Orosur Mining Regulatory News (OMI)

9 Apr 2008 07:00

Uruguay Mineral Exploration Inc. (UME) (TSX VENTURE:UME) (LSE:UGY) todayreported net profit after tax of US$5.9 million for the third quarter endedFebruary 29, 2008, up 52% from the third quarter of the prior financial year, or$US 0.12 basic EPS. David Fowler, Chief Executive Officer commented: "During the quarter we produced25,150 ounces of gold at a cash cost of $US 342 per ounce. At the currentproduction rate, we expect to reach previously forecast levels of 95,000 ouncesfor this fiscal year." "Exploration this quarter focused on drilling near the mine, where results totest depth extensions of the San Gregorio and Arenal systems were disappointing.Although we encountered broad mineralized widths, the grade is too low to beeconomic for an underground operation." "Based on these results, we do not anticipate a significant restatement ofresources for the 2008 financial year. Reserves were last calculated at 1 June2007 at a gold price of about $US 550 per ounce and will be re-calculated laterthis year using higher gold prices. Our current mine plan for fiscal 2008/2009shows a base level of production of 80,000 ounces. We however expect to continueimproving this position through optimization and exploration work over the nextsix months and our target remains 95,000 ounces," Mr. Fowler continued. "Our experienced exploration team has established a systematic program aimed atdefining new resources and reserves. Our rate of progress in defining andtesting prospects has shown an important increase in the past year, as hasproductivity in exploration drilling which has in the last quarter increased byapproximately 50% over prior performance. During the fourth quarter of fiscal2007/2008 near mine exploration will focus on drilling Veta Rodrigo, Castrillon,additional targets at Santa Teresa and San Gregorio and infill drilling at depthin the Arenal plunge zone looking for higher grade mineralization. Away from themine, drilling will focus on Presidente Terra and Crucera/Casupa, either ofwhich we believe, based on current geological interpretation, has the potentialto host a stand alone economic resource. An 8,000 metre drill campaign will alsocommence at the Lascano anomaly in April. Furthermore, we are continuing toevaluate opportunities in selected South American countries where we can use thestrengths of our exploration and production teams to maximize shareholdervalue." "We will pay a dividend of 2.0 Canadian cents per share on 11th April 2008. InJuly, after consultation with our major shareholders, we will considerpriorities for our cash resources and what implications those priorities have onfuture dividend payments." closed Mr. Fowler. \* T Q3 Q3 YTD YTDSummary of Results 2007/08 2006/07 2007/08 2006/07----------------------------------------------------------------------Operating ResultsGold produced Ounces 25,150 27,921 69,955 67,155Average cash cost US$/oz 342 253 375 303Average price received US$/oz 888 638 777 593 Financial ResultsRevenue $US '000s 22,220 16,606 56,653 41,216Net income for the period $US '000s 5,942 3,899 11,535 8,217Cash flow from operations $US '000s 4,416 4,840 17,359 11,737Basic earnings per share $US 0.12 0.08 0.24 0.17 Cash at the end of the $US period '000s 14,942 7,796 14,942 7,796Total debt at the end of $US the period '000s 2,309 2,425 2,309 2,425----------------------------------------------------------------------Results are based on Canadian GAAP and expressed in U.S. dollars.\* T REVIEW FOR THE QUARTER AND NINE MONTHS ENDED 28 FEBRUARY 2008 Production and Costs Gold production for the quarter was 25,150 ounces with 69,331 ounces producedfor the nine months to February 2008. Plant feed for the quarter was 313,340tonnes with throughput increasing relative to the prior quarter as additionalsofter Veta material was available to blend with the Arenal ore. The averagegrade for the quarter was 2.71 g/t. Ore stocks continued to build during the quarter with a balance of 482,000tonnes at 1.18 g/t produced. At year end we anticipate having approximately700,000 tonnes of ore stockpiled at an average grade of 1.00 g/t. Cash costs for the quarter were $US 342 per ounce. A reconciliation of the cashcost per ounce of $US 375 for the nine month period ended February 2008 and theforecast at the beginning of the financial year of $US 345 per ounce is shownbelow. Cost changes reflect a devaluation of the Uruguayan peso against the $USby 15 percent over the nine-month period, increases in fuel prices and royaltiesamongst other factors. \* T $US per ounce produced----------------------------------------------------------------------Original forecast cash cost for the 2007/08 financial year 345----------------------------------------------------------------------Difference due to lower production for the 9 months (assuming 95,000 full year) 7----------------------------------------------------------------------Cost changes 26----------------------------------------------------------------------Change in accounting treatment for deferred stripping (3)----------------------------------------------------------------------Actual Cash costs for the nine months ended February 29 2008 375----------------------------------------------------------------------\* T The production forecast for the 2007/2008 financial year remains at 95,000ounces with a reforecast cash cost between $US 360 and $US 380 per ounce. Financial Performance Net profit after tax was $US 5.9 million for the quarter and $US 11.5 millionfor the nine months ended February 29, 2008. The average gold sales price forthe quarter was $US 888 per ounce against a cash cost of $US 342 per ounce. Cashflow generated by operations was $US 8.67 million before working capital items.During the quarter $US 2.8 million in cash flow was invested in working capitalto build up ore stocks. Capital expenditure for the quarter was $US 1.7 million invested in plant andequipment and $US 2.2 million in exploration. Investment in plant and equipmentincluded the construction of the tailings dam and pre strip of San GregorioEast. UME will pay an interim dividend of $CAD 2 cents per share on 11 April 2008 toshareholders on the register on 25 March 2008. On 11 December 2007 the Company announced its intention to make a Normal CourseIssuer Bid to buy back up to $C 2,000,000 of its common shares over a 12 monthperiod. During the quarter $271,000 was used to purchase 80,400 shares at anaverage price of $3.36. Additional purchases are expected to be made in thecoming quarter as the Company continues to believe exploration and developmentwill be successful and will ultimately be reflected in capital appreciation ofthe Company's shares. We will consider, in July, after consultation with our major shareholders,priorities for our cash resources and what implications this has on futuredividend payments. Exploration and Development During the quarter the focus of our near mine drilling was to test the depthextensions of the Arenal system. Although we are pleased that we encounteredbroad mineralized intercepts, we are disappointed that to date the grades aretoo low to be economic for an underground operation. We will complete anadditional three infill holes at Arenal to look for higher grade material in thedown plunge zone. A number of targets have also been drilled in the Zapucaydistrict. These programs are likely to define minor increases in resources inthe district. Based on these results, at present we do not anticipate a significant update inresources for the 2008 financial year end. We anticipate restating reserves forhigher gold prices and taking into consideration drilling performed during theyear. In July the Board will review results of reserve modeling including a base casefive year mine plan based on lower grade reserves and the economics of upgradingthe plant to offset lower grade. This plan currently anticipates a base level ofproduction for the 2008/9 financial year of approximately 80,000 ounces. Wecontinue to believe that we have the potential in near mine targets to continueimproving this position through optimization and exploration work over the nextsix months and our target remains 95,000 ounces. Away from the mine, Presidente Terra, Crucera/Casupa, and Vichadero aredeveloping well and we believe any one of them has the potential to host a standalone economic resource. During the remainder of this calendar year we will bedrilling all of these projects. Drilling will commence later this month at the Lascano anomaly on the first ofan anticipated 12 drill holes for 8,000 metres. Drilling will be performed byBoart Longyear. Land access agreements have been received and explorationpermits are expected to be granted in April for the first five holes. Additionalpermits and agreements are expected to be finalized as required for theremainder of the program. Our target is a copper porphyry or IronOxide-Copper-Gold (IOCG) system. Isla Cristalina Belt: San Gregorio Near Mine Exploration Program After scoping studies indicated that underground mining was likely to be viableat San Gregorio if similar grades to existing open pits were encountered atdepth, the Company commenced drilling to test the depth extensions of the SanGregorio system in the second quarter. This drilling has continued in the thirdquarter and is expected to be ongoing into the first quarter of fiscal 2009. A program of nine holes has now tested the depth extension to the Arenal depositto a vertical depth of approximately 450 metres over 500 metres strike. The bestresults to date have been encountered in the down plunge zone to the southeastof the main ore body. The three holes drilled in this area show the shear zoneto be 50 to 80 meters in width. The intercepts encountered have been 1 to 1.5g/t with narrower higher grade zones near the hanging wall and foot wall of theshear zone. In hole ALDD077 38.9 metres of mineralization was intercepted at1.23 g/t. The grade of these intercepts is unlikely to justify the developmentof an underground operation. Three additional holes will however be drilled inthis down plunge area to target higher grade mineralization. At San Gregorio two of the initial three holes encountered a steep structurewith 2.65 to 3.65 metres widths reporting 3.23 to 4.19 g/t, respectively. Theprogram has now continued along strike to Rieles. The initial two holes haveintercepted 5.9 metres of 2.39 g/t and 2.95 metres at 1.59 g/t. These interceptsshould help firm up the resource in this area of the Rieles deposit. During the quarter the Polvorin anomaly in the footwall of the San Gregoriostructure north east of the Santa Teresa deposit was drilled targeting a veindeposit. The best results were 3 metres at 19.61 g/t, including 1 meter of 55.56g/t from 116 metres and 5 metres of 5.8 g/t from 76 metres. Follow-up is nowplanned to define the extent of the mineralization. Drilling in the coming quarter will include Veta Rodrigo, Castrillon, andadditional targets in the Santa Teresa hanging wall and San Gregorio footwall.Refinement and identification of targets was completed in conjunction with theexternal structural geologist who worked at San Gregorio during the quarter.Exploration work continues in the district in areas which have seen littleexploration in the past, including the area between Arenal and Zapucay. During the quarter metallurgical testing for gravity, heap leach and toestablish work indices on different deposits began. Initial results from gravitytest work indicate that marginal improvements in recoveries of gold and silverand reduction in costs could be achieved by adding a gravity circuit to theexisting plant. Testing will be completed by the end of April 2008. Heap leachtest work has commenced and is 6 weeks into a 19 week program. Results from bothprograms are expected to be finalized in approximately three months' time. Near mine drilling during the first three quarters is not likely to produce asignificant restatement in resources for the 2008 financial year. Engineeringstudies are being performed to convert additional resource to reserve to reflectthe current positive price environment, drilling during the year and the resultsof metallurgical test work. The current mine plan shows production for the 2008/09 financial year of 80,000ounces. Optimization and exploration work is expected to continue to improvethis position. Isla Cristalina Belt: Zapucay District Exploration Program During calendar 2007 the Company developed six prospects within the Zapucaydistrict to test during the 2008 financial year. These include the structuralcorridor between Zapucay and Argentinita, areas around the Zapucay deposit,Papagayo, Tito Lopez, Lavadero, and the Laureles prospects. a) Drilling south of Zapucay on trend to Argentinita returned mostly narrowmineralization with the best intercepts of 13 metres at 1.6 g/t and 4 m at 1.75g/t. The structural corridor between Argentinita and Zapucay has now beendrilled except for a zone of 400 metres between Zapucay and Argentinita. Thiszone is bound by some of the better intercepts at Zapucay south and Argentinitanorth and will be drilled once land access issues are resolved. b) Drilling around the Zapucay deposit was completed to augment the remnantresource around the old mine site. An in house resource will be developed fromthis recent drilling and historic data. c) Drilling on Papagayo during the quarter failed to define significantmineralization. No further work is planned for this prospect. Drilling at Lavadero, southern Argentinita and Laureles, where permits have beengranted and land access agreements have been signed, has commenced in March andis expected to be completed this fiscal year. Drilling at Tito Lopez and a newprospect along strike from Tito Lopez at Zaballa is expected to commence onceexploration permits are granted. Isla Cristalina Belt: Regional Exploration Program The focus of regional work in the Isla Cristalina is now transitioning fromprospecting to focus on specific targets. These include Vichadero, Vaca Muerta,Curtume and Cerro Chato. Soil sampling and geophysics have been completed at Curtume and Vaca Muerta anddrill programs will be performed when exploration permits are received. Soilsampling and geophysics over a 14 km square area near Vichadero areapproximately 50 percent completed, and strongly mineralized rock chip sampleshave been identified during the collection of soil samples. Drill targets atVichadero are expected to be defined in the last quarter of 2008. Drilling willcommence soon after surface exploration results are evaluated and permits arereceived. The Cerro Chato target is planned to be developed over the comingquarters. Southern Uruguay Exploration Program At Presidente Terra additional trenching, soil sampling and IP surveys are beingcompleted before drilling commences in April. Drill targets at Crucera/Casupahave been defined and are awaiting exploration permits to allow furtherexploration and drilling to commence. While drilling at Nueva Helveciaencountered anomalous mineralization, current indications have not defined asignificant mineralized body. No further drilling for gold mineralization willbe performed on the Bragado property. Drill targets to extend Crucera and at Madre con Hijos have been developed andwe are awaiting access and permits to commence drilling and advanced explorationrespectively. This should occur in the last quarter of the financial year. Thedistrict continues to be developed. Regional mapping and prospecting areresulting in the discovery of new veins reporting anomalous gold values.Geophysics and soil sampling will be used to define drill targets on these newveins with drilling to follow when permits are obtained. Presidente Terra sits on a regional north-west shear structure within the DonFeliciano Belt. Anomalous mineralisation over 10 kilometres is found along acontact between granite and metasediments which is believed to be sheared.Mineralisation is also found in metasediments and in quartz veining within thegranites. Geophysical surveys, soil sampling and trenching on initial targetswere expanded and continued into March. Results of this work will be received inApril and will be used to refine drill programs that are now expected tocommence in the second half of April. Exploration permits and land access havebeen granted. At Nueva Helvecia the additional 6 holes drilled during the quarter weredisappointing with only one intercept of 3 metres at 1.2 g/t. The project is nowbeing reviewed prior to one final round of drilling later in the year. Regional exploration programs continue in the Florida, Dom Feliciano and ArroyoGrande belts and are identifying new prospects that are being advanced. Exploration Permits and Drilling Three exploration permits were granted between 1 January 2008 to 31 March 2008and 5 new permits were submitted during the same period. At the end of March 16,applications for exploration permits were pending. Exploration drill productivity improved during the quarter and is now close totarget levels. Lascano Project Exploration Program A contract has been signed for drilling at Lascano with an anticipated 8,000metres of diamond drilling, commencing in April. Land access agreements havebeen received and exploration permits are expected to be granted in April forthe first 5 holes. Exploration permits have been filed for 4 of the remainingseven holes and land access agreements are being negotiated. The objective ofthe drill program is to discover an Iron Oxide-Copper-Gold or porphyry coppersystem. For more information on UME's exploration activities for the quarter, pleaserefer to the Exploration Report for the Quarter ended February 29, 2008. Third Quarter 2008 Earnings Conference Call The management of UME will hold a conference call to discuss the 3rd Quarterresults at 11:30 Toronto time, 16:30 UK time on Wednesday 9th April. Theconference call can be accessed by dialing +1 514 315 1023 (Canada), +1 703 6219126 (US) or +44 (0)20 8609 0205 (UK) and giving passcode 636996#. Allparticipants will be required to register with the operator. A simultaneous webcast of the call will be available at www.uruguayminerals.com.You will need to have Windows Media Player installed on your computer and youwill also be required to complete a registration page in order to log on to thewebcast. A replay of the call will be available until midnight (UK time) on 16th April2008. The replay is accessible by dialing +1 866 676 5865 (Canada & U.S.) or +44(0)20 8609 0289 (UK) and entering passcode 211511#. Qualified Person's Statement The technical information presented in this press release has been reviewed andverified by Mr. John Sadek, Vice President Operations and a Mining Engineer, andMr. George Schroer Vice President Exploration and a Certified ProfessionalGeologist. Mr. Sadek and Mr. Schroer are the Qualified Persons for the purposesof the AIM Guidance Note on Mining, Oil and Gas Companies dated March 2006. Mr.Sadek has a Bachelor of Engineering (Mining) from the University of Sydney andis a member of the AusIMM and SME. He has over 20 years of internationalexperience in mining. Mr. Schroer has a Masters of Science in Geology fromColorado State University and is a member of SEG and AIPG. He has over 20 yearsof international experience in exploration. Forward Looking Statements All statements, other than statements of historical fact, contained orincorporated by reference in this news release, including any information as tothe future financial or operating performance of UME, constitute"forward-looking statements" within the meaning of certain securities laws,including the "safe harbour" provisions of the Securities Act (Ontario) and theUnited States Private Securities Litigation Reform Act of 1995 and are based onexpectations estimates and projections as of the date of this news release.There can be no assurance that such statements will prove to be accurate, suchstatements are subject to significant risks and uncertainties, and actualresults and future events could differ materially from those anticipated in suchstatements. Forward-looking statements include, without limitation success ofexploration activities; permitting time lines; the failure of plant; equipmentor processes to operate as anticipated; accidents; labour disputes; requirementsfor additional capital title disputes or claims and limitations on insurancecoverage. UME disclaims any intention or obligation to update or revise anyforward looking statements whether as a result of new information, future eventsand such forward-looking statements, except to the extent required by applicablelaw. The TSX Venture Exchange has not reviewed and does not accept responsibility forthe adequacy or accuracy of this news release. About Uruguay Mineral Exploration Inc. Uruguay Mineral Exploration Inc. (UME) is a gold production and explorationcompany that identifies and develops mineral opportunities in South America. UMEis a fully integrated mining company, possessing the skills necessary to exploreand develop its discoveries. UME operates San Gregorio, the only producing goldmine in Uruguay, and is the leading mineral exploration company in Uruguay withan exploration portfolio of gold, diamonds and base metal prospects, includingcopper, nickel, lead, and zinc. Uruguay Mineral Exploration Inc. is quoted in Canada (TSXV) and London (AIM) andRBC Capital Markets is its Nominated Adviser and Broker. More information can befound at www.uruguayminerals.com For further information, please contact \* TUruguay Mineral Exploration IncTony Shearer, Chairman: +44 20 7602-1570; tonyshearer@btinternet.comDavid Fowler, CEO: 598 2 6016354; urumin@ume.com.uy Investor/Media RelationsEmily Bruning, Shared Value Ltd: +44 (0) 20 7321 5027; ebruning@sharedvalue.net RBC Capital MarketsAndrew Smith: +44 (0) 20 7029 7882; andrew.smith@rbccm.comSarah Wharry: +44 (0) 20 7653 4667; sarah.wharry@rbccm.comMartin Eales: +44 (0) 20 7029 7881: martin.eales@rbccm.com\* T \* T Uruguay Mineral Exploration Inc. Consolidated Balance Sheets (Unaudited - Prepared by management) (Thousands of United States Dollars, except where indicated) As at ------------------------ February 28, May 31, 2008 2007---------------------------------------------------------------------- $ $Assets Current assets Cash and cash equivalents 14,942 13,978 Accounts receivable 1,134 2,275 Inventories 15,153 8,484 Prepaid expenses and other 1,385 647 ------------------------ 32,614 25,384 Property plant and equipment (Note 2) 28,589 30,714Deferred exploration (Note 3) 21,304 16,316Future income tax assets 4,505 2,387Other non current assets 152 140 ------------------------Total assets 87,164 74,941 ---------------------------------------------------------------------- Liabilities and Shareholders' Equity Current liabilities Accounts payable and accrued liabilities 8,600 6,238 Dividends payable 1,000 0 Current portion of long term debt (Note 4) 2,238 1,231 ------------------------ 11,838 7,469 Long term tax payable 2,414 2,414Long term debt (Note 4) 71 2,154Asset retirement obligation 2,121 2,036 ------------------------Total liabilities 16,444 14,073 ------------------------ Share capital (Note 5) 35,107 34,592Warrants (Note 5) 12 12Contributed surplus (Note 6) 3,875 3,297Accumulated comprehensive income (19) (19)Retained earnings 31,745 22,986 ------------------------Total shareholders' equity 70,720 60,868 ------------------------ Total liabilities and shareholders' equity 87,164 74,941 For notes, refer to the full financial statement available on the company's website.\* T \* T Uruguay Mineral Exploration Inc. Consolidated Statements of Income, Comprehensive Income and Retained Earnings (Unaudited - Prepared by management) (Thousands of United States Dollars, except where indicated) Three months ended Nine months ended February 29 February 29 2008 2007 2008 2007---------------------------------------------------------------------- $ $ $ $ Sales 22,220 16,606 56,653 41,216 Operating expenses 9,863 7,374 28,768 21,799 Amortization, depletion and accretion 2,977 2,331 9,004 6,255 -----------------------------------------------Total operating expenses 12,840 9,705 37,772 28,054 Sub - Total 9,380 6,901 18,881 13,162 Other expenses / (gains) Stock based compensation expense 264 278 770 758 General and administrative expense 1,069 1,229 3,235 3,218 Fair value adjustment for derivatives 0 0 0 (2,317) Foreign exchange losses / (gains) (4) 44 (54) 202 Interest and financing fees / (income) (121) (40) (310) (107) Other expense / (income) (24) 0 (80) 0 ----------------------------------------------- 1,184 1,511 3,561 1,754 Income before taxes 8,196 5,390 15,320 11,408 Current income taxes provision 3,467 2,028 5,903 1,914 Future income taxes provision / (recovery) (1,213) (537) (2,118) 1,277 -----------------------------------------------Net and comprehensive income for the period 5,942 3,899 11,535 8,217 Retained earnings, beginning of period 26,803 13,598 22,986 10,775Dividends (1,000) (840) (2,776) (2,335) -----------------------------------------------Retained earnings, end of period 31,745 16,657 31,745 16,657---------------------------------------------------------------------- Comprehensive IncomeBalance - beginning of period 0 0 0 0Unrealized gain and losses on translating financial statements of self-sustaining foreign operations (Note 1b) 0 0 (19) 0 ----------- ----------- ----------- -----------Balance - end of period 0 0 (19) 0---------------------------------------------------------------------- Earnings per common shareBasic (Note 9) 0.12 0.08 0.24 0.17Diluted (Note 9) 0.12 0.08 0.24 0.17 Weighted average shares outstandingBasic 48,882,801 48,451,768 48,911,779 48,168,433Diluted 48,904,758 48,451,768 48,929,474 48,168,433---------------------------------------------------------------------- For notes, refer to the full financial statement available on the company's website.\* T \* T Uruguay Mineral Exploration Inc. Consolidated Statements of Cashflows (Unaudited - Prepared by management) (Thousands of United States Dollars, except where indicated) Three months ended Nine months ended February 29 February 29 2008 2007 2008 2007---------------------------------------------------------------------- $ $ $ $Operating activities Net income for the period 5,942 3,899 11,535 8,217 Adjustments for: Amortization, depletion and accretion 2,977 2,331 9,004 6,255 Deferred stripping 619 (341) 1,854 (1,354) Future income taxes (1,213) (537) (2,118) 1,277 Fair value adjustment of derivatives 0 0 0 (2,317) Stock based compensation expense 264 278 770 758 Other 82 11 218 (15) ------------------------------------ 8,671 5,641 21,263 12,821 Net change in non-cash working capital balances (Note 8)) (4,255) (801) (3,904) (1,084) ------------------------------------ 4,416 4,840 17,359 11,737 ------------------------------------ Financing activities Proceeds from the issue of share capital 0 344 593 1,512 Share buy back (270) 0 (270) 0 Payments of finance lease net of drawdowns (46) 21 (141) (65) Dividend payment 0 0 (1,776) (1,495) ------------------------------------ (316) 365 (1,594) (48) Investing activities Net proceeds from sale of assets 0 0 0 45 Purchase of property, plant and equipment and development costs (1,669) (1,252) (7,770) (7,673) Exploration expenditure (2,230) (1,959) (7,031) (5,196) ------------------------------------ (3,899) (3,211) (14,801) (12,824) ------------------------------------Increase/ (decrease) in cash and cash equivalents 201 1,994 964 (1,135) Cash and cash equivalents, beginning of period 14,741 5,802 13,978 8,931 ------------------------------------Cash and cash equivalents, end of period 14,942 7,796 14,942 7,796 For notes, refer to the full financial statement available on the company's website.\* T Copyright Business Wire 2008