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Orosur Mining dragged down by retrenchment and exploration costs
Gold producer Orosur Mining recorded an operating profit of $1.68m from the third quarter of its current trading year thanks to continued mining at its San Gregorio gold project in Uruguay, but staff retrenchments and exploration programmes dragged the group to a loss.
AIM-quoted Orosur, which posted a loss after tax of $1.97m for the twelve week period, reversing the profit of $363,000 returned a year prior, as a result of allowing for higher depreciation and a provision for staff retrenchments, poured $1.75m in capital expenditure and $1.23m into exploration programmes throughout the quarter.
The dual-listed firm's significant increase in exploration costs was a result of its current Colombian drilling campaign, where high grade drilling at its APTA project has returned results of 4.89 grams per tonne gold at 13.9 metres, 4.86 grams over 25 metres, 9.42 grams over seven metres and 9.62 grams over six meters.
At its San Gregorio asset, the mine plan and sequencing were redesigned in order to "optimise economics" following the definition of a weaker mineralised structure, leading Orosur to cancel the development of deeper stopes from its previous mine plan and incorporate marginal stopes from current levels into its third quarter production.
As a result, grades in the third quarter were lower, and production dropped to 6,859 ounces of gold versus the 7,820 ounces mined one year earlier.
Average cash operating costs for the quarter increased 24% to $1,065 per ounce, leaving Orosur with a 58% lower cash balance of $1.39m as of 28 February after the company drew down on its Santander line of credit to the tune of $1.5m.
Ignacio Salazar, Orosur's chief executive, said, "As of today, SG Central is now in production, and we are quickly advancing a new higher-grade underground mine at Veta A. The company is currently contemplating several strategic alternatives to advance its projects and unlock the value of our assets for the benefit of our shareholders."
Discussing the group's Colombian operations, Salazar added, "Anzá is located in the most prospective district in Colombia. Our strategy for this drilling campaign is to demonstrate the potential scale of the project and the results to date from APTA together with the quality of the other untested targets in our 200km² property support this approach."
As of 0840 BST, shares had lost 1.96% to 6.25p.