Orosur Mining Regulatory News (OMI)

9 Jan 2008 07:00

Uruguay Mineral Exploration Inc. (TSX VENTURE:UME) (LSE:UGY): Highlights -- Initial near mine deep drilling at San Gregorio and Arenal is positive with gold mineralization intercepted in three holes to date. The two best intercepts are 2.65m @ 3.23 g/t and 3.65m @ 4.19 g/t. -- Significant mineralization has been intercepted during first pass drilling at Nueva Helvecia on the Florida Belt in the south of Uruguay. Eight drill holes have been completed with most reporting anomalous gold mineralization. Two drill holes, NH-07-006 and 007, report intercepts of 1.79 and 2.45 g/t respectively over drill widths of 4 meters. -- Ore grade mineralization close to the surface has been intercepted at Zapucay including 6 meters at 4.25 g/t. -- 3D modelling of the Lascano geophysical anomalies completed during the quarter has helped define the next set of drill targets. Drilling has been deferred due to the lack of an appropriate contract drill rig and is now expected to commence in March 2008. -- Gold production of 26,317 ounces for the second quarter and half year production of 44,805 ounces is consistent with UME's full year production target of 95,000 ounces. -- Net profit after tax for the second quarter was $US 4,369,000 or $US 0.089 basic earnings per share with half year net profit of $US 5,593,000 or $US 0.114 basic earnings per share. -- An interim dividend of 2.0 Canadian cents per share will be paid in April 2008. \* TSummary of Results Q2 Q2 H1 H1 2007/08 2006/07 2007/08 2006/07----------------------------------------------------------------------Operating ResultsGold produced Ounces 26,317 20,059 44,805 39,234Average cash cost US$/oz 374 345 395 340Average price received US$/oz 761 565 719 566 Financial ResultsRevenue $US '000s 21,180 12,433 34,433 24,610Net income for the period $US '000s 4,369 1,751 5,593 4,318Cash flow from operations $US '000s 8,482 3,677 12,592 7,180Basic earnings per share $US 0.089 0.036 0.114 0.090Cash at the end of the period $US '000s 14,741 5,802 14,741 5,802Total debt at the end of the period $US '000s 2,320 2,319 2,320 2,319----------------------------------------------------------------------\* T David Fowler, Chief Executive Officer commented: "We are very pleased with theprogress achieved this quarter, both in meeting production objectives and inadvancing exploration projects. "We are particularly excited by the exploration results from our near mine deepdrilling program at San Gregorio and Arenal. The results of this programindicate that the structures hosting the San Gregorio and Arenal depositscontinue at depth with mineralization at target grades. Outside of the minedistrict significant mineralization has been encountered at the Nueva Helveciaproject in the south Florida Belt. We are continuing to work on these areas aswell as the other exploration opportunities that exist and look forward withanticipation to a year of intensive drilling to define new resources. "Whilst drilling on the Lascano anomaly has been delayed, we have used the timeto further define the anomalies, and to refine the drill targets for the nextround of drilling, which we hope will help confirm the potential for a largeiron ore copper gold or porphyry copper discovery. "Mine planning continues to evaluate the potential to convert additionalresources to reserves through underground mining, other processing alternativesor additional drilling and as a consequence of higher gold prices. Almost aquarter of the resource required to justify an underground operation at Arenalexists in the south east lens outside of the current open pit reserves. Testingfor extensions to this south east lens is of high priority, with additionaldrilling and mine planning work to commence on this resource in the second halfof 2008. "Second quarter production recovered as expected with 26,317 ounces produced andwe are on track to meet our 95,000 ounce target for the 2008 fiscal year." REVIEW FOR THE QUARTER AND HALF ENDED 30 NOVEMBER 2007 Production and Costs Production for the quarter of 26,317 ounces resulted in production of 44,805ounces for the half year. Plant feed for the quarter at 293,657 tonnes was 10percent lower than the previous quarter with the majority of the ore sourcedfrom Arenal. Additional Veta A material is expected to be mined over theremainder of the year to blend with Arenal ore to increase throughput. Oregrades improved with an average grade of 3 g/t for the quarter. The increase ingrade reflects the expansion of the Arenal pit below the Arroyo Corrales whereore reconciliation has returned to its normal high levels. To increase flexibility in meeting production targets over the next 18 months,the mine plan was changed during the quarter with mining production accelerated.This required the use of contract mining at higher unit costs but now allows theArenal pit to be developed in one phase to maximize productivity. As a result ofaccelerated mining, inventories of 181,000 tonnes of ore at 1.49 g/t were builtduring the quarter. A reconciliation of the cash cost per ounce for the current half of $US 393 perounce and the forecast at the beginning of the financial year of $US 345 perounce is shown below. \* T $US per ounce produced----------------------------------------------------------------------Forecast Cash costs for the six months ended November 2007 345----------------------------------------------------------------------Difference due to lower production for the half (assuming 95,000 for the full year) 21----------------------------------------------------------------------Cost changes 18----------------------------------------------------------------------Change in accounting treatment for deferred stripping 11----------------------------------------------------------------------Actual Cash costs for the six month ended November 2007 395----------------------------------------------------------------------\* T The use of additional contractor mining resources and a termination payment forcontract maintenance on mobile equipment increased cash operating costs for thequarter to $US 374 per ounce. Costs were also higher due to an increase inroyalties as a result of higher gold prices, higher fuel prices and anappreciation of the Uruguayan Peso against the $US. While contract mining costswill fall in the second half, the remaining factors are expected to bringoperating cost per ounce for the full year to the $US 360 to $US 380 per ouncerange. Expected production for the full year continues to be 95,000 ounces withconsistent production for each of the two remaining quarters of fiscal 2008. Financial Performance Our half year net profit after tax of $US 5.6 million rose 30 percent from thecomparative period of the prior financial year due to higher average salesprices and higher production. As UME's sales are unhedged, we receive the fullbenefit of higher prices, and with minimal debt to repay, our cash positionincreased by $US 3.1 million during the quarter to $US 14.7 million at the endof the quarter. This cash position was achieved after investing $US 4.8 million in explorationand $US 6.1 million in capital expenditure for the half, and paying a dividendof $US 1.8 million. With continued strong gold prices and lower capitalexpenditure expected for the second half, UME will pay an interim dividend of$CAD 2 cents per share on 11 April 2008 to shareholders on the register on 21March 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. The bid will be funded from existing cash resources. The objective of the buyback is to increase shareholder value by acquiringshares at a price that the Directors believe is significantly lower than theCompany's fair value. The purchase of shares represents an attractiveopportunity and a sensible use of a portion of available funds for the benefitof all shareholders. Exploration and Development Our strategy is to build the resources and reserves in order to maintain andthen increase gold production over the medium term. To achieve this, we have seta short term objective to develop a minimum of 50,000 ounces of high gradematerial above 3 g/t so that production can be maintained at current levels tothe end of the 2010 financial year. In-house modelling of the first quarter VetaSur drilling has upgraded the indicated resource to 645,000 tonnes at 2.2 g/tusing a 0.5 g/t cut (an increase of approximately 20,000 ounces in indicatedresources). High grade shallow results at Zapucay during the quarter are alsoexpected to add to resources. With Castrillon and other near mine targets stillto be drilled before the end of the year, we are well on the way to achievingour short term objective. For the medium term, our objective is to develop 2.5 million ounces of resourcesto build a longer term reserve profile for San Gregorio and to start anadditional operation away from the existing mine. Near the mine, we are excited by the initial results from our deep drillingprogram at San Gregorio and Arenal. These significant results at San Gregorioindicate that the structure continues at depth with mineralization at targetgrades. The first, recently completed down dip hole to the south east of theArenal deposit has intercepted the structure and mineralization, and indicatesthat the structure is open and has the potential of hosting a large mineralizedzone at depth. In the Zapucay district, we have made good progress with drilling commencing onthree of the six promising gold drill targets. We have confirmed thatmineralization continues along the structure corridor between Argentinita andZapucay at similar grades to the Argentinita deposit. Additional mineralizationhas been found around the Zapucay deposit with shallow intercepts of good grade.Whilst the initial drilling of a northeast structure at Papagayo has reporteddisappointing results, trench sampling of a northwest trending structure hasprovided better results. Drilling is continuing on all the targets with the aimof defining significant resources. On the Don Feliciano mobile belt, 12 drill holes were completed at Bragado withanomalous copper mineralization identified in most holes. The project will beevaluated in the third quarter to determine if additional exploration effort isjustified. The first exploration permit at Presidente Terra was granted inJanuary 2008 and trenching and drilling is expected to start in the near future. The focus during the second quarter on the Florida belt was Nueva Helvecia andthe Crucera/Casupa district. At Nueva Helvecia, eight drill holes have beencompleted with most reporting anomalous gold mineralization. Two holes haveintercepted significant mineralization. An additional six holes are planned tobe completed in this first pass campaign during the third quarter. Promisingstrike extensions to the Crucera structure were identified during the quarterand are expected to be drilled in the fourth quarter. Whilst drilling on the Lascano anomaly has been delayed, we have used the timeto further develop our 3D model of the central geophysical feature. This hashelped to further define the anomalies, and has been used to refine the drilltargets for the next round of drilling, which we hope will help confirm thepotential for a large IOCG or porphyry copper discovery. Mine planning continues to evaluate the potential to convert additionalresources to reserves through underground mining, other processing alternativesor additional drilling and as a consequence of higher gold prices. Almost onequarter of the resource required to justify an underground operation at Arenalexists in the south east lens outside of the current open pit reserves. Testingfor extensions to this south east lens is of high priority and is expected to becompleted in the second half with mine planning work also anticipated tocommence on this resource in the second half of fiscal 2008. A new resource and reserve position will be published in August 2008 concurrentwith the publication of the Annual Report. At that time we also intend toconsider the impact on our Reserves of using current higher gold prices tocalculate the Reserves previously announced as at June 1, 2007. Isla Cristalina Belt: San Gregorio Near Mine Exploration Program The San Gregorio system including Arenal, San Gregorio and Santa Teresa hasproduced more than 800,000 ounces to date from open pit mining with limiteddrilling below 200 meters vertical depth. A scoping study completed during thequarter has demonstrated the viability of mining deposits similar to SanGregorio and Arenal at depth. That study determined the size and grade ofresource required to ensure economic success, and drilling has been initiated toexplore for such resources. An initial program of 12 diamond holes, designed to test for depth extensionscommenced during the quarter with the first four holes completed. Mineralizationwas intercepted in two holes at San Gregorio and the hole at Arenal. At San Gregorio, three holes have been completed with significant mineralizationencountered in two holes including drill hole intercepts of 2.65 meters at 3.23g/t from 434 meters and 3.65 meters at 4.19 g/t from 656 meters (using a .5 g/tcut). These significant results indicate that the structure continues at depthwith mineralization at target grades. Drilling will continue to explore down dipand along strike in search for zones where the structure may flatten and open upto greater mineralized widths. The first, recently completed hole on the down dip extension of the Arenalorebody to the south east, has intercepted a structural zone of greater than 90meters in thickness with variable mineralization throughout. Assay resultsreport mineralization with individual one meter intercepts reporting greaterthan 2.5 g/t. The intercept indicates that the structure is open and has thepotential of hosting a large mineralized zone at depth. This first hole testedthe down dip extension of the mineralized body with similar results to thenearest historical drill hole, 100 meters up dip. The second hole will test theinterpreted down plunge extension to the higher grade core of the mineralizedbody, where we believe there is an improved opportunity for consistentmineralization. We are excited by the initial results of this program and both diamond drillrigs will focus on testing the down plunge extension of the Arenalmineralization in the third quarter. An ongoing program over the next 12 monthswill also test for orebodies at depth along the 7 km structural corridor betweenArenal and Santa Teresa. Following the completion of first pass drilling during the first quarter at VetaSur an in-house resource update was estimated. An increase in grade and tonneswas calculated to give a revised indicated resource of 645,000 tonnes at 2.2 g/t(an increase of approximately 20,000 ounces in indicated resources) and aninferred resource of 57,000 tonnes at 1.6 g/t using a 0.5 g/t cutoff. Mineplanning work will now commence on this resource. Additional drilling on the southern extension of Veta Sur some 2 kilometers awaywill be completed later in the financial year and drill plans have beendeveloped for Castrillon, Polvorin and other targets on existing mining leasesto define high grade resources before August 2008. Scoping studies to analyze the alternatives for increasing throughput at SanGregorio and to test alternative processing options commenced during 2007 tocomplement exploration activities. The second phase of this program to completemetallurgical testing for gravity, heap leach and establish work indices ondifferent deposits began during the quarter. Gravity test work will be performedby the Knelson Research and Technology Centre in Canada. Testing of work indicesand heap leach potential will be performed by Amdel in Australia. Results fromthis test work will be received over the next four months. Additional near mine exploration targets have been and continue to be developedand will be tested as work on other targets is completed. Isla Cristalina Belt: Zapucay District Exploration Program The Zapucay district is located 20 kilometers to the southeast of the SanGregorio Operation and so far is the second most important district in the IslaCristalina Belt. To date, gold resources have been defined at two main deposits;Argentinita and Zapucay, and our objective is to develop additional satellitedeposits that can be processed through the San Gregorio plant. During calendar2007 the Company developed six prospects within the Zapucay district to testduring the 2008 financial year. These include the structural corridor betweenZapucay and Argentinita, areas around the Zapucay deposit, Papagayo, Tito Lopez,Lavadero, and the Laureles prospects. First pass drilling commenced on three ofthese targets during the quarter with the following results: a) Initial drill results have confirmed that mineralization continues along thestructural corridor between Argentinita and Zapucay. To date intercepts havebeen thin and of similar grades to the Argentinita deposit, predominantly lessthan 2.0 g/t. b) Additional mineralization exists around the Zapucay deposit with shallowintercepts of good grade reported including 7 meters at 3.58 g/t and 6 meters of4.25 g/t from drill hole depths of 9 and 19 meters, respectively. Intercepts aredrill hole widths and not true thickness and use a .5 g/t cut. This program isexpected to be expanded during the third quarter. c) Initial drilling of a northeast structure at Papagayo has reporteddisappointing results. However, trench sampling of a northwest trendingstructure has provided better results including 12.7 meters at 3.16 g/t inCPTR021. This and other targets at Papagayo are expected to be tested in thethird quarter. Drilling will continue on all six targets during the third quarter with an aimof defining significant resources. Mine planning work is ongoing as new resultsare obtained. Isla Cristalina Belt: Regional Exploration Program A regional exploration program for the Isla Cristalina Belt commenced a year agowith the objective of testing known prospects in the eastern end of the IslaCristalina Belt and to develop new prospects from generative work away from thetraditional San Gregorio and Zapuchay districts. As a result of this program, a pipeline of new targets has been developed totest in the 2008 calendar year including Veta Rodrigo, Curtume, Vaca Muerta andVichadero. Drilling on these projects is expected to commence as access isnegotiated and preliminary work completed. Regional work is also generating new,early stage targets that are expected to be developed during calendar 2008. Southern Uruguay Exploration Program Over the past year UME's exploration programs in southern Uruguay have beenfocused on the Don Feliciano and Florida belts. Key projects developed includePresidente Terra, the Crucera/Casupa district, Nueva Helvecia and the IslaPatrulla area. Our objective is to develop resources of at least 500,000 ouncesto justify the initial capital investment of a stand alone operation. Drillingcommenced at Nueva Helvecia in the Florida Belt and Bragado in the Isla Patrullaarea of the Don Feliciano Belt during the quarter. Field work on PresidenteTerra and Crucera/Casupa during the quarter continues to improve the quality ofthe projects and we expect to drill these targets in the second half of fiscal2008. At Nueva Helvecia, eight drill holes have been completed with most reportinganomalous gold mineralization. Two holes; NH-07-006 and 007, have interceptedsignificant mineralization of 1.79 g/t and 2.45 g/t respectively over drill holewidths of 4 meters. An additional six holes are planned to be completed in thisfirst pass campaign during the third quarter. Twelve drill holes were completed at Bragado with anomalous coppermineralization identified in most holes. The best result included 10m @ 1.034 %.The project will be evaluated in the third quarter to determine if additionalexploration effort is justified. A ground magnetic survey at Crucera in 2007 identified a structure up to 5,000meters long. Drilling has confirmed that 800 meters of that structure aremineralized. Soil sampling work was completed along this structure during thequarter and has defined anomalous mineralization along strike for 1,000 metersto the northwest and 700 meters to the southeast. As land access negotiationsare concluded, drilling is proposed to test this structure and targets in theCasupa district in the fourth quarter. At Presidente Terra an IP geophysical survey was performed during the quarter tounderstand the potential for mineralization between anomalous zones in thesouth, where little outcrop occurs. The survey indicates that sulfidemineralization continues under cover for individual veins for an additional 500meters to a kilometer. The productive corridor is now defined by surfacegeochemistry and is 10 km long. Additional IP lines and soil sampling is beingperformed with trenching expected to commence in January and drilling inFebruary/March as exploration permits are received. Regional exploration programs continue in the Florida and Don Feliciano beltsand are identifying new prospects that are being advanced. These regionalprograms are expected to be expanded to the Arroyo Grande Belt and other areasduring the 2008 calendar year. Exploration Permits and Drilling Seven exploration permits were granted during the quarter, allowing explorationdrilling and trenching to progress on a number of the aforementioned projects.By the end of the quarter, 15 additional applications for exploration permitshad been submitted but had not been granted. UME continues to work with theUruguayan Mines Department to prioritise projects and obtain permits as rapidlyas possible. It is expected that additional staff will be employed by the MinesDepartment early in 2008 and that this should assist in the timely grant ofpermits. During the quarter, Patagonia Drilling was appointed to manage UME's fleet offive exploration drill rigs. Initial results have been positive and the focusover the remainder of the financial year will be to improve safety, andsignificantly increase the utilization and productivity of the drill fleet. Lascano Project Exploration Program During 2007 our understanding of the Lascano project advanced significantly,with mineralization and alteration encountered in initial drilling identifyingthe potential for a large IOCG or porphyry copper discovery. Following thecompletion of the initial five hole drill program in the first quarter,exploration work has concentrated on detailed logging of all drill holes, threedimensional interpretation of the geophysical features and selective sampling ofdrill core for geochemical, petrographic and geophysical properties. 3D modeling of the central geophysical feature down to 7 km depth has helped tofurther define the anomalies and has been used to refine drill targets for thenext round of drilling. This program will consist of four to five drill holes inand around hole two where anomalous copper mineralization was encountered and anadditional four to five drill holes in similar geophysical settings within thecentral anomaly. The objective of the drill program is to discover an IOCG orporphyry system. Drilling is expected to commence in March 2008 pending drillavailability. For more information on UME's exploration activities for the quarter, pleaserefer to the Exploration Report for the Quarter ended 30 November 2007. \* TURUGUAY MINERAL EXPLORATION INC.EXPLORATION REPORTSECOND QUARTER ENDED OF FISCAL 2008\* T This report provides details of exploration activities during the quarter ending30 November 2007. 1. Highlights Isla Cristalina Belt -- Near mine drill programs have been designed to test whether mineralization extends at a depth below 200 metres at the San Gregorio and Arenal deposits. Four holes have been completed with holes five and six in progress. Results have been encouraging as they could indicate that the deposit continues at depth at San Gregorio and to the south east of the existing Arenal pit. Mineralization has been encountered in three of the four holes with San Gregorio drill hole intercepts including 2.65m @ 3.23 g/t from 434 meters and 3.65m @ 4.19 g/t from 656 meters. An additional 12 hole program is planned to further test the down dip extensions of Arenal, San Gregoria and Santa Teresa. -- Infill drilling on Veta Sur has been completed and mine planning has commenced. An in-house resource estimate indicates a moderate increase in grade and tonnes. Follow up drilling is planned for March 2008 to chase the anomalies defined by the broad first pass program. Drilling commenced on the San Antonio prospect and intercepted an isolated but high grade intercept. Initial offset drilling failed to define a resource. -- In the Zapuchay district first pass drill programs have been completed along the structure between Zapachay and Argentinita, around Zapuchay and at Papagayo. Best results are the identification of additional shallow high grade mineralization at Zapuchay. Drill programs are planned at Tito Lopez and Lavadero for the coming months. Exploration permits are pending for the Tito Lopez area and should be received by May 2008. -- At Vichadero on the far eastern end of the Isla Cristalina belt a 14 square kilometer soil sampling program has been started in the anomalous basins defined by stream sediment results. The program will be accompanied by a detailed ground geophysical program. Southern Gold Exploration -- At Nueva Helvecia on the Florida Belt a drill program has commenced and results are encouraging. Eight drill holes have been completed with most reporting anomalous gold mineralization. Two holes, NH-07-006 and 007, have intercepted significant mineralization of 1.79 and 2.45 g/t respectively over drill hole widths of 4 meters. An additional six holes are planned to be completed in this first pass campaign. -- A first pass drill program has been completed at the Bragado prospect in the Don Feliciano Belt. Results are similar to those described from trench sampling with weak to no gold mineralization. Anomalous copper mineralization has been defined with individual intercepts reporting greater than 6%. A review of the data is underway and a decision on the property will be made within the next quarter. -- The Cruzera/Casupa district located at the eastern end of the Florida Belt continues to develop as more of the individual vein systems are explored mapped and defined. Additional ground geophysics and soil sampling is planned to cover the more prospective areas before a drill campaign scheduled for the fourth quarter. Exploration permits and land access agreements are pending. -- Soil sampling results at the Crucera project have returned anomalous Au results in soil along strike of the main mineralized vein. This soil survey has defined an additional 1 km of mineralization to the NW and 700 mts to the SE along the same structural trend. Rock chip samples of veins in the SE have confirmed anomalous gold mineralization in that sector. Lascano -- The Lascano exploration program concentrated on detail logging of all drill holes. Selective sampling was completed on core for geochemical, geophysical and petrographic studies. 3D modeling of the geophysics has produced a model which has been used to refine the drill hole locations for the second program. The drilling program of seven to ten thousand meters has been rescheduled to commence in the fourth quarter of 2008 subject to grant of . exploration permits and drill rig availability. Permits and Drilling -- A number of exploration tenement applications were granted this quarter. With a concerted effort by UME staff and the Uruguayan Department of Mining, progress is being made. Only two drill ready projects are delayed due to permit grants. The application for exploration permits is a continual process as new projects are advanced from prospecting to drilling and trenching. -- Patagonia Drill has been hired to manage and train the drill crews to increase drill rig productivity while improving safety. A changeover in management occurred in November 2007 with no adverse change to productivity. UME expects increases in drill rig productivity and utilization to occur in the coming quarters. 2. Gold Projects - Isla Cristalina Belt Minas Del Corrales District (Arenal and San Gregorio) Exploration during the quarter focused on: -- Targets in the San Gregorio footwall to add incremental resource. -- Depth extension to the San Gregorio and Arenal deposits looking for similar sized ore bodies. -- Vein targets at Veta Sur and San Antonio. An additional round of 2,848 meters of RC drilling was completed targetinguntested areas around the San Gregorio deposit. These targets included parallelstructures to the San Gregorio mineralization in the San Gregorio footwall andthe potential northwest extension of the San Gregorio deposit. Only weak ((lessthan) 1.0 g/t) mineralization was encountered over short intercept intervals. Noadditional drilling is planned for these targets. A continuation of mineralization down dip and along strike is typical of thesePrecambrian shear hosted gold systems. A drilling program to test the down dippotential of the system commenced in September. Three holes have been completedin San Gregorio and one in Arenal. Results are encouraging with all four holesintercepting the structure. Significant results from two of the holes in SanGregorio are reported below. \* TProspect Hole ID From Intercept Au---------------------------------------------------------------San Gregorio SGDD002 434.3 mts 2.65m @ 3.23 g/t---------------------------------------------------------------San Gregorio SGDD003 656.75 3.65m @ 4.19 g/t--------------------------------------------------------------- Including 0.45m @ 21.94 g/t---------------------------------------------------------------\* T (Drill hole intercepts, not true thickness, are composites using 0.5 g/t cut) These results are significant in that they indicate that the structure continuesat depth with mineralization of good grade. Drilling will continue to exploredown dip along strike for zones where the structure flattens and opens up togreater mineralized widths. The first, recently completed hole testing the area immediately south east ofthe Arenal pit has intercepted the structure and mineralization. This holeintercepted a structural zone of greater than 90 meters in thickness withvariable mineralization throughout. Assay results report mineralization withindividual one meter intercepts reporting (greater than) 2.5 g/t Au. Significantcomposite intercepts are reported below. \* TProspect Trench From Intercept Au-----------------------------------------------------Arenal ALDD075 312.65m 7.95m @ 1.11g/t-----------------------------------------------------Arenal ALDD075 333.50m 5.25m @ 0.95g/t-----------------------------------------------------Arenal ALDD075 386.10m 3.5m @ 0.83g/t-----------------------------------------------------Arenal ALDD075 393.45m 2.4m @ 1.92g/t-----------------------------------------------------\* T (Drill hole intercepts, not true thickness, are composites using 0.5 g/t cut) The intercept indicates that the structure is still open to the south east atdepth and has the potential of hosting a large mineralized zone. This first holetested the down dip extension of the mineralized body with similar results tothe nearest historical drill hole, 100 meters up dip. The second hole will testthe interpreted down plunge extension to the mineralized body where higher grademineralization is expected. A detailed study is planned for 2008 to better define the structural controls tomineralization in these ore bodies and throughout the district as a whole. Thestudy will be led by a consulting geologist with international experience inthese types of deposits. An update to the recently reported resource for Veta Sur was completed in-houseby UME personnel. Although not material, an increase in grade and tonnes wascalculated to give a revised indicated resource of 645,000 tonnes at 2.2 g/t andan inferred resource of 57,000 tonnes at 1.6 g/t at a cut off grade of 0.5 g/t.Mine planning work will now commence on this resource.. Veta Sur mineralization is known to continue under the San Gregorio waste dumpsto the southwest. Exploration drilling has taken place along the extension ofthe Veta Sur structure 400 meters to the southwest where it emerges from underthe waste dumps. Results have identified the structure and weak mineralization.The San Antonio prospect 1.1 kilometers further to the southwest has beendrilled and has returned an isolated but strongly mineralized intercept.Significant results from this drill campaign are presented below. \* TProspect Hole ID From Intercept Au---------------------------------------------------------San Antonio CHRC037 24 mts 1 mt @ 156.8 g/t---------------------------------------------------------San Antonio CHRC037 25 mts 5 mts @ 7.99 g/t---------------------------------------------------------\* T (Drill hole intercepts, not true thickness, are composites using 0.5 g/t cut) Offset drilling of this intercept has been completed and has not returnedsignificant grades. Drilling has also been completed at Cross Hill. Nosignificant results were reported. No further exploration is planned for the SanAntonio or Cross Hill prospects at this time. Exploration drilling will continuealong the Veta Sur structure exploring for similar deposits as Veta Sur 1 and 2. Zapucay District Exploration in the Zapuchay district during the quarter focused on: -- Testing the structure between the Argentinita and Zapuchay deposits -- Targets around the Zapuchay deposit to test the potential for additional resource -- Drilling initial targets at Papagayo. Drill programs were also designed to test the Lavadero, Tito Lopez, and Laurelesprospects in the coming quarter. All of these prospects are within sixkilometers of one another. Drill results have shown that the Argentinita mineralization does continue alongthe same structure to the Zapucay deposit. To date intercepts have been thin andof similar grades to the Argentinita deposit predominantly less than 2.0 g/t. \* TProspect Hole ID From Intercept AuArgentinita ARGDD020 29.9 m 1.1 m @ 3.10 g/t----------------------------------------------------------Argentinita ARGDD021 72.4 m 1.0 m @ 1,19 g/t----------------------------------------------------------Argentinita ARGDD021 75.5 m 2.1 m @ 1,22 g/t----------------------------------------------------------Argentinita ARGDD023 54.2 m 2.41 m @ 0,79 g/t----------------------------------------------------------Argentinita ARGDD024 45.0 m 2.6 m @ 2,57 g/t----------------------------------------------------------Argentinita ARGDD024 51.7 m 1.0 m @ 1,79 g/t----------------------------------------------------------Argentinita ARGDD026 97.1 m 1.6 m @ 1,19 g/t----------------------------------------------------------Argentinita ARGRC274 63.0 m 2.0 m @ 0.58 g/t----------------------------------------------------------Argentinita ARGRC276 104.0 m 1.0 m @ 1,59 g/t----------------------------------------------------------Argentinita ARGRC277 82.0 m 1.0 m @ 0,42 g/t----------------------------------------------------------Argentinita ARGRC278 18.0 m 1.0 m @ 3,29 g/t----------------------------------------------------------Argentinita ARGRC280 57.0 m 1.0 m @ 2,56 g/t----------------------------------------------------------\* T (Drill hole intercepts, not true thickness, are composites using 0.5 g/t cut) Drilling has confirmed shallow mineralization of good grades in and around theZapucay mine site. The most significant results are presented below. \* TProspect Hole ID From Intercept Au----------------------------------------------------------Zapucay ZPRC007 6 m 5 m @ 3.06 g/t----------------------------------------------------------Zapucay ZPRC010 9 m 7 m @ 3.58 g/t----------------------------------------------------------Zapucay ZPRC010 19 m 6 m @ 4.25 g/t----------------------------------------------------------Zapucay ZPRC012 15 m 1 m @ 8.16 g/t----------------------------------------------------------Zapucay ZPRC016 61 m 1 m @ 1.20 g/t----------------------------------------------------------Zapucay ZPRC017 50 m 3 m @ 1.30 g/t----------------------------------------------------------Zapucay ZPRC017 54 m 1 m @ 3.58 g/t----------------------------------------------------------Zapucay ZPRC017 58 m 1 m @ 1.28 g/t----------------------------------------------------------Zapucay ZPRC017 61 m 1 m @ 5.36 g/t----------------------------------------------------------\* T (Drill hole intercepts, not true thickness, are composites using 0.5 g/t cut) Additional drilling around the Zapucay deposit will be done to better define theresource. The Papagayo target is composed of a number of different targets includingnortheast and northwest trending structures. Exploration drilling commencedduring the quarter on the northeast shear structure. Ten RC holes and threediamond drill holes were completed. The structure has been intersected in alldrill holes with disappointing analytical results ((less than) 1 g/t Au). Trench sampling on the northwest trending structure during the quarter hasreturned significant results. The best results from this trench work arepresented below. \* TProspect Trench From Intercept Au-------------------------------------------------------------Cerro Papagayo CPTR021 6 m 12.7m @ 3.16 g/t-------------------------------------------------------------Cerro Papagayo CPTR022 18 m 11m @ 2.51 g/t-------------------------------------------------------------Cerro Papagayo CPTR022 35 m 3m @ 1.57 g/t-------------------------------------------------------------Cerro Papagayo CPTR024 23 m 5m @ 1.00 g/t-------------------------------------------------------------\* T (Trench intercepts, not true thickness, composites using 0.5 g/t cut) Drilling is planned to test the northwest structure as well as additionalanomalies to the north of the main structure. No further drilling is plannedalong the northeast structure at this time. Progress was made during the quarter in obtaining exploration permits for theZapuchay district including exploration permits for Papaguyo, Lavadero andLaurales. Exploration programs have begun with drill programs designed andinitiated. Additional permits are expected to be received in the coming quarterfor Tito Lopez and Lilo prospects. Western Isla Cristalina Belt The 20 km of the Isla Cristalina Belt west of the mine has been a focus ofregional exploration efforts over the last half a year. Results to date indicatethat the same prospective host rocks as exist in the San Gregorio area, occur inthis area. Recently received stream sediment results also indicate thatanomalous gold mineralization does occur in this sector. These results will befollowed up over the next two quarters. Exploration permits have been received for Veta Rodrigo and land access permitsare in the process of being negotiated. Drilling will commence once access isgranted. Access is expected to be granted in the second half of the year. The Castrillon prospect was reviewed during the quarter. Additional drilling isplanned for this target over the next two quarters to further define theresource and test additional exploration targets in the area. A resourceestimate will be completed by May 2008. Harley Hernandez and Nueva Australia are currently being reviewed. It isbelieved that these two prospects are the structural offset of the westernextension of the main San Gregorio structure. Due to this interpretation a deepexploration drill program is being developed to test for stronger mineralizationat depth. Eastern Half Isla Cristalina Belt Generative exploration work continues in the eastern half of the Isla CristalinaBelt. A soil sampling grid of 14 square kilometers has been placed over theanomalous basins in the Vichadero prospect. Sampling started in late Novemberwith results expected by March 2008. A ground magnetic survey will also becompleted across this grid to help further define expected drill targets.Drilling of identified targets is expected early in the 2009 financial year. Mapping and sampling have been completed over the Curtume prospect. Nosignificant anomalies were identified from this work. The project area is underreview and limited drilling is planned to test the historic prospect sitesbefore May 2008. Vaca Muerta prospect has been evaluated and an exploration drill program isbeing developed. Mapping and sampling of the prospect have been finished andresults are pending. Historic sampling and drilling indicate that a mineralizedstructure trending ESE (100 degrees), carries anomalous mineralization. Drillingis planned for March 2008. 3. Gold Projects - Don Feliciano and Florida Belts Presidente Terra Additional surface exploration work was performed during the quarter to betterdefine drill targets. A ground IP geophysical survey consisting of 15 lines of1.5 km has been completed. Results have helped to better define the mineralizedvein/structures as they dive under the pasture land between outcrops. AdditionalIP surveys are planned for the project and should be completed in January 2008.A comprehensive soil sampling grid is being planned for the property and shouldbe completed in February/March 2008. Trenching will commence once explorationpermits are approved and land owner agreements are completed. This is expectedto be in January 2008. The drilling program will be postponed to incorporateresults from these final surface exploration programs and is expected tocommence in February/ March 2008. The objective is to discover at least oneresource of 0.5 to 1.0 million ounces along the 10 km mineralized trend.Significant rock chip sampling results for the quarter are presented below. \* TProspect Sample ID Au_g/t Ag_g/t----------------------------------------------------------Presidente Terra EX10738 21.3 1.5----------------------------------------------------------Presidente Terra EX10739 0.64 13.6----------------------------------------------------------Presidente Terra EX10783 5.4 (less than) 0.3----------------------------------------------------------Presidente Terra EX10785 2.85 0.4----------------------------------------------------------\* T Bragado The Bragado prospect has been drill tested and results received. Significantcopper mineralization was encountered with little to no gold mineralization.Results from the 12 drill hole program are presented below. \* TProspect Hole ID From Intercept Cu %----------------------------------------------------------Bragado BR_07_001 60 m 6m @ .068 %----------------------------------------------------------Bragado BR_07_002 103 m 26m @ 0.074 %----------------------------------------------------------Bragado BR_07_002 94 m 9m @ 0.3 %----------------------------------------------------------Bragado BR_07_003 102 m 19m @ 0.089 %----------------------------------------------------------Bragado BR_07_003 43 m 4m @ 0.200 %----------------------------------------------------------Bragado BR_07_003 52 m 7m @ 0.104 %----------------------------------------------------------Bragado BR_07_004 118 m 5m @ 0.052 %----------------------------------------------------------Bragado BR_07_004 33 m 28m @ 0.084 %----------------------------------------------------------Bragado BR_07_004 61 m 25m @ 0.102 %----------------------------------------------------------Bragado BR_07_004 86 m 10m @ 1.034 %----------------------------------------------------------Bragado BR_07_005 56 m 2m @ 0.091 %----------------------------------------------------------Bragado BR_07_005 60 m 3m @ 0.249 %----------------------------------------------------------Bragado BR_07_007 20 m 16m @ 0.300 %----------------------------------------------------------Bragado BR_07_007 36 m 16m @ 0.076 %----------------------------------------------------------Bragado BR_07_007 70 m 4m @ 0.219 %----------------------------------------------------------Bragado BR_07_008 2 m 3m @ 0.097 %----------------------------------------------------------Bragado BR_07_008 31 m 3m @ 0.099 %----------------------------------------------------------Bragado BR_07_009 0 m 100m @ 0.080 %----------------------------------------------------------Bragado BR_07_009 109 m 4m @ 0.060 %----------------------------------------------------------Bragado BR_07_009 132 m 3m @ 0.056 %----------------------------------------------------------Bragado BR_07_010 104 m 14m @ 0.075 %----------------------------------------------------------Bragado BR_07_010 41 m 2m @ 0.130 %----------------------------------------------------------Bragado BR_07_011 50 m 3m @ 0.098 %----------------------------------------------------------\* T (Drill hole intercepts, not true thickness) Mineralization is hosted in veins which cut the folded meta-sediments,meta-volcanic and associated granitic host rock. Most veins are parallel to thefold axis and trend NNE as does the belt. Mineralization is also found locallyconcentrated in the nose of the folds. The prospect is predominately coppermineralization with minor gold. Decisions as to the future of the project arepending further review of the drill results. Crucera The Crucera vein deposit is one of a number of vein deposits that are currentlybeing explored and developed in the Crucera/Casupa district of the Florida Belt.The district lies in the eastern end of the Piedra Alta terrain and covers anarea of 20 by 5 kilometres. Resource drilling has been completed and an in-house resource has beenestimated. It is clear from this work that mineralization does continue down dipand along strike though the mineralized shear pinches and swells. To date nearly800 meters of strike length have been drill tested to a depth of 100 meters. During the second quarter five RC drill holes tested a parallel quartz veinstructure to the SSE of the main Crucera structure. No Significantmineralization was encountered. A soil sampling program was completed 1 km to the NW and 700 meters to the SEalong strike of the main mineralized vein. The survey defined extensions to theCrucera Vein in both directions. Rock chip sampling of veins SE along strike ofthe main Crucera vein contain sulfides and returned assay values of greater than1 g/t. Drill testing these anomalies is planned for February 2008. Significantrock chip results are presented below. \* TProspect Sample ID Au_g/t Ag_g/t--------------------------------------------------------Cruzera East Extension EX13532 0.53 0.6--------------------------------------------------------Cruzera East Extension EX13531 1.49 0.6--------------------------------------------------------Cruzera East Extension EX13530 4.62 10--------------------------------------------------------Cruzera East Extension EX13518 0.79 0.6--------------------------------------------------------Cruzera East Extension EX13517 1.64 2.5--------------------------------------------------------Cruzera East Extension EX13507 0.51 0.2--------------------------------------------------------Cruzera East Extension EX11169 0.96 1.8--------------------------------------------------------\* T Casupa The development of drill targets in the Casupa district has concentrated aroundthe Madre con Hijos vein. Mapping was completed on this vein and has movedoutward to define another three vein systems. Soil and geophysical surveys areplanned for the vein systems to better define their extent as they disappearbelow the pasture land. The district continues to return significant analyticalresults form rock chip sampling of the vein systems. Significant results arepresented below. \* TProspect Sample ID Au_g/t Ag_g/t--------------------------------------------------------Casupa EX13621 0.75 0.1--------------------------------------------------------Casupa EX13618 6.20 2.2--------------------------------------------------------Casupa EX13617 4.69 1.1--------------------------------------------------------Casupa EX13572 4.08 3.7--------------------------------------------------------Casupa EX13560 4.61 1.3--------------------------------------------------------Casupa EX13559 20.56 1.8--------------------------------------------------------Casupa EX13554 1.70 2.4--------------------------------------------------------Casupa EX11116 1.41 (less than) 0.3--------------------------------------------------------Casupa EX13663 0.57 0.9--------------------------------------------------------Casupa EX13658 0.50 0.1--------------------------------------------------------Casupa EX13656 0.51 0.7--------------------------------------------------------Casupa EX13642 8.13 7.3--------------------------------------------------------Casupa EX13641 0.75 0.6--------------------------------------------------------Casupa EX13639 4.74 1.8--------------------------------------------------------Casupa EX13633 3.39 1.9--------------------------------------------------------Casupa EX13632 2.26 1.7--------------------------------------------------------Casupa EX13631 5.74 10.4--------------------------------------------------------Casupa EX13587 1.58 (less than) 0.3--------------------------------------------------------Casupa EX13584 0.95 (less than) 0.3--------------------------------------------------------\* T Drilling of these vein systems is planned for the second half of the year onceall preparatory work is finished and exploration permits are granted. Nueva Helvecia UME is earning a 100% interest in the Nueva Helvecia property under an agreementwith Delcosur S.A. The property is located in southeastern Uruguay. Explorationactivity in the quarter consisted of detailed mapping, sampling and explorationdrilling. Drilling has encountered mineralization along a NW trending structureand within altered volcanic dikes. Significant results are reported from anumber of different drill holes and are presented below. \* TProspect Trench From Intercept Au----------------------------------------------------------------Nueva Helvecia NH_07_002 18 m 1m @ 0.67 g/t----------------------------------------------------------------Nueva Helvecia NH_07_003 68 m 4m @ 0.65 g/t----------------------------------------------------------------Nueva Helvecia NH_07_003 86 m 1m @ 0.88 g/t----------------------------------------------------------------Nueva Helvecia NH_07_003 89 m 1m @ 0.60 g/t----------------------------------------------------------------Nueva Helvecia NH_07_005 93 m 1m @ 0.57 g/t----------------------------------------------------------------Nueva Helvecia NH_07_006 52 m 4m @ 1.79 g/t----------------------------------------------------------------Nueva Helvecia NH_07_006 72 m 1m @ 0.47 g/t----------------------------------------------------------------Nueva Helvecia NH_07_006 106 m 1m @ 0.57 g/t----------------------------------------------------------------Nueva Helvecia NH_07_007 122 m 4m @ 2.45 g/t----------------------------------------------------------------\* T Intercepts are significant and indicate that mineralization does exist along thedefined trend. Drilling will continue over the next couple of months to helpfurther define the system and build resource. The first pass drill program willtest 1 km strike length of the structure. Ongoing mapping in the field will tryand define extension to this structure. 4. Other Projects Lascano Geophysical Anomaly The Lascano exploration target is composed of three large circular geophysicalfeatures which are each approximately 20 kilometers in diameter. The anomalieswere defined by airborne geophysical survey flown in 2005 by Bell Geophysical.The geophysical features are composed of both high and low gravity gradient andmagnetic anomalies which form the three separate circular patterns. Drilling todate has explored the central geophysical anomaly. Exploration work on the Lascano project this quarter has concentrated on detaillogging of all drill holes, three-dimensional interpretation of the geophysicalfeatures and selectively sampling the core for geochemical, petrographic andgeophysical features. The 3D modeling of the geophysical features has helped to further define theanomalies and has been used to refine drill targets for the next round ofdrilling. This program will consist of four to five drill holes in and aroundhole 2 and an additional four to five drill holes in similar geophysical settingwithin the central anomaly. Mineralization and alteration are suggestive of anIOCG or porphyry copper system. The objective of the drill program is todiscover one of these types of systems. Base metal Properties Four groups are presently interested in the base metal properties. Two companieshave signed the CA and are reviewing the data. One group has recently made aproperty visit to help make a final decision. GeoDiscovery, nickel exploration consultants, have worked up a program toadvance exploration on the Mal Abrigo/Cerros Negros and Carpenteria nickelproperties. Exploration work is scheduled to commence in early March 2008. Theprogram will be guided by Geodiscovery and supported by UME staff. The ultimategoal is to discover significant mineralization so the projects can be developedwith a partner. One group has signed the CA for the Nickel properties and isreviewing the data. Diamond Exploration Diamond exploration activities have been suspended until exploration permits aregranted and land access agreements finalised. A number of additional targetshave been identified for drill testing. It is expected that exploration permitswill be received in the third quarter of the fiscal year 2008. 5. Other Activities Drilling UME exploration presently runs a fleet of five UME owned exploration drill rigsProductivity and utilization of these machines has been below expectation.Patagonia Drill of Argentina, has been hired to train and manage the drill fleetas of the first week of November. The objective of this commercial arrangementis to increase production and improve safety and performance. Novemberproduction figures were similar to those for previous months though a completechange in management was implemented. Increases in productivity are expected inthe coming months as changes are implemented. Acquisition UME is presently evaluating opportunities across South America. The target is toacquire a property that has the potential to produce 500,000 ozs or more andthat can be put into production in two to three years. 2nd Quarter 2008 Earnings Conference Call The management of UME will hold a conference call to discuss the 2nd Quarterresults at 09:00 Canada time, 14:00 UK time on Wednesday 9th January. Theconference call can be accessed by dialing +1 416 849 5515 (Canada & U.S.) or+44 (0)20 7138 0843 (UK) and giving passcode 1855349# All participants will berequired 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 January2008. The replay is accessible by dialing +1 718 354 1112 (Canada & U.S.) or +44(0)20 7806 1972 (UK) and entering passcode 1855349#. 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. ENDS 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 Uruguay. UME is afully integrated mining company, possessing the skills necessary to explore anddevelop its discoveries. UME operates San Gregorio, the only producing gold minein Uruguay, and is the leading mineral exploration company in Uruguay with anexploration 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 (Prepared by management) (Thousands of United States Dollars, except where indicated) As at --------------- November May 30, 31, 2007 2007---------------------------------------------------------------------- $ $Assets Current assets Cash and cash equivalents 14,741 13,978 Accounts receivable 1,382 2,275 Inventories 12,335 8,484 Prepaid expenses and other 796 647 --------------- 29,254 25,384 Property plant and equipment 30,651 30,714Deferred exploration 19,074 16,316Future income tax assets 3,291 2,387Other non current assets 148 140 ---------------Total assets 82,418 74,941 ---------------------------------------------------------------------- Liabilities and Shareholders' Equity Current liabilities Accounts payable and accrued liabilities 9,696 6,238 Current portion of long term debt 2,202 1,231 --------------- 11,898 7,469 Long term tax payable 2,414 2,414Long term debt 118 2,154Asset retirement obligation 2,205 2,036 ---------------Total liabilities 16,635 14,073 --------------- Share capital 35,372 34,592Warrants 12 12Contributed surplus 3,615 3,297Accumulated comprehensive income (19) (19)Retained earnings 26,803 22,986 ---------------Total shareholders' equity 65,783 60,868 --------------- Total liabilities and shareholders' equity 82,418 74,941\* T \* T Uruguay Mineral Exploration Inc. Consolidated Statements of Income, Comprehensive Income and Retained Earnings (Prepared by management) (Thousands of United States Dollars, except where indicated) Three months ended Six months ended November 30 November 30 2007 2006 2007 2006---------------------------------------------------------------------- $ $ $ $Sales 21,180 12,433 34,433 24,610 Operating expenses 10,582 7,676 18,905 14,425 Amortization, depletion and accretion 3,615 1,909 6,027 3,924 ----------------------------------------Total operating expenses 14,197 9,585 24,932 18,349 Sub - Total 6,983 2,848 9,501 6,261 Other expenses / (gains) Stock based compensation expense 314 229 506 480 General and administrative expense 1,155 1,053 2,166 1,989 Fair value adjustment for derivatives - (1,070) - (2,317) Foreign exchange losses / (gains) (92) 95 (50) 158 Interest and financing fees / (income) (68) 23 (189) 83 Other expense / (income) (43) (87) (56) (150) ---------------------------------------- 1,266 243 2,377 243 Income before taxes 5,717 2,605 7,124 6,018 Current income taxes provision 2,002 628 2,436 1,814 Future income taxes provision / (recovery) (654) 226 (905) (114) ----------------------------------------Net and comprehensive income for the period 4,369 1,751 5,593 4,318 Retained earnings, beginning of period 24,210 13,342 22,986 10,775Dividends (1,776) (1,495) (1,776) (1,495) ----------------------------------------Retained earnings, end of period 26,803 13,598 26,803 13,598 ---------------------------------------------------------------------- Comprehensive IncomeBalance - beginning of period - - - -Unrealized gain and losses on translating financial statements of self-sustaining foreign operations - - (19) - ----------------------------------------Balance - end of period - - (19) - ---------------------------------------------------------------------- Earnings per common shareBasic $0.089 $0.036 $0.114 $0.090Diluted $0.087 $0.036 $0.112 $0.089Weighted average shares outstandingBasic 48,926,26848,081,93548,926,26848,026,766Diluted 49,947,26848,689,64549,920,26848,634,766\* T \* T Uruguay Mineral Exploration Inc. Consolidated Statements of Cash Flows (Prepared by management) (Thousands of United States Dollars, except where indicated) Three months Six months ended ended November 30 November 30 2007 2006 2007 2006---------------------------------------------------------------------- $ $ $ $Operating activities Net income for the period 4,369 1,751 5,593 4,318 Adjustments for: Amortization, depletion and accretion 3,615 1,909 6,027 3,924 Deferred stripping 782 (659) 1,235(1,013) Future income taxes (654) 1,588 (905) 1,814 Fair value adjustment of derivatives -(1,070) -(2,317) Stock based compensation expense 314 229 506 480 Other 56 (71) 136 (26) ----------------------------- 8,482 3,677 12,592 7,180 Net change in non-cash working capital balances 300 (5) 351 (283) ----------------------------- 8,782 3,672 12,943 6,897 ----------------------------- Financing activities Proceeds from the issue of share capital - 17 593 1,168 Payments of finance lease (49) (54) (95) (86) Dividend payment (1,776)(1,495) (1,776)(1,495) ----------------------------- (1,825)(1,532) (1,278) (413) Investing activities Net proceeds from sale of assets - - - 45 Purchase of property, plant and equipment and development costs (1,354)(3,022) (6,101)(6,421) Exploration expenditure (2,493)(1,861) (4,801)(3,237) ----------------------------- (3,847)(4,883)(10,902)(9,613) -----------------------------Increase/ (decrease) in cash and cash equivalents 3,110(2,743) 763(3,129) Cash and cash equivalents, beginning of period 11,631 8,545 13,978 8,931 -----------------------------Cash and cash equivalents, end of period 14,741 5,802 14,741 5,802\* T Copyright Business Wire 2008