Last checked at 21 Dec 2010 07:00
Orosur Mining Inc (TSX-V: OMI/AIM: OMI), a South American-focused gold producer and explorer announces the approval of the Arenal Deeps project by its Board of Directors and the execution of a Letter of Intent with Redpath Chilena Construcciones y Compañía Limitada ("Redpath"), a member of the Redpath Group of companies, for the mining development contract. A definitive agreement is expected to be signed early in 2011 with targeted commencement of development in February 2011, following equipment delivery and final environmental permitting.
The contract will involve the development of approximately 2 km's of decline, 8 km's of lateral development and stope preparation and is expected to be completed in approximately 30 months. Redpath has committed to training Uruguayan personnel to allow Orosur to develop a longer term capability to undertake owner operated mining.
Ore mining will be performed by Orosur and expected to start in the second half of calendar 2011 and to be carried out concurrently with development.
The Company submitted a request for an environmental permit for the Arenal Deeps project on April 30, 2010 and is in the process of obtaining the environmental approvals for the project from DINAMA, the relevant authority in Uruguay by early calendar 2011.
At current gold prices the project can be funded from cashflow from operations and modest debt levels. Orosur has received a number of preliminary debt funding offers for the project and expects to close financing arrange for $US5 million to $US10 million of debt funding in Q1 of calendar 2011.
Mobilisation of Redpath is targeted for February 2011, when development is planned to start. Gold production is anticipated in the second half of calendar 2011.
Commenting on the approval of Arenal Deeps and the appointment of contractors, David Fowler, CEO of Orosur said: "Arenal Deeps is an important step for the Company in our objective to extend the San Gregorio mine life in Uruguay while maintaining production levels at approximately 50,000 to 60,000 ounces of gold per annum and reducing cash costs. The initial investment in capital and skills will also allow additional underground reserves to be targeted at San Gregorio and Argentinita to further extend mine life."
"Arenal Deeps will be the first underground mine in Uruguay. Partnering with Redpath, a premium international underground mining contractor, is an important step in reducing project risk. Redpath will contribute an experienced team, safety systems and a focus on productivity that will allow time for Orosur to develop longer term underground mining capabilities. It will also allow Orosur to focus on optimizing the mine plan to extract the maximum benefit from the project".
An update of the financial projections for the project to reflect Redpath contractual costs, equipment tendering, and additional training costs of OMI staff will result in a net present value (NPV) of US$11.5 million compared to US$16.3 million in the Feasibility Study. Each 100 $/Oz above the $US1000/oz gold price assumed in the projections will increase the NPV by US$10.2 million. All these numbers are pre-tax. OMI will purchase the underground equipment improving results after tax as the Company will qualify for the tax benefits in Uruguay of an Investment Project. At the same time, this will also allow Orosur to eventually assume responsibility for development.
Qualified Person's Statement
The information presented in this press release has been reviewed by Mr. Randall Corbett, General Manager, San Gregorio, and is considered to be in compliance with NI 43-101 reporting guidelines. Mr. Corbett has a Bachelor of Engineering (Mining) Degree from Technical University of Nova Scotia (T.U.N.S.), is a Professional Engineer (P. Eng.) registered in the Province of Ontario and has more than 25 years operational, engineering and development experience.
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.
Neither TSX Venture Exchange nor its Regulation Services Provider (as that term is defined in the policies of the TSX Venture Exchange) accepts responsibility for the adequacy or accuracy of this release.
Notes to Editors
About Orosur Mining Inc.
Orosur Mining Inc. is a fully integrated gold producer and exploration company focused on identifying and developing gold projects in Latin 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 and Chile. The Company is quoted in Canada (TSX-Venture Exchange: OMI) and London (AIM: OMI).
Background
Arenal Deeps is the down plunge continuation of the Arenal deposit that was mined as an open pit between October 2004 and April 2009 and produced 388,000 ounces of gold at an average grade of 2.16 g/t Au using a 0.5 g/t Au cut off grade.
Feasibility Study Completed by AMEC in Aug 2010 envisages two underground mining methods, inclined room-and-pillar (IRP) and transverse stoping (TS), based on probable mineral reserves, (effective date 1 June 2010), as follows: Previously released Sept 7, 2010
| Method | Tonnes (kt) | Grade(g/t Au) | Contained Ounces (koz) | ||||
| IRP | 276 | 2.53 | 22 | ||||
| TS | 830 | 3.25 | 87 | ||||
| Total Probable Mineral Reserves in Stopes | 1,106 | 3.06 | 109 | ||||
| Development | 462 | 2.38 | 35 | ||||
| Total Probable Mineral Reserves | 1,568 | 2.87 | 145 |
Notes to accompany Mineral Reserve Table:
| 1. | Underground Mineral Reserves are confined to designed stopes; | |
| 2. | A cut-off grade of 1.3 g/t Au is used for the TS, and 1.5 g/t Au for the IRP; | |
| 3. | Mineral Reserves are reported using a gold price of USD850/oz; | |
| 4. | Tonnages and ounces are rounded to the nearest 1,000 tonnes, grades are rounded to two decimal places; | |
| 5. | Tonnage and grade measurements are in metric units, ounces are troy ounces |
Orosur Mining IncDavid Fowler, CEOIgnacio Salazar, CFO + 598 2601 6354; info@orosur.caorMatrix Corporate Capital LLP (Nominated Adviser & Broker)Louis Castro, +44 (0) 203 206 7209Tim Graham, +44 (0) 203 206 7206orBlythe Weigh Communications (Public Relations and Investor Relations)Tim Blythe: +44 (0) 7816 924626Ana Ribeiro: +44 (0) 7980 321505Matthew Neal: +44 (0) 7917 800011
Copyright Business Wire 2010