Orosur Mining reports on transitional quarter

(ShareCast News) - South America-focused gold producer, developer and explorer Orosur Mining posted its first half and second quarter results through November 2016 on Monday, updating the market at the same time of its exploration and development activities in Uruguay.The AIM-traded company said its quarterly cash operating costs were $914per ounce, in line with expectations although higher than the $858 for the same period in the prior year.Its guidance for the 2017 financial year remained $800 to $900 per ounce.Additional development capital expenditure related to the construction of the SGW UG mine in Uruguay resulted in all-in sustaining costs for the quarter of $1,345 per ounce, up from $1,095.The transition from Arenal UG to the new SGW UG mine led to an increase in capital expenditure to $3.8m, from $0.9m, though cash generated from operations also increased in to $2.2M from $0.9M.Orosur had a total cash balance at period end of $5.4m, increasing from $5m at the end of the first quarter and $4.3m at the end of the 2016 financial year.Second quarter net profit after tax reached $0.9m, swinging from a loss of $0.9M.The average gold price for the quarter was $1,252 per ounce, up from $1,100.On the operational front, the San Gregorio West Underground mine commenced full production from its maiden stope on November 24, 2016, with Orosur saying the project was completed on budget and on schedule following a safe and efficient transition of equipment and staff from Arenal.Construction included more than 883 metres of horizontal development and approximately 663 metres of infill diamond drilling from 13 underground holes, comprising the bulk of the zones to be mined within the existing FY17 SGW mine plan.An additional 90,000 tonnes at 1.4 g/t Au not previously in the mine plan were produced at Arenal UG mine prior to its planned closure at the end of Q2 17, deferring higher grade production from SGW UG.Production for the quarter of 6,852 oz was, as previously guided, affected by the transition from Arenal UG to the new SGW UG mine, Orosur's board said.Looking ahead, Orosur explained that exploration drilling in and around the San Gregorio UG area had yielded positive results, successfully intersecting gold mineralisation in every hole, which was expected to significantly enhance mine economics and increase reserves and resources in the short and medium term, with further drilling underway.During the second half, the company said it plans to accelerate exploration in open pit targets around the San Gregorio plant after receiving several permits and to drill seven reverse circulation and diamond drilled holes of 1,600 metres in the Arenal-SG corridor to test the occurrence of what could be a relatively large deposit.In Colombia, the company is finalising a geological model of its high grade Anzá gold project to determine the exploratory potential with the assistance of Mine Development Associates of Reno, Nevada.The results of that work are expected to be announced shortly."Operations remain healthy and profitable, with $7m of cash generated in the first half of our fiscal 2017," said Orosur CEO Ignacio Salazar."The successful transition to San Gregorio UG as the company's primary source of ore feed to the plant in Uruguay was a significant achievement for Orosur."The SGW UG mine successfully started production from its first stope on November 24 on time and within budget."Salazar said the transition represented a significant technical and operational achievement, and was financed entirely from operational cash flow helped by the efficient transfer of equipment and staff between the two underground mines."In parallel, more active and aggressive exploration work in Uruguay appears to have a good likelihood of enhancing the San Gregorio underground project and advancing the open pit projects around the plant."In Colombia, we are making good progress in the geological interpretation and modelling of our high grade Anzá gold project and expect to be updating the market shortly."