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LONDON (Alliance News) - Orosur Mining Inc Monday reported a drop in profit and revenue for the third quarter, as gold production dropped and it was was hit by falling gold prices, although it said it reduced its operating costs more than previously expected.
The South America-focused gold miner said that gold production for the quarter ended February 28 was 13,218 ounces, compared with 18,401 ounces a year earlier, while the average gold price received was USD1,254 an ounce, down from USD1,653.
Revenues for the quarter were USD16.7 million, down from USD30.0 million the prior year, and its pretax profit was USD84,000, down from USD3.4 million.
"In a challenging gold price environment and in the quarter we had already anticipated as the most challenging of the year, we are pleased to deliver this strong operational performance," said Chief Executive Officer Ignacio Salazar in a statement.
Back in January, the company raised its fiscal 2014 production outlook to between 55,000 and 60,000 ounces, from 50,000 to 55,000 previously, and revised down its operating cash cost guidance to USD800 to USD875 an ounce, from USD850 to USD925 an ounce.
Orosur Mining said Monday that it cut its cash operating costs in the quarter to USD818 an ounce, 18% lower than USD999 an ounce in the same quarter a year earlier. It said that in the year-to-date, average operating cash costs are USD776 an ounce, 29% lower than the prior year.
The company said that despite current gold prices, its net cash position has increased by USD6.1 million in the first nine months of the year, and it has a current cash balance of USD9.3 million, and total debt of USD6.5 million.
"We are devoting capital and key resources to extending the mine life, specifically at Arenal and Vaca Muerta, while also generating new projects to further add resources and reserves at San Gregorio," Salazar added.
The gold miner said the successful startup of the new Vaca Muerta open pit mine was at a lower costs than expected due to favourable ground conditions.
It also said that underground exploration drilling at Arenal was successful during the quarter, targeting three different zones. It said that drilling is expected to continue during the fourth quarter.
Orosur said it plans to mine a higher proportion of the ore from open pits like Vaca Muerta in the second half of the year, and anticipates the percentage ratio split of open pit to Arenal underground mined ore to be around 30:70, compared with a ratio of 15:85 in the first half of the year.
"Based on the results achieved year-to-date and the consolidation of the changes introduced positively affecting the remainder of the year, the company maintains its enhanced outlook for fiscal 2014 with a production guidance of 55,000 to 60,000 ounces, at a reduced operating cash costs guidance of USD800 to USD875 ounces," it said.
The company said it invested USD1.8 million in capital projects and USD1.1 million in exploration for the quarter, compared with USD4.6 million and USD2.0 million, respectively, the prior year. It said the decrease in capital expenditure was as a result of less development of the now producing Arenal underground mine.
Orosur Mining shares were down 1.5% at 13.05 pence per share Monday morning.
By Rowena Harris-Doughty; rowenaharrisdoughty@alliancenews.com; @rharrisdoughty
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