Orosur Mining Regulatory News (OMI)

15 Apr 2010 07:00

Orosur Mining Inc. ("OMI" or "the Company"), today announced results for the third fiscal 2010 quarter and the nine months ended February 28, 2010. All currency US dollars unless otherwise stated.

David Fowler, Chief Executive Officer commented: "Orosur has made significant progress during the quarter towards delivering against growth objectives. In January 2010, the Company completed the acquisition of all of the issued and outstanding common shares of Fortune Valley Resources. Following this acquisition, drilling commenced early in February 2010 at Pantanillo in Chile with all of the first 9 holes intersecting mineralization including PNN-10-04 and PNN-10-06 which intercepted 107 meters at 1.21 g/t Au from 150 meters and 118 meters at 0.79 g/t Au from 8 meters respectively. AMEC has been appointed to estimate an independent 43-101 compliant resource and complete a scoping study for Pantanillo during calendar 2010. Exploration work has also commenced at the Anillo project close to the El Peñon mine in northern Chile.

"In Uruguay, an updated resource estimate was completed for the Arenal Deeps deposit, adjacent to the current San Gregorio mine. In early March, OMI announced a new NI 43-101 compliant resource: at a 1.5 g/t cut-off, the new resource resulted in a measured and indicated resource of 2,143,000 tonnes @ 3.61 g/t Au for a total of 249,000 contained ounces of gold. The resource is open along strike to the east and down dip. AMEC has been appointed to complete a feasibility study and has already visited the San Gregorio Mine site to commence this work which is expected to be finished in the third calendar quarter of 2010. Development of this resource is expected to progressively reduce cash costs and extend mine life."

"Also in January, the Company announced that it had entered into an Option Agreement with Gladiator Resources Limited which provides Gladiator the right to earn up to an 80% interest in the iron ore, manganese ore and base metals potential in OMI's project area in the Isla Cristalina Belt in Uruguay. This agreement was made with a view to expediting development of these projects without further investment by OMI.

"Production for the quarter was 12,742 ounces in accordance with expectations and we remain on track to achieve our production target for the year ending 31 May 2010, of 55,000 to 57,500 ounces at $US 825 per ounce," concluded Mr. Fowler.

Results for the Third Quarter and Nine Months Ended February 28, 2010

Operating and Financial Summary

1Results are based on Canadian GAAP and expressed in US dollars

2Before non-cash working capital movements

Production and costs

Production, at 12,742 ounces of gold, was low compared to prior quarters but above expectations for the quarter due to higher plant throughput and improved recoveries from lower silver grades. Restricted access to a number of pits, experienced during the prior quarter, continued and the development of the new Castrillon pit was delayed due to continued heavy rainfall (680 mm) during the quarter. As a result, areas of lower grade ore and waste were mined and lower grade stockpiled ore was processed.

Cash costs per ounce of gold for the quarter were $US 984 compared to $US 547 for same quarter last year. The increase is primarily due to lower gold production, but costs are also affected by lower silver by-product credits and the elimination of the export refund.

For the nine months, production totalled 39,495 ounces at cash costs of $US 910 (2009 - 51,647 ounces at cash costs of $US 706). Higher grade ore in Ombu and Santa Teresa will be mined in the last quarter of fiscal 2010 with production of 55,000 to 57,500 ounces at a cash cost of $US 825 forecast for the full fiscal year.

Financial Performance

Total sales for the quarter were $US 13.2 million (M) compared to $US 17.1 M for the corresponding period of the previous year. The average gold price for the quarter increased to $US 1,110 per ounce from $US 822 in the third quarter of the previous year. For the quarter, the pre-tax loss increased to $US 2,3 M compared to $US 1,1 M in the prior period.

Cash flow from operations includes the result from the San Gregorio operation less the cost of general and administrative expenses, interest and income taxes. During the quarter, cash flow used in operations before working capital movements was $US 0.1 M compared to $US 5 M generated in the corresponding quarter of the previous year. The margin for the quarter of $US 126 per ounce between cash cost (at $US 984 per ounce) and sales price (at $US 1,110 per ounce) is not represented in cash flow from operations as sales volumes (affecting the cash from operations) for the quarter were lower than production volumes (taking into account to calculate cash costs) due to timing differences.

For the nine month period ended February 28, 2010, cash flow from operations before working capital movements was $US 1.7 M compared to $US 6.8 M for last year corresponding period of the prior year.

Exploration cash expenditure for the quarter was $US 2.2 M (including $ US 0.4 M in Fortune Valley acquisition costs) compared to $US 1.9 M for the corresponding quarter of the prior year. Exploration expenditure for the nine month period amounted to $US 5.6 M compared to $US 8.3 M in the corresponding period of the prior financial year, reflecting the reduction in the exploration budget.

The Company's cash position at the end of the quarter was $US 7.15 M. The cash balance was reduced during the Quarter by $US 2.2 M after investing $US 3.4 M in pre-production & exploration expenses. With higher production levels expected in the final quarter, cash on hand is expected to increase to $US 8 M by the end of the fiscal year.

Exploration and Development

Pantanillo

In October, 2010, Orosur optioned the Pantanillo property from Anglo American Norte S.A., a subsidiary of Anglo American PLC. The project is located in the Maricunga Belt of Chile, approximately 30 km north of the Maricunga property operated by Kinross Gold Inc.

During the quarter the company commenced a 7,500 meter drill program with approximately 30 drill holes planned to be completed by the end of April 2010. The program is designed to infill historical drilling performed by Anglo American (1992-2005) and Kinross Gold (2005-2008) on Pantanillo Norte, the most advanced target developed on the property to date. The drilling will target the oxide and mixed zones down to an approximate depth of 200 meters. AMEC has been contracted to complete an independent 43-101 compliant resource estimate and scoping study during calendar 2010. Work has commenced including field visits.

Results of drilling to date include

All reported results are from diamond drill holes the core from which was sampled at 2 meter intervals. Intercepts may contain a maximum of 6m (and up to 18 meters as is the case in hole PNN-10-06) of internal dilution by lower grade material. Results are pending for eight RC holes including PNN-10-07 and three other diamond holes. Drill holes PNN-10-01, PNN-10-03 and PNN-10-04 were all terminated in mineralization. Results received to date confirm historical intercepts and show continuity of mineralization between historic wide spaced drilling.

Arenal Deeps

In March, 2010, OMI announced completion of the updated Arenal Deeps resource estimate. At a 1.5 g/t cut-off, the new resource resulted in an increase in measured and indicated ounces and grade: 2,143,000 tonnes @ 3.61 g/t Au for a total of 249,000 ounces compared to the previous estimate of 3,162,000 tonnes @ 2.21 g/t Au for 224,000 oz. The resource was modeled and estimated by Mine Development Associates and is NI 43-101 compliant. A summary table is presented below. The 1.5 g/t Au cutoff is highlighted as the current anticipated economic cutoff based on a prefeasibility study produced by Golders & Associates dated 24 September 2009.

As announced on 25 February 2010, AMEC was appointed to complete a feasibility study and has already visited the San Gregorio Mine site to commence this work which is expected to be completed in the third calendar quarter of 2010.

Other Uruguay Exploration

Some 2,360 meters of reverse circulation drilling have been completed in the footwall of the Santa Teresa Pit. This drilling was undertaken following encouragement from the positive reconciliation of ore mined during the 2010 fiscal year to the resource modeled and the identification of new structures from in-pit mapping. Best results from this drilling include:

These drill results will be interpreted and modeled during the fourth quarter with the objective of completing a further cutback of the Santa Teresa pit during fiscal 2011.

A drilling program commenced during the period designed to increase confidence in open pit resources and identify additional underground resources within and adjacent to the current San Gregorio Resource.

The program includes additional infill and extension drilling, re-logging of historic drill holes, and re-interpretation of the deposit geology. Mine Development Associates has been contracted to complete a resource update during Q1 of fiscal 2011. 7 Diamond and 18 RC drill holes have been completed to date for 4,920m. Intercepts from these drill holes are presented in the following table;

Anillo

The Anillo property has been optioned from Codelco. The property is located north of the El Peñon mine in northern Chile. Detailed geological mapping and property evaluation got under way during the quarter.

Qualified Person's Statement

The information presented in this press release has been reviewed by Devin den Boer, PGeo, OMI Exploration Manager and Mr. Randall Corbett, general manager, San Gregorio, and is considered to be in compliance with NI 43-101 reporting guidelines. Mr. den Boer has a Bachelor of Science (Geological Sciences) Degree from the University of British Columbia, is a registered member of APEGBC and has over 13 years of international experience in minerals exploration. 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).

Financial Statements Follow

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