increase reserves and resources in
the
short and medium term. Further drilling is underway and
ongoing.
-- In Colombia, the Company finalized a geological model of its high
grade Anzá gold project to determine the exploratory potential
with
the assistance of Mine Development Associates ("MDA") of Reno,
Nevada.
The results of this work were announced on January 19th,
2017.
-- The Anzá project includes a gypsum mine, which has environmental and
mining permits granted by the Colombian authorities. As
previously
announced, Orosur has recently taken over operatorship of the
mine.
The gypsum permits can be readily expanded for additional
tonnage,
providing the ability for Orosur to fast-track permitting for
future
gold mining operations.
Ignacio Salazar, CEO of Orosur, said:
"Operations remain healthy and profitable, with $8.7M of cash
generated in the first three quarters of our fiscal 2017.We are
especially pleased with progress so far given this is the first
quarter with SGW UG as the Company's primary source of ore feed to
the plant in Uruguay, achieving a unit operating cost of $858/oz in
the Quarter despite the normal constraints associated to the
initial months of operation of a new mine.
As previously announced, SGW UG has been financed entirely from
operational cash flow and the Company aims to maintain this
financial discipline in its future expansion into SG UG East and
Central, with the objective of developing a larger UG mine in,
around and below the current SGW UG.
In Colombia, we have made significant progress in the geological
interpretation and modelling of our high grade Anzá gold project
and we plan to commence a 15,000m - 30,000m drilling campaign. We
are excited to be moving this project forward since taking over
operatorship of the gypsum mine, which has now resumed operations
after finalizing remediation work and improved operational
standards during the quarter. With exploitation permits in place,
the existing gypsum can be readily expanded, enabling Orosur to
fast-track future gold mining operations."
Operational
&
Financial
Summary1
Q3 17 Q3 16 Diff YTD 17 YTD 16 Diff
Operating
Results
Gold Ounces 7,820 7,274 546 24,623 27,917 (3,294)
produced
Operating US$/oz 858 803 55 807 886 (79)
cash
cost3
AISC US$/oz 1,289 978 311 1,184 1,096 88
Average US$/oz 1,198 1,143 55 1,263 1,131 132
price
received
Financial
Results
(unaudited)
Net US$ '000 363 3,071 (2,708) 4,064 475 3,589
profit
after
tax
Cash US$ '000 1,674 4,804 (3,130) 8,703 5,902 2,801
flow
from
operations2
Cash & Feb. May 31,2016 Diff
Debt 28,2017
Summary
(unaudited)
Cash US$ '000 2,400 4,320 (1,920)
balance
Total US$ '000 161 352 (191)
debt
Cash US$ '000 2,239 3,968 (1,729)
net
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.
Q3 2017 Operations and SGW Development
Q3 2017 production was 7,820 oz of gold, in line with the 7,274
oz produced during Q3 2016.
In Q2 2017 the Company transitioned from Arenal UG to SGW UG,
following which Q3 2017 saw commissioning of the SGW UG new mine
concluded successfully. Availability of services such as water,
power, access and ventilation as well as operational factors such
as fortification and development works have been implemented with
approximately 60% of gold production for the Quarter coming from
the SGW UG mine in this, its first quarter in production. Typically
ore production and operational efficiencies are lower at the start
of any new mine, especially underground operations, due to the low
operational flexibility given the lack of available production
stopes. As the SGW UG mine development advances, efficiency is
expected to improve and the Company expects to see improvements as
early as Q4 2017.
Q3 2017 Financial Summary
Average cash operating costs were of $858/oz, compared to
$803/oz in Q3 2016. As previously announced in the Company's Q2
2017 results, with the new SGW UG mine commencing production in the
Quarter, unit costs have begun to gradually reduce (cash operating
costs in Q2 2017 were: $914/oz) and the Company expects the same
trend to continue in Q4 2017 given more available production stopes
and higher grades from SGW UG.
During the Quarter, the Company invested $3.2M in capex and
$0.4M in exploration compared to $0.9M and $0.6M, respectively, in
Q3 2016. The bulk of the investment for the construction of the SGW
UG mine was concentrated in Q2 and Q3 2017 including work related
to the ramp, access and the ventilation shaft. In addition, the
Company completed construction of phase 4A of the tailings dam
during the Quarter. As a result of the additional capex in SGW UG
and phase 4A of the tailings dam, AISC were $1,289/oz compared to
$978/oz in Q3 2016. This marks a reduction compared with Q2 2017
($1,345/oz); a trend the Company expects to continue in Q4 2017 and
beyond.
The average gold price realized for the Quarter was $1,198/oz
(Q3 2016: $1,143/oz).
Net profit after tax was $0.4M compared to a profit of $3.0M in
Q3 2016. The difference in profit between the two quarters was
mainly due to the benefit of $2.5M recognized during Q3 2016 as a
result of the settlement with the Government of Uruguay for the
elimination of the benefit relating to the export of industrialized
goods, as previously announced.
YTD profit after tax was $4.0M compared to a profit of $0.5M in
the same period of the previous fiscal year. The improvement is
mainly due to a higher realised price of gold ($1,263/oz) compared
to ($1,131/oz) and lower overall costs of sales, which have been
partially offset by lower relative production for the period;
overall, resulting in more profitable production (Contribution
margin YTD 2017: $9.3M compared to $5.2M in YTD 2016).
Cash flow from operations before working capital variations was
$1.7M compared to $4.8M in Q3 2016 (which also included the $2.5M
settlement explained above). YTD 2017 cash flow from operations
before working capital variations was $8.7M compared to $5.9M for
the prior year due to better operating performance in YTD 2017 as
explained above.
The cash balance at the end of the Quarter was $2.4M compared
with $4.3M at May 31, 2016. The decrease in cash was mainly due to
increased investment in the development of the SGW UG (total
investment in SGW UG during the period ended February 28, 2017 with
total capitalised expenditure at period end of $5.2M compared to
$1.0M as at May 31, 2016). The YTD total capex amounts to $9.0M as
the Company is made higher than anticipated investments following
the exploration successes in SG UG East and Central as Orosur plans
to develop a larger UG mine in and around SGW UG. The Company
remains committed to develop SG UG without any external funding, as
planned, and the debt balance at the end of the Quarter remained
$0.2M compared to $0.4M at May 31, 2016. The current debt
outstanding is related to equipment leases.
Orosur has a $1.5M committed and undrawn line of credit with
Banco Santander available as at February 28, 2017, and as of the
date hereof.
FY17 Outlook & Guidance
The Company's forecast production guidance for FY17 remains
between 35,000 to 40,000 oz of gold at operating cash costs of
between $800 - $900/oz.
As in the past, variations in production and unit costs have
been expected to occur, quarter on quarter, as the mine plan draws
ore from multiple sources at varying grades, stages of development
and stripping factors. As previously announced, the Company
incurred higher unit costs during the transition and start of
operations in SGW UG which are expected to decrease further in Q4
2017 given successful progress in the SGW UG development.
Uruguay Underground Exploration Projects - Potential for
Significant Expansion of the SGW UG Mine
SGW UG is a continuation, at depth, of the historic San Gregorio
open pit deposit which has produced approximately 536,000 oz at an
average grade of 2.12 g/t. During FY17, the Company intends to add
reserves and expand prospective SGW UG operations within three
neighboring underground projects. These projects are the SGE
Underground, SGW UG Deep Extension and the SG Central UG areas. The
last two projects relate to areas which were not previously
considered in the SGW UG mining plans and represent new
opportunities with a strong potential for near term resource and
reserve delineation.
A comprehensive and extensive drilling campaign is currently
being carried out at San Gregorio. During FY 17, a total of 9,000m
of drilling are planned in order to confirm and increase reserves
and extend the SGW UG mine.
At the end of the Quarter, 6,000m, of the planned 9,000m have
been drilled:
a) SGE UG: After finalizing a drilling program of 19 drill holes
(totalling 3,803m) in this area, a geological and a block model has
been built and the Company is currently working on reserves
estimation. Drilling information indicates that this zone is still
open in the East.
b) SGC UG: Four new holes have been drilled in the area, for a
total of 16 holes (totaling 3,315m), with 2 holes (610m) remaining
to be drilled in SGC UG for the remainder of FY 17.
The results of the new holes indicate:
Hole ID From (m) To (m) Intercept
SGDD16-84B 310.25 313.40 3.15 m @ 4.20 g/t
SGDD16-081 243.70 249.30 5.60 m @ 1.14 g/t
SGDD17-080 272.00 282.55 10.55m @ 1.11 g/t
SGDD17-082B 244.20 246.70 2.50m @ 1.13 g/t
SGDD17-083 268.40 271.85 3.45m @ 0.63 g/t
Current results indicate the potential existence of additional
reserves in the immediate area. There also appear to be strong
indications that mineralization extends to the western part towards
the SGW UG mine. Further drilling, planned in the current proposed
drill program, is required to validate this.
To see a full PDF of the release with images, click here.
Uruguay Open Pit Exploration Projects
Veta Rey
An RC drilling campaign has been finalized at Veta Rey. A total
of 19 holes totaling 983m were completed. Five of these holes were
categorized as infill drilling; with the rest aimed to testing the
continuity of central and south orebodies. Infill drilling has
successfully validated the remaining reserves; however, exploratory
drilling has failed, at this point, to prove the continuity of the
mineralization between the two ore zones.
Sobresaliente Domain
To date, four holes, from a program of six, have been drilled at
the Mantos Verdes project in the Sobresaliente domain with the
following results:
Hole ID From (m) To (m) Intercept Total grade(g/t) including
(m) length
(m)
MVRC17-01 5 7 2 31 0.32
MVRC17-02 14 18 4 43 0.80 1 m @ 2.22
g/t
MVRC17-03 19 22 3 32 0.96 1 m @ 2.2
g/t
MVRC17-04 21 24 3 35 3.26 1 m @ 9.1
g/t
This drilling has identified a mineralized zone which currently
is being economically reviewed.
Colombia
The Company continues to advance its high grade Anzá gold
project. During Q3 2017, the Company finalized a geological model.
Based on this geological interpretation, an exploration target was
formulated with the assistance of MDA and the results announced on
January 19th, 2017.
During 2017, the Company plans to commence a 15,000m - 30,000m
drilling campaign, culminating in the preparation and publishing of
a maiden N.I. 43- 101 compliant resource report for the APTA
project. Currently the Company is in the planning and tender
process for the above mentioned drilling program.
The Anzá project includes a gypsum mine, which has environmental
and mining permits granted by the Colombian authorities.
Historically, the gypsum mine was operated by a third-party
contractor. As previously announced, Orosur recently took over
operatorship of the mine. The Anza gypsum mine is back into
operation after Orosur finalized remediation work and improved
operational standards during Q3 2017. Current mining activities are
focussed on operational development work required to re-start
gypsum extraction. The gypsum permits can be readily expanded,
providing the ability for Orosur to fast-track permitting for
future gold mining operations. The Company anticipates that by
operating a mine at Anzá in parallel with the gold exploration
drilling campaign should, allow Orosur to advance the gold project
more swiftly and accurately towards feasibility.
Qualified Person's Statement
The technical information related to the current assets of
Orosur 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.
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, 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.
For more information, please visit www.orosur.ca
The information contained within this announcement is deemed by
the Company to constitute inside information as stipulated under
the Market Abuse Regulations (EU) No. 596/2014 ('MAR'). Upon the
publication of this announcement via Regulatory Information Service
('RIS'), this inside information is now considered to be in the
public domain.
About Orosur Mining Inc.
Orosur Mining Inc. 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 Company is listed in Canada (TSX: OMI) and London
(AIM: OMI).
Orosur Mining Inc.
Condensed Interim
Consolidated
Statements
of Financial Position
Thousands of United
States Dollars,
except where indicated
As at February 28,2017 ($) As at May 31,2016 ($)
Assets
Cash 2,400 4,320
Accounts receivable 1,939 1,770
and other assets
Inventories 12,189 12,069
Total current assets 16,528 18,159
Accounts receivable 550 550
and other assets
Property, plant 14,686 10,106
and equipment
and development costs
Exploration and 18,785 17,250
evaluation
costs
Deferred income 2,534 2,534
tax assets
Restricted cash 228 221
Total non-current 36,783 30,661
assets
Total assets 53,311 48,820
Liabilities and
Shareholders'
Equity
Trade payables 10,981 10,586
and other
accrued liabilities
Current portion of 161 253
long-term debt
Environmental 360 360
rehabilitation
provision
Total current 11,502 11,199
liabilities
Long-term debt - 99
Environmental 5,232 5,327
rehabilitation
provision
Total non-current 5,232 5,426
liabilities
Total liabilities 16,734 16,625
Capital stock 61,110 60,751
Contributed surplus 5,832 5,925
Deficit (29,433) (33,497)
Currency translation (932) (984)
reserve
Total shareholders' 36,577 32,195
equity
Total liabilities and 53,311 48,820
shareholders' equity
Orosur Mining Inc.
Condensed Interim Consolidated Statements of profit/(loss)
and Comprehensive profit/(loss)
Thousands of United States Dollars, except
for loss per share amounts
Three months ended Nine months ended
February 28 February 29 February 28 February 29
2017 ($) 2016 ($) 2017 ($) 2016 ($)
Sales 8,845 8,936 32,268 33,591
Cost of sales (8,376) (8,187) (27,186) (33,352)
Gross profit 469 749 5,082 239
Corporate and administrative expenses (457) (474) (1,688) (1,664)
Restructuring costs (144) (217) 144 (1,911)
Exploration expenses and (6) (3) (17) (14)
exploration written off
Obsolescence provision (1) - (101) -
Other income 471 2,722 1,328 3,467
Net finance cost (53) (68) (143) (205)
Derivative loss - - (412) -
Net foreign exchange gain/(loss) 78 378 (110) 560
(112) 2,338 (999) 233
Profit before income tax 357 3,087 4,083 472
Recovery (provision) for income taxes 6 (16) (19) 3
Net profit for the period 363 3,071 4,064 475
Other comprehensive profit/(loss)
Cumulative translation adjustment 109 (144) 52 (951)
Total comprehensive profit/(loss) 472 2,927 4,116 (476)
for the period
Profit per common share:
Basic 0.00 0.03 0.04 0.00
Diluted 0.00 0.03 0.04 0.00
Orosur Mining Inc.
Condensed Interim Consolidated
Statements of Cash Flows
Thousands of United States Dollars,
except where indicated
Nine months ended
February 28 February 29
2017 ($) 2016 ($)
Net inflow/(outflow) of cash related
to the followingactivities
Cash flow from operating activities
Net profit for the period 4,064 475
Adjustments to reconcile net income to net
cash providedfrom operating activities:
Depreciation 4,208 5,006
Exploration and evaluation 17 14
expenses written off
Obsolescence provision 101 -
Fair value of derivatives 181 -
Accretion of asset retirement obligation 57 57
Stock based compensation 49 28
Gain on sale of property, (187) (15)
plant and equipment
Other 213 337
Subtotal 8,703 5,902
Changes in working capital
Accounts receivable and other assets (259) (2,325)
Inventories (220) 3,137
Trade payables and other 395 (4,142)
accrued liabilities
Net cash generated from 8,619 2,572
operating activities
Cash flow from financing activities
Loan payments (191) (1,066)
Proceeds on sale of common - 710
shares of Anillo SPA
Net cash used in financing activities (191) (356)
Cash flow from investing activities
Purchase of property, plant and equipment (8,829) (2,638)
and development costs
Environmental tasks (152) (198)
Proceeds from the sale of property, 240 33
plant and equipment
Exploration and evaluation (1,607) (2,239)
expenditure assets
Net cash used in investing activities (10,348) (5,042)
Decrease in cash (1,920) (2,826)
Cash at the beginning of period 4,320 4,787
Cash at the end of period 2,400 1,961
Orosur Mining Inc.
Condensed Interim Consolidated Statements
of Changes in Shareholders' Equity
Thousands of United States Dollars,
except where indicated
Nine months ended
February 28 February 29
2017 ($) 2016 ($)
Capital stock
Balance at beginning of period 60,751 60,544
Termination consideration - 195
Exercise of stock options 326 -
Grant of shares 33 -
Balance at end of period 61,110 60,739
Broker Warrants
Balance at beginning of period - 62
Balance at end of period - 62
Contributed surplus
Balance at beginning of period 5,925 5,824
Stock based compensation 90 28
recognized
Exercise of stock options (183) -
Balance at end of period 5,832 5,852
Deficit
Balance at beginning of period (33,497) (32,287)
Net profit for the period 4,064 475
Balance at end of period (29,433) (31,812)
Currency translation reserve (932) (1,208)
Shareholders' equity 36,577 33,633
at end of period
Orosur Mining Inc.Ignacio Salazar, +1 (778) 373-0100Chief
Executive Officerinfo@orosur.caorCantor Fitzgerald EuropeDavid
Porter / Craig Francis / Philip DaviesTel: +44 (0) 20 7894 7000FTI
ConsultingBen Brewerton / Oliver Winters / Sara Powell / Emerson
ClarkeTel: +44 (0) 20 3727 1000
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