Orosur Mining Inc Announces Second Quarter Results

Orosur Mining Inc Announces Second Quarter Results

SANTIAGO, Chile--(BUSINESS WIRE)-- Orosur Mining Inc ('OMI' or the 'Company') (TSX: OMI) (AIM: OMI), the South American focused gold producer and explorer, today announces its results for the second quarter ending 30November 2012.

Further to the announcement of 7 December, the Company reiterates that production for the quarter was 13,970 ounces and Orosur remains on track to achieve its forecast production target of 63,000 to 68,000 ounces for the full year.

The Company reports that the development of the Arenal Deeps ramp and lateral development to enable production from transverse stopes are on track for completion during the quarter ending 28February 2013. Completion of the ramp and lateral development will enable the Company to access higher grade transverse stope ore at Arenal Deeps for the first time in the last quarter of the financial year ending 31 May 2013.

Operating and Financial Summary


Key Results Summary1


Three months ended


Six Months Ended

   2012   2011   2012   2011
Operating Results                    
Gold produced   Ounces   13,970   11,916   29,421   24,404
Cash cost2   $US/oz   1,215   1,007   1,151   975
Average price received   $US/oz   1,694   1,717   1,642   1,663
Financial Results                    
Revenue   $US '000s   24,168   20,985   50,502   42,011
Net income for the period after tax   $US '000s   1,210   2,565   3,501   6,977
Cash flow from operations3   $US '000s   3,485   4,651   8,523   10,223
Cash at the end of the period   $US '000s   3,745   17,054   3,745   17,054
Total debt at the end of the period   $US '000s   9,718   5,949   9,718   5,949

(1)Results are based on IFRS and expressed in US dollars

(2)Operating cash cost is total cost excluding royalties and capital tax on production assets

(3)Before non-cash working capital movements

Production for the quarter was 13,970 ounces. Despite ore production being slowed from all pits due to heavy rain during the quarter and the mining sequence being changed production and cash costs from Arenal Deeps, Sobresaliente, and Zapucay were all in line with expectations.

However, ore mined from the Crucera pit during the quarter was of a lower grade than planned, resulting in lower ounces produced and higher cash costs per ounce at that pit. The cash cost per ounce for Crucera has increased because, though we have produced approximately the same amount of ore at the same cost, the grade of the ore has been lower than expected and so we have produced fewer ounces, thus increasing the total cash cost per ounce for the quarter to $US 1,215 an ounce compared with a target of approximately $US 1,100.

The impact of the higher cash costs and lower production from Crucera, offset in part by higher gold prices than we had planned for, reduced our cash flow for the quarter by $US 2.0 million. As a result the Company's cash balance at the end of the quarter was $US 3.7 million.

CEO's Comment

David Fowler, Chief Executive Officer, commented:

"Production was at the lower end of expectations for the quarter due to lower than anticipated grades from the Crucera pit. During December we slowed the rate of mining at Crucera in order to adapt the mining approach to reduce dilution, thus achieving less tonnes of ore produced at an improved grade. Accordingly, and taking account of the significant progress made on developing the ramp at Arenal Deeps, we remain confident that we will meet our production target for the second half, and achieve production for the full year of between 63,000 and 68,000 ounces.

"We anticipate that the grade achieved at Crucera will result in cash costs for the full year being in the range of $US 1,000 to $US 1,065 per ounce, a modest increase on the $US 975 that we forecast in October. We are focused on improving grade control and mining practices, and identifying where cost savings can be made elsewhere in the operation to offset part of the impact of the lower grade from Crucera.

"As a result of the lower cash flow in the second quarter we expect that our cash balance, prior to the additional capital expenditure outlined below, at year end will be approximately $US 13 million (based on production of 65,750 ounces and a gold price of $1,625 an ounce) compared with the $US 15 million that we announced in October. We expect to commit up to $US 4 million of additional capital expenditure in the second half of the year to accelerate the "pre-strip" of the San Gregorio extension that had been planned to commence in the next financial year . We have also incurred additional exploration expenditure to earn our interest in Pantanillo during the first half and plan, following a positive review of the project, to complete the initial acquisition of 25% of the Talca asset. Together with San Gregorio these investments will reduce the expected cash balance as at 31 May 2013 to approximately $US 8 million.

"Overall, we are confident that the Company remains on track to successfully deliver the strategy that was outlined in October 2012."

Financial Highlights

  • Revenue increased 15 per cent to $US 24.1m for the quarter (Q2 2011: $US 21.0m), with an average realized gold price of $US 1,694 (Q2 2011: $US 1,717/oz).
  • Net profit after tax for the quarter was $US1.2m (Q2 2011: $US 2.6m). For the half year net profit after tax was $US3.5m (1H 2011: $US 7.0m).
  • Cash flow from operations for the quarter was $US3.5m (Q2 2011: $US 4.6m) with $US 8.5m for the half year (1H 2011: $US 10.2m). $US 4.8m was consumed in working capital during the half. Working capital is expected to be maintained or reduced in the second half of the current financial year.
  • Capital expenditure for the first half was $US 11.75m. Total capital expenditure for the year is expected to be $US 24.5m compared to an original budget of $US 20.5m. The Company is planning to spend up to $US4m in the second half of the current year to change the mining sequence of San Gregorio to accelerate pre-strip on this deposit. This will allow the Company to maintain higher ore stock levels to reduce risk and maximise throughput and maintain consistent production over the coming years.
  • The Company's cash balance at 30 November 2012 was $US 3.75m compared to $US 7.2m at 31 August 2012. This is in accordance with previous guidance. Cash flow from operations and profitability in the second half is expected to be significantly stronger as higher production levels are forecast with similar cost levels. The Company's cash balance is therefore expected to increase in the second half.

Production Highlights

  • Production for the quarter increased by 17 per cent year on year to 13,970 ounces (Q2 2011: 11,916 ounces). 29,422 ounces were produced for the half year (1H 2011: 24,404), an increase of 20.6 per cent.
  • During the quarter 1.8m tonnes of waste (Q2 11/12 - 1.4m) and 284,880 tonnes of ore (Q2 11/12 - 232,070) were mined with an average grade of 1.50 g/t (Q2 11/12 - 1.25g/t).
  • During the quarter 385,271 tonnes of ore (Q2 11/12 - 391,686) were fed into the plant at an average grade of 1.21 g/t (Q2 11/12 - 1.02 g/t) to produce 13,970 ounces of gold (Q2 11/12 - 11,916) with a metallurgical recovery of 93.4% (Q2 11/12 - 92.6%).
  • Cash operating costs for the quarter were $US1,215 per ounce (Q2 2011: $US1,007). Higher costs were due to lower head grade mined from the Crucera pit, planned higher stripping costs for the quarter and Uruguayan inflation and peso exchange rate when compared to the prior year. Unit mining and processing costs including Arenal Deeps underground costs were in accordance or below budget.
  • Successful continued development of the ramp at Arenal Deeps with 352 metres completed during the quarter. The ramp is planned for completion during January with ore production targeted for the second half of February when level development for the initial mining levels is complete.
  • The production forecast for the full year remains on track to be in the range of 63,000 to 68,000 ounces. Production in the second half is expected to increase as Arenal development will transition from waste to ore, higher grade Arenal ore will be accessed in the last quarter and Crucera ore delayed from the first half of the year will be processed in the second half.
  • Cash cost per ounce for the full year is expected to be in the range of $US1,000 to $US1,065 per ounce, approximately 6 per cent above the Company's budget for the year, as a result of the average grade of ore mined from the Crucera open pit in the first half of the year being lower than initially expected. Unit operating costs are in line with budget.

Exploration and Development Highlights

  • Maiden NI43-101 compliant resource estimate expected at Mahoma in the second half of fiscal 2013 - expected to support the commencement of feasibility work. 4,530 metres of infill and extension drilling have been completed on the Mahoma vein project. Best results reported to date for the current programme include 1.4 meters at 219 g/t, 1.6 meters at 32.1 g/t, 1.4 meters at 36.7 g/t, 3 meters at 20 g/t and 4 meters at 41.2 g/t.
  • Company completed drilling and expenditure commitments on the Pantanillo project it optioned from Anglo American. During December the Company exercised its option to acquire the Pantanillo project and now owns the project. Field work during quarter three will be focused on target generation with no further drilling planned for this fiscal year.
  • Completion of the previously announced review of the Talca project. The review identified a number of new areas with potential for discovery of high grade veins. Company to complete the acquisition of initial 25 per cent interest during 2013. Upon completion, the Company will have five years to perform further exploration work without having to make further payments. A CSMT geophysical survey is planned to test these and existing zones before further drilling is performed.
  • At Anillo 75 km² of new mapping and 28 trenches were completed during the quarter. Anomalous Au and Ag values were obtained in the Anillo Central and South East sectors that suggest the existence of an underlying hydrothermal cell. A CSMT geophysical survey is planned for the third quarter with 2,000 meters of drilling in the fourth quarter to test these targets.

Financial and Operating Performance Details

Further information on financial and operating performance can be found in the Company's Management Discussion and Analysis filed on SEDAR.

Exploration and Development


During fiscal 2013, 44 drill holes equal to 4,530.2 m were completed at the project: 1560.20 m of diamond drilling and 2970 m RC drilling (of which 1830 m were for pre-collars). Resource modelling will commence when the pending assay results are received in January with a first NI43-101 resource estimate for Mahoma targeted for completion during the second half of the financial year. A plan view of the drill holes contained in the following table is available on the Company's website.









   Au g/t   Comments
MHDD029   70.8   72.4   1.6   5.96    
MHDD030   25.9   26.4   0.5   1.39    
   32.7   34.7   2   3.30    
MHDD031   17.2   18   0.8   1.88    
   38.8   39.85   1.05   1.02    
   67   67.8   0.8   4.60    
   86.15   87.55   1.4   219.33    
MHDD032   92.03   92.6   0.57   30.10    
MHDD033   91.9   92.6   0.7   3.13    
   96.6   97.2   0.6   16.72    
   98.3   99.9   1.6   32.15    
   108.9   109.9   1   1.06    
MHDD034   103.2   103.9   0.7   2.82    
MHDD035   102.6   105.55   2.95   3.48    
   106.1   106.6   0.5   2.80    
MHDD036   91.9   93.3   1.4   36.71    
MHDD037   No significant results    
MHDD037   97   98.4   1.4   3.15    
   101.5   102   0.5   3.56    
MHDD038   103   105   2   1.77    
   107.5   108   0.5   2.09    
MHDD039   138.1   138.6   0.5   2.06    
   139.2   140   0.8   2.80    
   141.5   142   0.5   4.06    
MHDD040   106.7  
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