Last checked at 6 Mar 2012 07:00
Orosur Mining Inc Announces Grant of Permits to fully Exploit Ore from its Underground Project, Arenal Deeps
MONTEVIDEO, Uruguay 06 March, 2012. Orosur Mining Inc. ('OMI' or 'the Company') (TSX-V: OMI) (AIM: OMI), a South American-focused gold producer and explorer, announces that the mining permits have been granted on March 1 for exploitation of ore from the Arenal Deeps project.
Highlights
Mining Permit was granted on March 1 to allow ore exploitation from all levels of the Arenal Deeps Project. A permit to commence development of the mine had already been granted in 2011, so the Arenal Deeps mine is now fully permitted to operate. This permit to mine on all levels was received one month later than anticipated by Orosur in its second quarter report. All of the mining equipment and personnel necessary to ramp up stope production to its designed level are currently on site. Production levels are ramping up and are expected to reach design capacity in the fourth quarter of fiscal 2012. Production for the quarter was 13,668 ounces of gold. The delay in receiving the full production permit, a decision to develop on a 5 x 5 meter basis rather than 8 x 5 meter basis and a planned reduction in the rate of stope advance due to the need to complete additional infill drilling will result in approximately 6,500 ounces less production than budgeted in the financial year to 31 May 2012. Mining of open pit material will be accelerated and planned mill throughput increased to compensate for this shortfall. As a result a revised target range of 55,000 ounces to 57,500 ounces of production has been established for the 2012 financial year. This represents a reduction of 4%. As a consequence of the need to incur additional cost to accelerate open pit mining and increase mill throughput, target cash costs per ounce have increased to a range of US$930 to US$950 per ounce. The second tailings storage facility at Orosur's San Gregorio Operation is substantially completed and awaiting the final permit from DINAMA (the environmental agency in Uruguay) to start operating. This permit is now expected to be received in early Q2 2012. Operations will run unaffected as there is capacity in the first tailings storage for two to three more months.David Fowler, CEO of the Company commented: "Permitting and the ramp up in stope production at Arenal Deeps has taken longer than anticipated which has affected production and operating cost per ounce for the 2012 financial year. While marginally lower production and higher cash costs for this year are disappointing, the full permitting of the first mechanized underground mine in Uruguay, the completion of the new tailings dam facility which will ultimately provide capacity for 7+ years of mine life and the successful development of the Arenal Deeps mine are all critical milestones for the Company that have been achieved. With major capital expenditure commitments completed, Orosur will now focus on ramping up production and reducing cash costs.
Permitting and Production Background
The Company was granted a permit by the Uruguayan mines department DINAMIGE in March 2011 to start development of approximately 2 kilometers of decline and 8 kilometers of lateral development and stope preparation. Ore mining is currently being performed by Orosur and is expected to proceed concurrently with development. Since March 2011, approximately 2,800 meters of development have been completed by the development contractor and total development is estimated to be achieved over a 30 month period to Q3 2014. Orosur's current level of development enables the Company to start stoping ore on 3 different levels simultaneously, following the granting of the final permit from DINAMIGE on 1 March 2012.
Due to the need to commence development before final detailed infill drilling could be completed on the upper levels of the mine, ore development on the first three levels was completed on a 5 x 5 meter basis rather than 5 x 8 meters as contemplated in the feasibility study. This has resulted in lower tonnes from ore development and has required additional long hole drilling in drive walls to define the final stope dimensions, slowing the rate of stoping advance. The additional tonnes are now planned to be mined as part of stope production.
Diamond infill drilling on 12 meter centers is now catching up to ore development and no further delays are expected on stope definition. With the opportunity to operate on more faces following the granting of the full permit stope, production is ramping up and is expected to reach design capacity during the fourth quarter. Overall tonnes and grade appear to be in line with the resource model and the company is adding development and stopes in a number of areas to target additional ore not originally included in the mine plan.
The delay in receiving the full production permit, the decision to develop on a 5 x 5 meter basis rather than 8 x 5 meter basis and a planned reduction in the rate of stope advance due to the need to complete additional infill drilling, will result in approximately 6,500 ounces less production than budgeted in the financial year to 31 May 2012. To compensate for this shortfall open pit mining has been accelerated and throughput increased to reduce the shortfall to approximately 2,500 ounces. Production is now forecast to total between 55,500 and 57,500 oz for the fiscal year ending on May 31, 2012.
Cash Cost Increase
Cash cost per ounce for the 2012 financial year is now forecast to be US$930 to US$950 per ounce. This increase compared to the previous guidance of $US 810 per ounce predominately relates to lower than expected production during the 2012 financial year at Arenal Deeps and the decision to mine additional open pit ore at a lower grade and increase throughput from low grade stockpile to make up for the shortfall in production at Arenal Deeps. It should be noted that the majority of the increase in costs this year results from acceleration on mining costs from future years into the current year.
Tailings Storage Facility
A permit has been granted for the company to build its second tailings storage facility in May 2011. Construction of the first phase of this facility is now substantially finished and can be made operational imminently. Significant rainfall over the past two months has delayed completion. The company is waiting for the final operating license to be granted by the government so it can begin using the new tailings facility. The existing facility is being progressively closed down. DINAMA has already made a final inspection on the new tailings dam construction site and is producing the final report that will culminate with the granting of the operating license.
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.
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).
| For further information, please contact: |
| Orosur Mining Inc |
| David Fowler, CEO + 598 2601 6354 |
| Ignacio Salazar, CFO + 598 2601 6354; info@orosur.ca |
| Canaccord Genuity Limited (Nominated Adviser & Broker) |
| +44 (0) 20 7050 6500 |
| Rob Collins |
| Bhavesh Patel |
| Blythe Weigh Communications (Public Relations and Investor Relations) |
| Tim Blythe: +44 (0) 7816 924626 |
| Matthew Neal: +44 (0) 7917 800011 |
Copyright Business Wire 2012