H1 2017 Results: $3.7M Profit, $7.0M Cash From Operations and New San Gregorio UG Mine Put into Production
Orosur Mining Inc.
H1 2017 Results: $3.7M Profit, $7.0M Cash From Operations and
New San Gregorio UG Mine Put into Production
SANTIAGO, Chile, January 16, 2017. Orosur Mining Inc. (“Orosur” or “the Company” ) (TSX/AIM: OMI), the
South American-focused gold producer, developer and explorer is pleased to announce the results for the first
half of its fiscal 2017 (“H1 17”) and second quarter ended November, 2016 (“Q2 17” or the “Quarter”) and an
update of its exploration and development activities in Uruguay.
OPERATIONAL HIGHLIGHTS
The San Gregorio West Underground (“SGW UG”) mine commenced full production from its maiden stope
on November 24, 2016
o Project completed on budget and on schedule following a safe and efficient transition of equipment
and staff from Arenal
o Construction included over 883m of horizontal development and approximately 663m of infill
diamond drilling from 13 underground holes comprising the bulk of the zones to be mined within
the existing FY17 SGW mine plan
An additional 90,000 tonnes at 1. 4 g/t Au not previously in the mine -plan were produced at Arenal UG
mine prior to its planned closure at the end of Q2 17, deferring higher grade production from SGW UG
Production for the Quarter of 6,852 oz was, as previously guided, af fected by the transition from Arenal
UG to the new SGW UG mine
FINANCIAL HIGHLIGHTS
Quarterly cash operating costs were $914/oz, in line with expectations(Q2 16: $858/oz)
o Guidance for FY 17 remains $800 to $900/oz
Additional development capex related to the contruction of the SGW UG mine in Uruguay resulted in All-
In-Sustaining costs (“AISC”) for the Quarter of $1,345/oz (Q2 16: $1,095/oz)
Transition from Arenal UG to the new SGW UG mine led to an increase on Capital Expenditure (“capex”)
to $3.8M (Q2 16: $0.9M)
Cash generated from operations increased in Q2 17 to $2.2M (Q2 16: $0.9M). Total cash balance at
period end of $5.4M, increased from Q1 17: $5.0M, and FY 16: $4.3M
Q2 17 Net profit after tax of $0.9M (Q2 16: loss of $0.9M)
o Average gold price for the quarter was $1,252/oz (Q2 16: 1,100/oz)
OUTLOOK
Exploration drilling in and around the San Gregorio UG area has yielded positive results, successfully
intersecting gold mineralization in every hole, which are expected to significantly enhance mine economics
and increase reserves and resources in the short and medium term. Further drilling is underway
During H2 FY17, the Company plans to accelerate exploration in open pit targets around the San Gregorio
plant after receiving several permits and to drill seven RC/DD holes (1,600m) in the Arenal-SG corridor to
test the occurrence of what could be a relatively large deposit
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In Colombia, the Company is finalizing a geological model of its high grade Anzá gold project project to
determine the exploratory potential with the assistance of Mine Development Associates (“MDA”) of Reno,
Nevada. The results of this work are expected to be announced shortly
Ignacio Salazar, CEO of Orosur, said:
“Operations remain healthy and profitable, with $7M of cash generated in the first half of our fiscal 2017. The
successful transition to San Gregorio UG as the Company’s primary source of ore feed to the plant in Uruguay,
was a significant achievement for Orosur. The SGW UG mine successfully started production from its first
stope on November 24 on time and within budget.
“The transition, achieved in a safe , professional manner, represents a significant technical and operational
achievement and I am pleased with the technical capacity and execution demonstrated by our team. It was
financed entirely from operational cash flow helped by the efficient transfer of equipment and staff between
the two undergound mines.
“In parallel, more active and aggressive exploration work in Uruguay appears to have a good likel ikood of
enhancing the San Gregorio underground project and advancing the open pit projects around the plant . In
Colombia, we are making good progress in the geological interpretation and modelling of our high grade Anzá
gold project and expect to be updating the market shortly.”
Operational & Financial Summary1
Q2 17 Q2 16 Diff YTD 17 YTD 16 Diff
Operating Results
Gold produced Ounces 6,852 8,172 (1,320) 16,802 20,643 (3,841)
Operating cash cost3 US$/oz 914 858 56 783 916 (133)
AISC US$/oz 1,345 1,095 250 1,135 1,138 (3)
Average price received US$/oz 1,252 1,100 152 1,290 1,127 163
Financial Results (unaudited)
Net profit/(loss) after tax US$ ‘000 942 (870) 1,812 3,701 (2,596) 6,297
Cash flow from operations2 US$ ‘000 2,234 924 1,310 7,029 1,097 5,932
Cash & Debt Summary (unaudited) Nov. 30,
2016
Aug 31,
2016
Diff Nov. 30,
2016
May 31,
2016
Diff
Cash balance US$ ‘000 5,376 4,982 394 5,376 4,320 1,056
Total debt US$ ‘000 225 289 (64) 225 352 (127)
Cash net of debt US$ ‘000 5,151 4,693 458 5,151 3,968 1,183
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.
Q2 17 Operations and SGW Development
Q2 17 production was 6,852 oz of gold, compared to 8 ,172 oz in Q2 16. The reduction is due to the
implementation of the strategic plan previously announced in July 2015, in response to the lower gold price
environment. Additionally, in this Quarter, the Company transitioned from its underground operation at Arenal
to the new mine in San Gregorio, which resulted in lower quarterly production, as previously announced and
guided.
The Company defined and processed an additional 90,000 tonnes grading 1.4 g/t from the Arenal UG, which
were not previously in the mine -plan or reserve base . The absence of development and mine fortification
costs at Arenal in its final stages allowed the economic mining of ore with lower grades. In the short term, this
has deferred higher grades previously planned for Q2 17 to the future, however management considers it is
economically positive for the Company in the medium and long run.
The construction of the SGW UG mine was completed on time and budget to allow first stope production to
commence on November 24th. The development included a total of 883 m of horizontal development, as well
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as the drilling of a 103 m ventilation chimney. The ventilation development work was conducted by Peruvian
contractor, Tumi, using a 3.1 m diameter raise borer. The raise borer technology was chosen to carry out the
ventilation shaft work due to its productivity, reliability and cost advantages.
During the Quarter, a total of 13 underground diamond holes were drille d, amounting to 663 m of infill drilling
in SGW UG. This drilling campaign was designed to enable a more thourough assessment of the geometry
and grade of the mineralized body in levels from +35m up to -5m, which entered into production at the end of
Q2 17 and comprises the bulk of the scheduled FY 17 production from the SGW UG mine.
Q2 17 Financial Summary
Average cash operating cost s were of $914/oz, compared to $858/oz in Q2 16. As already announced, the
Company had previously budgeted and expected h igher unit co sts in Q2 17 , as a result of the shift of its
underground staff and equipment from the Arenal UG operation in its final months of production to the new
SGW UG mine.
During the Quarter, the Company invested $ 3.8M in capex and $0.6M in exploration compared to $0.9M and
$0.7M, respectively, in Q2 16. During Q2 17, the Company increased its investment in the construction of the
SGW UG ramp and access and finalized the construction of the ventilation shaft. In addition, the Company
advanced the construction of the phase 4A of the tailings dam. As of a result of the additional capex, AISC
were $1,345/oz compared to $1,095/oz in Q2 16.
The average gold price realized for the Quarter was $1,252/oz (Q2 16: $1,100/oz).
Profit before tax for the quarter was $1.0M compared to a loss of $ 0.9M in Q2 16. Net profit after tax was
$0.9M compared to a loss of $0.9M in Q2 16.
Cash flow from operations before working capital variations was $ 2.2M compared to $ 0.9M in Q2 16. YTD
cash flow from operations b efore working capital variations was $7 .0M compared to $1.1M for the prior year
due to better operating performance and higher revenue.
The cash balance at the end of the Quarter was $5.4M compared with $4.3M at May 31, 2016. The Company’s
debt balance was $0.2M compared to $0.4M at May 31, 2016 related to minor equipment leases.
FY17 Outlook & Guidance
The Company's forecast production guidance for FY17 remains between 35,000 to 40,000 oz of gold at
operating cash costs of between $800 - $900/oz.
As in the past, variations in production and unit costs are expected to occur, quarter on quarter, as the mine
plan draws ore from multiple sources at varying grades , stages of development and stripping factors. As
already announced, the Company incurred higher unit costs in Q2 17 due to the transition from the Arenal UG
to the SGW UG mine which are expected to gradually decrease during the remainder of the Company’s FY17.
Uruguay Underground Exploration Projects - Potential for Significant Expansion of the SGW UG Mine
SGW UG is a continuation , at depth , of the historic San Gregorio open pit deposit which has produced
approximately 536,000 oz at an average grade of 2.12 g/t. During FY17, the Company intends to add reserves
and expand prospective SGW UG operations within three neighboring underground projects. These projects
are the San Gregorio East Underground, SGW UG Deep Extension and the San Gregorio Underground
Central area. The last two projects relate to areas which were not previously considered in the SGW UG mining
plans and represent new opportunities with a strong potential for near term resource and reserve delineation.
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A comprehensive and extensive drilling campaign is currently being carried out at San Gregorio. During FY17,
a total of 9,000m of drilling are planned in order to confirm and increase reserves and extend the SGW UG
mine. To the end of the Quarter, some 4,250m have already been drilled, with positive results.
San Gregorio UG cross-section looking North – highlighting west, central and east mineralized bodies
San Gregorio Central (SGC) – A New Mineralised Area in the Core of SG
New resources are being discovered at San Gregorio Central which are expected to have a positive impact
on the economics of the SGW UG project. San Gregorio Central is an eastern continuity of the current SGW
UG mineralized ore body.
A total of twelve drill holes (2,252m) have been drilled in the area. Ten of these from underground drilling
stations (1,514m) and two from the surface (738m). All the holes drilled to date have intercepted grades
considered at present to be economic mineralization. The last five holes (1,381m) were drilled during Q2 17
and their mineral intercepts are shown below.
Q2 17 intercepts from underground:
Hole ID From (m) To (m) Intercept Including
DDHUGSG16-024_08 119.45 125.45 6.0m @ 1.28 g/t Au 4.0m @ 1.44 g/t Au
DDHUGSG16-024_09 139.10 146.10 7.0m @ 0.60 g/t Au 1.0m @ 1.34 g/t Au
DDHUGSG16-024_10 155.95 164.35 8.4m @ 1.01 g/t Au 4.3m @ 1.53 g/t Au
Q2 17 intercepts from surface:
Hole ID From (m) To (m) Intercept Including
DDHUGSG16-177 239.85 244.05 4.2m @ 3.52 g/t Au 1.85m @ 5.55 g/t Au
DDHUGSG16-080 272.00 282.55 10.6m @ 1.11 g/t Au 1.10m @ 2.51 g/t Au
A total of 3,600m of drilling distributed over thirteen holes are planned for this target during the remainder of
the fiscal year. It is management’s belief that this work has the strong potential to increase reserves.
San Gregorio East (SGE)
To date, t he r esults from surface based diamond drilling at San Greg orio East UG have confirmed the
continuity of the mineralized body. The g rades encountered have been more variable than expected .
Additional mineralization has been defined outside the originally known boundaries. The Company’s
preliminary interpretation is validating the current reserves defined in the area. At present, the geological
model is currently being re-interpreted.
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A total of 19 holes amounting 3,800m of diamond drilling were finished during Q2 17. All mineralized
intercepts are shown below:
Hole ID From (m) To (m) Intercept Including
SGDD16-060 149.05 159.40 10.30m @ 2.63 g/t Au 3.70 m @ 2.74 g/t Au
SGDD16-061 215.10 220.10 5.00m @1.10 g/t Au 2.20 m @ 1.58 g/t Au
SGDD16-062 183.75 197.80 14.05m @ 1.34 g/t Au 5.00 m @ 2.06 g/t Au
SGDD16-063 173.60 180.85 7.25m @ 1.30 g/t Au 5.00 m @ 1.70 g/t Au
SGDD16-064 169.80 184.85 15.05m @ 1.22 g/t Au 5.60 m @ 1.77 g/t Au
SGDD16-065 186.25 200.75 14.50m @ 1.40 g/t Au 2.05 m @ 6.40 g/t Au
SGDD16-066 224.60 229.25 4.65m @ 0.89 g/t Au 1.05 m @ 1.13 g/t Au
SGDD16-067 153.25 161.45 8.20m @ 0.53 g/t Au 3.50 m @ 0.80 g/t Au
SGDD16-068 181.70 187.00 5.30m @ 0.90 g/t Au 0.75m @ 1.74 g/t Au
SGDD16-069 125.35 137.60 12.25m @ 1.81 g/t Au 6.80m @ 2.28 g/t Au
SGDD16-070 153.65 166.25 12.60m @ 0.84 g/t Au 3.25m @ 1.87 g/t Au
SGDD16-072 123.95 138.85 14.9m @ 0.56 g/t Au 0.90m @ 1.42 g/t Au
SGDD16-073 119.90 128.00 8.10m @ 0.98 g/t Au 3.45m @ 2.26 g/t Au
SGDD16-071 128.00 135.15 7.15m @ 0.50 g/t Au 1.10m @ 0.67 g/t Au
SGDD16-074 119.60 137.90 18.30m @ 0.87 g/t Au 2.85m @ 1.70 g/t Au
SGDD16-075B 107.70 128.95 21.25m @ 1.47 g/t Au 8.85m @ 2.52 g/t Au
SGDD16-076 177.35 188.10 10.75m @ 1.65 g/t Au 7.05m @ 2.21 g/t Au
SGDD16-078 165.95 176.65 10.70m @ 0.87 g/t Au 3.95m @ 1.19 g/t Au
SGDD16-079B 205.25 231.75 26.50m @ 1.24 g/t Au 8.95m @ 1.70 g/t Au
Potential for Delineation of New Reserves At Depth Below SGW UG
Drilling for a deeper mineralized extension of the San Gregorio West UG body is currently in progress . A
potential orebody was tentatively defined by two historically drilled holes and at present, one drill hole targeting
a depth of 450m is underway. It is expected that this hole will intercept the mineralized body at approximately
400m depth. Another 450m hole is planned during Q3.
Uruguay Open Pit Exploration Projects
The production strategy that has been working successfully for the Company for the last 4 years comprises of
one core underground mine providing 50 - 70% of the ore to the plant, complemented with production from
one or more nearby open pits. The open pit ore feed provides additional operational flexibility and allows the
underground to be better optimized with a more rigid design driven by operational efficiencies.
As part of this stra tegy, the Company is accelerating an aggressive campaign to identify and evaluate new
reserves amenable to exploitation via open pit mining methods, which can be fast tracked and included in its
medium term production plan.
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Mina Perú
At present, the Perú area has defined reserves totaling 5,389 oz (65,010 tonnes @ 2.58 g/t Au). Exploration
to date has included the drilling of 110 reverse circulation (“RC”) drill holes amounting to 8,974m of drilling, of
which 64 holes intercepted mineralization.
As part of an ongoing strategy to better assess the technical and economic viability of this mineralization, four
additional diamond holes amounting to 313m were drilled during the Quarter resulting in the following
intercepts:
Hole ID From (m) To (m) Intercept Including
PRDD16-001 94.6 97.9 3.35m @ 1.32g/t Au
PRDD16-002 84.7 94.7 10.00m @ 1.67g/t Au 1.00m @ 5.06g/t Au
PRDD16-003 27.0 28.0 9.95m @ 3.41g/t Au 4.25m @ 7.39g/t Au
PRDD16-004 13.9 20.8 6.90m @ 0.67g/t Au
34.0 35.9 1.90m @ 1.85g/t Au
Next steps in the campaign include the drilling of 120 shallow pantera holes (1,800m) during the remainder of
the current fiscal year.
Veta Rey
The Veta Rey open pit has produced some 1 8k oz over the last two years. During the Quarter, exploration
continued towards the southern end of the current Vet a Rey pit, where strong indications of continuation of
the mineralized body exist. An initial extension of the pit is being defined and some additional 900m, totaling
12 RC holes, are planned for Q3 with the goal of further growing reserves.
Los Naranjos
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Los Naranjos is the natural northwest continuity of the Argentinita orebody. Argentinita/ Zapucay is a mining
area located 27 km south-east of the San Gregorio plant with approximately 100 ,000 oz of historical
production.
Following the recent approval of its exploration permit in Q2 17, a pantera drilling campaign of 1,500m together
with 500m of RC/DD drilling are planned to test the available targets during Q3.
The Sobresaliente Domain
The Company owns three projects in the Sobresaliente area (Don Ti to, Las Pampas and Mantos Verdes),
approximately 6 km north of San Gregorio. This area has historic artisanal workings, with gold occurring in
quartz veins hosted in granite similar to the ore bodies mined previously at Sobresaliente, in operation during
2011 – 2013, producing 21,667 oz of gold at an average grade of 1.04 g/t Au.
Permits were granted for Don Tito in Q1 and exploration work completed 5 diamond holes, 7 Reverse
Circulation holes, and 7 trenches with promising results (announced on October 1 2th, 2016). The project
contains an anomalous area with high grade intercepts. Although structural controls remain unclear, there is
a gold anomalous zone approximately 600m on strike and 50m in width which remains open along strike and
at depth.
On Jan uary 11 th, 2017, permits were granted on the other two projects, Las Pampas and Mantos
Verdes. Some exploration was undertaken historically in Las Pampas with drill holes under old workings which
returned some encouraging results. Along strike to the sout h east, Crystallex drilled some shallow sections
also with promising results. A wide zone of anomalous gold is evident and, within the zone, there are a number
of higher grade narrow intersections.
With permitting available in the three projects, the Company is able to optimize during H2 FY17 the exploration
work in the Sobresaliente district with the objective of adding short term open pit reserves.
Greenfield exploration in Isla Cristalina
OMI is active in its search for larger deposits in Isla Cristalina, similar in size to Arenal or San Gregorio, each
having produced in excess of 500,000 oz to date. Currently the Company has identified two key areas which
have indicators of such potential; being the Arenal/ San Gregorio Corridor and Nueva Australia.
The current geological reinterpretation of the San Gregorio – Arenal corridor , if proven successful, w ould
unlock an area of approximately 25,000m² to new exploration. The Company plans to drill seven RC/DD holes
(1,600m) in the Arenal-SG corridor during H2 FY17 to test the occurrence of a relatively large deposit.
Nueva Australia is thought to be the northeast displaced continuity of the San Gregorio Main shear zone along
which Arenal, San Gregorio, Santa Teresa and other historical deposits. Little systematic exploration has been
carried out in the area where the geological features indicate the presence of a highly prospective zone.
Historic mining workings and recent soil and rock chips sampling anomalies demonstrate the potential for near
surface mineralization.
Exploration permits in Nueva Australia were granted in Q2 17 and the Company is currently preparing the
targets for drilling during H2 FY 17.
Southern Uruguay
The Company’s priority at present is to swiftly obtain exploration permit s in order to commence a drilling
campaign at its Veta Madre project in southern Uruguay.
Colombia
The Company continues advancing its high grade Anzá gold project. The Company is in the process of
finalizing a geological model to better understand the gold mineralization. Based on this geological
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interpretation, a n explorat ion target and recommendations to progress are being formulated with the
assistance of Mine Development Associates (“MDA”) of Reno, Nevada. The results of this work are expected
to be announced shortly.
Qualified Person's Statement
The technical information related to the current assets of Orosur Mining in this presentation has been reviewed
by Miguel Fuentealba, a Mining Engineer who is considered to be a Qualified Person under NI 43-101 reporting
guidelines. Mr. Fuentealba is a graduate in Mining Engineering from the University of Santiago de Chile and
is an AusIMM Member and Qualified Person of Chilean Mining Commission. Mr. Fuentealba has 20 years of
professional experience in the field of mining engineering, mine development and management.
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 fi nancial 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 Litigat ion 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 pr ocesses 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.
About Orosur Mining Inc.
Orosur Mining Inc. is a fully integrated gold producer , developer and explor er 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 listed in Canada (TSX: OMI) and London (AIM: OMI).
For more information, please visit www.orosur.ca or contact:
Orosur Mining Inc.
Ignacio Salazar, Chief Executive Officer
Tel: +1 (778) 373-0100
Cantor Fitzgerald Europe
David Porter / Craig Francis / Philip Davies
Tel: +44 (0) 20 7894 7000
FTI Consulting
Ben Brewerton / Oliver Winters / Sara Powell / Emerson Clarke
Tel: +44 (0) 20 3727 1000