Fiscal Q1 2015 Results – US$3.5 M Cash Flow from Operations
Orosur Mining Inc. (“Orosur” or the “Company”) (TSX:OMI) (AIM:OMI), a South American-focused gold producer, developer and explorer is pleased to announce the results for the fiscal 2015’s first quarter ended August 31, 2014.
Highlights
- Q1 gold production of 13,684 oz, in line with top end of annual guidance (50,000–55,000 oz for the year)
- Cash operating costs of US$945/oz (Q1 13/14: US$754/oz) in line with guidance
- All-In-Sustaining costs of US$1,182/oz (Q1 13/14: US$916/oz).
- Average gold price received of US$1,302/oz (Q1 13/14: US$1,321/oz)
- Cash flow from operations of US$3.5M (Q1 13/14: US$6.8M )
- Net loss after tax of US$1.3M (Q1 13/14: Net loss after tax US$1.0M)
- Net cash of US$6.0M at August 31, 2014 (net negative cash of US$2.0M at August 31, 2013)
- Successful completion of plan of arrangement with Waymar on July 10, 2014
- Continued funding of exploration programs in the San Gregorio district of Uruguay, including 6,018 metres of exploration drilling and 539 metres of trenching. Pre-development work focused on the main known extension of the San Gregorio deposit continued.
Ignacio Salazar, CEO of Orosur, said:
“Orosur is pleased to have once again delivered quarterly results in line with its guidance. The current gold price environment is not strong; however, the operational improvements implemented over the past 18 months have positioned the Company to continue to generate positive cash flow whilst also advancing exploration and development efforts. After funding approximately US$3.6 million in capex and exploration during the quarter in and around San Gregorio, the Company’s net cash position continues to grow.
In July 2014, we completed the transaction with Waymar and welcomed Pablo Marcet and H.D. Lee to the Board. Their contributions to the Company commenced immediately and have brought further depth and expertise to our team.”
Results Conference Call
Orosur will be hosting a conference call for analysts to discuss the results, details for the call are below:
| Time & Date: | 15 October 2014 | |
| 2.00pm British Summer Time, 9:00am Eastern Standard Time. | ||
| Dial-In Details: | London +44 (0) 20 3139 4830 | |
| Canada +1 (514) 841 2196 | ||
| United States +1 (718) 873 9077 | ||
| Passcode: | 22277727# | |
| Operational & Financial Summary1 | Q1 ended August 31 | |||||||
| Q1 14/15 | Q1 13/14 | Diff | ||||||
| Operating Results | ||||||||
| Gold produced | Ounces | 13,684 | 16,851 | (3,167) | ||||
| Operating cash cost3 | US$/oz | 945 | 754 | (191) | ||||
| Average price received | US$/oz | 1,302 | 1,321 | (19) | ||||
| Financial Results | ||||||||
| Revenue | US$ ‘000 | 16,526 | 22,945 | (6,419) | ||||
| Net loss after tax | US$ ‘000 | (1,280) | (1,036) | 244 | ||||
| Cash flow from operations2 | US$ ‘000 | 3,543 | 6,810 | (3,267) | ||||
| Cash & Debt at the end of the period – Summary | August 31, | May 31, | August 31, | |||||
| Cash balance | US$ ‘000 | 11,425 | 10,818 | 6,463 | ||||
| Total debt | US$ ‘000 | 5,401 | 4,939 | 8,487 | ||||
| Cash net of debt | US$ ´000 | 6,024 | 5,879 | (2,024) | ||||
| 1 | Results are based on IFRS and expressed in US dollars | ||||||
| 2 | Before non-cash working capital movements | ||||||
| 3 | Operating cash cost is total cost discounting royalties and capital tax on production assets. | ||||||
Q1 Production and Cash Costs
| First quarter ended August 31, | ||||||||
| 2014 (Actual) | 2014 (Guidance) | 2013 (Actual) | ||||||
| Gold Produced | Ounces | 13,684 | 12,500–13,750 | 16,851 | ||||
| Cash Operating Costs | US$/oz | $945 | $850–$950 | $755 | ||||
Production and cash operating costs for the quarter ended August 31, 2014 (“Q1 2015”) are in line with the Company’s mine plan and previously stated guidance.
As stated in its fiscal 2014 year-end results announced on August 18, 2014, Orosur expects higher unit costs in the first half of fiscal 2015, as observed in Q1 2015 and as anticipated in the second quarter. During Q1 2015, in accordance with the mine plan, work at Arenal Deeps focused on room and pillar mining (instead of transverse stoping) which entails operating at smaller, lower grade stopes, grading on average approximately 1.68 g/t. The Company expects a similar pattern in the second quarter, after which a return to higher grade, larger transverse stopes in the second half of fiscal 2015 is expected to reduce cash operating costs.
Orosur continues to focus on cost reduction initiatives, including optimizing corporate and operational teams, geological modelling, mine planning, and fleet use.
FY 2015 Outlook & Guidance
The Company maintains its forecast production guidance for FY 2015 between 50,000 to 55,000 ounces of gold at operating cash costs of between US$850 to US$950 per ounce. FY 2015 Production from Arenal Deeps is expected to contribute approximately 70-75% of total gold production, with open pit mining contributing the balance of the production profile.
As in the past, variations in production and unit costs will occur quarter on quarter as the mine plan draws ore from several Arenal stopes with different grades, positions and sizes, changing the level of access required as well as the addition of ore from several open pits at varying grades and stages of stripping.
Q1 2015 Financial Summary
Cash flow from operations before working capital was US$3.5 million for the quarter compared to US$6.8 million for Q1 13/14, mainly due to a lower gold price and production rates. Net loss after tax for the quarter was US$1.3 million compared to US$1 million in Q1 13/14.
The Company invested US$2.6 million in capital expenditures and US$1 million in exploration expenditures in the quarter compared to US$2.5 million and US$1.5 million respectively in Q1 13/14.
The cash balance at August 31, 2014 was US$11.4 million compared to US$10.8 million at May 31, 2014. The Company’s debt balance at August 31, 2014 was US$5.4 million compared to US$4.9 million at May 31, 2014, as a result of the addition of the US$0.5 loan agreement between Waymar and Continental Gold Ltd. consolidated in Orosur as part of the closing of the transaction during Q1 2015.
The Company expects to continue following the contracted schedule of lease repayments with HSBC and Banco Santander and anticipates being close to debt free by the end of FY 2015. The Company has US$3.0M of committed but undrawn lines of credit available at August 31, 2014 and at present is not planning to utilize them within the current development plans and gold price environment.
Q1 Development and Exploration
During Q1, the Company continued its exploration programs in the San Gregorio district of Uruguay, including 6,018 metres of exploration drilling and 539 metres of trenching while continued pre-development work focused on the main known extension of the San Gregorio deposit.
Uruguay Development Projects
In Q1, a program of >3,000 metres of drilling was designed to further evaluate a significant geological resource adjacent to the San Gregorio open pit that is the subject of prefeasibility level engineering work. The additional work program, scheduled to commence in Q2, is aimed at validating and improving the current geological model and at gathering precise geotechnical data with the goal of reaching a development decision in the current fiscal year.
Uruguay Brownfields Exploration
The brownfields exploration program continued to focus on two areas. The first, Arenal Deeps, with 1,076 metres of drilling, identifying, delineating and infilling extensions of the known ore deposit. Secondly, 3,556 metres of shallow drilling (to 15 m depths) was completed to add ounces at the edges of the existing open pits, especially at Vaca Muerta.
Uruguay Greenfields Exploration
The Company’s greenfields exploration efforts continued on the corridor of the Santa Teresa, San Gregorio and Arenal Shear Zone (“SGSZ”), a zone that was delineated in FY2014 within an approximate 200m wide corridor and along an extension of approximately 10 km, and on several targets in the Sobresaliente district. During Q1, in addition to the ongoing geological, geochemical and geophysical surveys, 1,386 metres of drilling and 539 metres of trenching were completed on three high priority targets.
With total historic and current exploration drilling in the wider San Gregorio district amounting to approximately 100,000 metres and production of over 1M ounces of gold, the Company believes that the area remains significantly underexplored, highly prospective and a prime target for organic growth given the proximity of the existing infrastructure at the San Gregorio operation.
Chile
No significant field activities were conducted in Chile during Q1. Altovalsol, the company that bought Talca in December 2013, communicated their decision to discontinue the exploration program due to insufficient results. The Company is currently in discussions with Altovalsol who must return the asset and following this, may seek alternative strategic options and/or partners for Talca.
Colombia
The Waymar transaction was finalized in July 2014. Routine environmental monitoring, community relations engagement and inspections by the local authorities were conducted in Q1 at the Anzá project as the Company prepares to advance its exploration programme.
END
Qualified Person's Statement
The information presented in this press release has been reviewed by Walter Muehlebach, GM Exploration of OMI, considered to be in compliance with N.I. 43-101 reporting guidelines. Mr. Muehlebach is a graduate in Geology of the Universidad Católica del Norte (Chile) and a member of the Chilean Comisión Calificadora de Competencias en Recursos y Reservas Mineras, and has 23 years of experience in the field of mineral exploration.
Forward Looking Statements
All statements, other than statements of historical fact, contained or incorporated by reference in this news release, including any information as to the future financial or operating performance of the Company, constitute "forward-looking statements" within the meaning of certain securities laws, including the "safe harbour" provisions of the Securities Act (Ontario) and the United States Private Securities Litigation Reform Act of 1995 and are based on expectations estimates and projections as of the date of this news release. There can be no assurance that such statements will prove to be accurate, such statements are subject to significant risks and uncertainties, and actual results and future events could differ materially from those anticipated in such statements. Forward-looking statements include, without limitation success of exploration activities; permitting time lines; the failure of plant; equipment or processes to operate as anticipated; accidents; labour disputes; requirements for additional capital title disputes or claims and limitations on insurance coverage. The Company disclaims any intention or obligation to update or revise any forward looking statements whether as a result of new information, future events and such forward-looking statements, except to the extent required by applicable law.
Neither TSX Exchange nor its Regulation Services Provider (as that term is defined in the policies of the TSX Exchange) accepts responsibility for the adequacy or accuracy of this release.
About Orosur Mining Inc.
Orosur Mining Inc. is a fully integrated gold producer, developer and exploration company focused on identifying and advancing gold projects in South America. The Company operates the only producing gold mine in Uruguay (San Gregorio), and has assembled an exploration portfolio of high quality assets in Uruguay, Chile and Colombia. The Company is quoted in Canada (TSX:OMI) and London (AIM:OMI).
For more information please visit www.orosur.ca
– Financial Statements Follow –
| Orosur Mining Inc. | ||||||||
| Condensed Interim Consolidated Statements of Financial Position | ||||||||
| Thousands of United States Dollars, except where indicated | ||||||||
| Note Ref. | As at August 31, 2014 ($) | As at May 31, 2014 ($) | ||||||
| Assets | ||||||||
| Cash and cash equivalents | 11,425 | 10,818 | ||||||
| Accounts receivables and other assets | 4 | 2,961 | 3,338 | |||||
| Inventories | 5 | 16,107 | 14,254 | |||||
| Total current assets | 30,493 | 28,410 | ||||||
| Accounts receivables and other assets | 4 | 414 | 414 | |||||
| Property plant and equipment and development costs | 6 | 34,664 | 37,323 | |||||
| Exploration and evaluation costs | 7 | 43,773 | 35,813 | |||||
| Deferred income tax assets | 13 | 4,900 | 5,470 | |||||
| Restricted cash | 289 | 258 | ||||||
| Total non-current assets | 84,040 | 79,278 | ||||||
| Total assets | 114,533 | 107,688 | ||||||
| Liabilities and Shareholders’ Equity | ||||||||
| Trade payables and other accrued liabilities | 4 | 15,726 | 13,343 | |||||
| Current portion of long-term debt | 18 | 4,571 | 3,978 | |||||
| Environmental rehabilitation provisions | 8 | 598 | 598 | |||||
| Total current liabilities | 20,895 | 17,919 | ||||||
| Long-term debt | 18 | 830 | 961 | |||||
| Environmental rehabilitation provisions | 8 | 5,599 | 5,828 | |||||
| Total non-current liabilities | 6,429 | 6,789 | ||||||
| Total liabilities | 27,324 | 24,708 | ||||||
| Capital stock | 9 | 60,544 | 55,184 | |||||
| Warrants | 62 | - | ||||||
| Contributed surplus | 5,849 | 5,708 | ||||||
| Retained earnings | 20,754 | 22,088 | ||||||
| Total shareholders’ equity | 87,209 | 82,980 | ||||||
| Total liabilities and shareholders’ equity | 114,533 | 107,688 | ||||||
| Orosur Mining Inc. | ||||||||
| Condensed Interim Consolidated Statements of Loss and Comprehensive Loss | ||||||||
| Thousands of United States Dollars, except for earnings per share amounts | ||||||||
| Note Ref. | Three months ended August 31, | |||||||
| 2014 ($) | 2013 ($) | |||||||
| Sales | 16,526 | 22,945 | ||||||
| Cost of sales | 20 | (16,474) | (19,899) | |||||
| Gross profit | 52 | 3,046 | ||||||
| Corporate and administrative expense | (882) | (831) | ||||||
| Exploration and evaluation expenses written off | (29) | (516) | ||||||
| Other income | 188 | 40 | ||||||
| Finance cost | 19 | (95) | (120) | |||||
| Finance income | 19 | 2 | 1 | |||||
| Net foreign exchange gain | 54 | 298 | ||||||
| (762) | (1,128) | |||||||
| (Loss) Profit before income tax | (710) | 1,918 | ||||||
| Provision for income taxes | 13 | (570) | (2,954) | |||||
| Total loss for the period | (1,280) | (1,036) | ||||||
| Other comprehensive loss | ||||||||
| Foreign exchange differences on translating foreign operations | (54) | - | ||||||
| Total loss and comprehensive loss for the period | (1,334) | (1,036) | ||||||
| Loss per common share | ||||||||
| Basic and fully diluted | 17 | (0.02) | (0.01) | |||||
| Orosur Mining Inc. | ||||||||
| Condensed Interim Consolidated Statements of Cash Flows | ||||||||
| Thousands of United States Dollars, except where indicated | ||||||||
|
| Note Ref. | Three months ended | ||||||
| 2014 ($) | 2013 ($) | |||||||
| Net inflow (outflow) of cash related to the following activities | ||||||||
| Cash flow from operating activities | ||||||||
| Net loss for the period | (1,280) | (1,036) | ||||||
| Adjustments to reconcile net income to net cash provided from operating activities: | ||||||||
| Depreciation | 4,472 | 4,295 | ||||||
| Exploration and evaluation expenses | 7 | 29 | 516 | |||||
| Accretion of asset retirement obligation | 8 | 19 | 19 | |||||
| Deferred income tax assets | 13 | 570 | 2,954 | |||||
| Stock based compensation | 10 | 47 | 48 | |||||
| Gain on sale of property, plant and equipment | (179) | 11 | ||||||
| Others | (135) | 3 | ||||||
| Subtotal | 3,543 | 6,810 | ||||||
| Changes in operating assets and liabilities | ||||||||
| Accounts receivables and other assets | 396 | 274 | ||||||
| Inventories | (1,855) | 522 | ||||||
| Trade payables and other accrued liabilities | 1,775 | (2,004) | ||||||
| Net cash generated from operating activities | 3,859 | 5,602 | ||||||
| Cash flow from financing activities | ||||||||
| Repayment of long-term debt | 18 | (298) | (305) | |||||
| Net cash from financing activities | (298) | (305) | ||||||
| Cash flow from investing activities | ||||||||
| Purchase of property, plant and equipment and development costs | 6 | (2,374) | (1,238) | |||||
| Environmental tasks | 8 | (249) | (1,220) | |||||
| Proceeds from the sale of fixed assets | 767 | - | ||||||
| Exploration and evaluation expenditure assets | 7 | (1,098) | (2,009) | |||||
| Net cash used in investing activities | (2,954) | (4,467) | ||||||
| Increase in cash and cash equivalents | 607 | 830 | ||||||
| Cash and cash equivalents at the beginning of period | 10,818 | 5,633 | ||||||
| Cash and cash equivalents at the end of period | 11,425 | 6,463 | ||||||
| Orosur Mining Inc. | ||||||
| Condensed Interim Consolidated Statements of Changes in Shareholders’ Equity | ||||||
| Thousands of United States Dollars, except where indicated | ||||||
| Three months ended August 31, | ||||||
| 2014 ($) | 2013 ($) | |||||
|
Capital stock | ||||||
| Balance at beginning of period | 55,184 | 55,184 | ||||
| Issued for Waymar acquisition | 5,360 | - | ||||
| Balance at end of period | 60,544 | 55,184 | ||||
| Broker Warrants | ||||||
| Balance at beginning of period | - | 276 | ||||
| Issued for Waymar acquisition | 62 | - | ||||
| Expiration | - | (276) | ||||
| Balance at end of period | 62 | - | ||||
| Contributed surplus | ||||||
| Balance at beginning of period | 5,708 | 5,534 | ||||
| Employee stock based compensation recognized | 47 | 48 | ||||
| Issued for Waymar acquisition | 94 | - | ||||
| Balance at end of period | 5,849 | 5,582 | ||||
| Retained earnings | ||||||
| Balance at beginning of period | 22,088 | 16,965 | ||||
| Warrant expiration | - | 276 | ||||
| Net loss for the period | (1,280) | (1,036) | ||||
| Currency translation reserve | (54) | - | ||||
| Balance at end of period | 20,754 | 16,205 | ||||
| Shareholders’ equity at end of period | 87,209 | 76,971 | ||||
Contact
Orosur Mining Inc
Ignacio Salazar, + 562 2924 6800
Chief Executive Officer
info@orosur.ca
or
Cantor Fitzgerald Europe
Stewart Dickson / Jeremy Stephenson
Tel: +44 (0) 20 7894 7000
or
FTI Consulting
Ben Brewerton / Oliver Winters / Sara Powell
Tel: +44 (0) 20 3727 1000
