Last checked at 29 Apr 2013 07:00
Orosur Mining Inc (TSX: OMI) (AIM: OMI), the South American focussed gold producer and explorer, announces that, following the recent steep decline in the gold price, the Company has commenced a review of its operations. Whilst the review is on-going, the Board has decided that it will not, for the moment, commence the pre-strip and development at San Gregorio Deeps. Significant pre-stripping costs would be required to be incurred for an initial period of around nine months before the pit starts to generate net positive cashflow over a six month period. The Board will review this decision once it has greater certainty about the gold price and the Company’s capital expenditure capacity.
In accordance with the Company´s mine plan, Santa Teresa, Argentinita Sur and Crucera will get to the end of their currently defined reserves during this quarter. In addition to Arenal Deeps, which will form the mainstay of Orosur's near-term production, the Company has reserves at Sobresaliente and Vaca Muerta which it plans to mine later in the year. The Company is also evaluating new alternative open pit ore sources to maximise margin and hence grade and ounces at lower unit cash cost.
Since stoping in Arenal Deeps started on 25th April (a few weeks later than we had planned) the Company expects to achieve a lower production for the year of approximately 63,000 ounces. For the 2013/2014 financial year, the deferral of San Gregorio Deeps (which was expected to contribute approximately 12,000 ounces) and a lower gold price assumption will lead to lower production and lower revenues. The Company is still assessing the likely impact of this change and will update the market in due course.
The Company recognises the importance of effectively managing its cash and resources in a more uncertain gold price environment and, as a result, is initiating cost cutting measures which are expected to include a significant reduction in the Company's workforce. Orosur has already initiated discussions with the relevant parties. As at 26th April 2013, the Company had a cash balance of US$3.6 million, debt of US$9.4 million, and access to US$6.5 million of undrawn and committed debt facilities.
COMMENT BY TONY SHEARER, CHAIRMAN
Tony Shearer said: “Like many gold producers, Orosur is reacting to reduced long term gold price expectations. We are focussing on lowering costs to ensure we maintain an operating margin. The decision not to proceed with the San Gregorio Deeps pre-stripping will be reviewed as and when we have greater certainty. Implementing the results of the operational review will be challenging, and we will keep the market informed of progress.”
For further information, please contact:Orosur Mining IncTony ShearerChairmantony@tonyshearer.comorIgnacio Salazar, + 562 2924 6800Interim Managing Directorisalazar@orosur.caorCanaccord Genuity Limited (Nominated Adviser & Joint Broker)Andrew Chubb / Ross Allister, +44 (0) 20 7523 8000
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: OMI) and London (AIM: OMI).
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.
Copyright Business Wire 2013