LONDON (Alliance News) - Orosur Mining Inc Thursday said its pretax loss widened in the first quarter of the financial year due to lower gold production and lower prices as it focuses on bringing down its costs to return its operations to profit.
The South-American gold miner reported a wider pretax loss of USD1.7 million in the first quarter ended August 31, from the USD710,000 loss a year earlier after revenue dropped to USD14.5 million from USD16.5 million.
Although revenue experienced a rise, its operations became unprofitable as it made a gross loss of USD550,000 in the quarter, compared to a USD52,000 gross profit a year ago. Compounding that was USD1.1 million of restructuring costs that were not present a year earlier.
Orosur produced 12,471 ounces of gold in the quarter, down from 13,684 ounces a year ago. Its cash costs rose year-on-year but its all-in-sustaining cash cost dropped to USD1,166 per ounce from USD1,182.
However, those cost savings were not enough to offset falling gold prices, which averaged USD1,147 in the period compared to USD1,302 per ounce a year ago, showing how costs outstripped prices in the period that led to the gross loss.
Gold was trading at around USD1,184 per ounce on Thursday morning.
Cashflow from operations more than halved in the quarter to USD1.4 million from USD3.9 million.
Back in August, Orosur launched a strategic plan to try and reduce costs and improve efficiencies at its operations amid falling gold prices. That will lead to capital expenditure being "significantly down" from last year and since the start of the financial year in June, Orosur has reduced its workforce by 40%.
The main aim of the plan however, is to get its all-in-sustaining cash cost, currently sitting at USD1,166 per ounce, down to below USD1,000 per ounce.
At the end of August, its cash balance had fell to USD4.6 million from USD4.8 million at the end of May, but debt was down to USD1.1 million from USD1.5 million, leaving it with net cash of USD3.5 million, which is up from USD3.3 million at the end of May.
Orosur shares were up 1.7% to 5.85 pence per share on Thursday morning.
By Joshua Warner; joshuawarner@alliancenews.com; @JoshAlliance
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Orosur Mining (OMI)