Orosur Mining Inc. – Full Year 2018 Results
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Orosur Mining Inc. – Full Year 2018 Results
Medellin, Colombia, August 29, 2018. Orosur Mining Inc. (“Orosur” or “the Company” ) (TSX: OMI) (AIM:
OMI) announces the results for the fiscal year ended May 31, 2018 (“FY18”). All dollar figures are stated
in US$ unless otherwise noted.
FY18 Highlights
Operational
• FY18 production of 27,586 oz of gold, in line with the updated guidance (27,000 - 30,000 oz), (FY17:
35,371 oz). The grade mined and processed at San Gregorio was lower than anticipated , leading to
higher costs and reduced gold production.
• 875,440 tonnes of ore were processed at a grade of 1.01 g/t with recovery averaging 94.97% (FY17:
978,529 tonnes at a grade of 1.21 g/t with recovery averaging 93.41%).
• The average gold price realized for the year was $1,280/oz (FY17: $1,258/oz), an increase of 2%.
• Cash operating costs for the year were $970/oz (FY17: $829/oz), an increase of 17%, due primarily to
lower production and lower ore grades. These results are in line with the updated guidance of US$900
– US$1,000oz for the year.
• All-in-sustaining costs (“AISC”) were $1,453/oz (FY17: $1,228/oz). The increase was due to the higher
unit operating costs from the lower ore grades processed during the period and additional brownfield
exploration.
Financial
• Restructuring costs of $2 .8mm (FY17: nil) were recognized as a provision for layoffs representing a
significant reduction in staff which left the Company with 70 employees at the end of July, as part of
the initiatives to preserve cash.
• The Company invested $ 9.8mm in capital and $5 .2mm in exploration (FY17: $10 .6mm and $2.6mm,
respectively). The Company significantly increased its investment in exploration as a result of the
drilling campaign in Colombia.
• Operating loss of $1.1mm including higher depreciation of $8.9mm. Loss after tax and after impairment
and discontinued ope rations was $36.9mm (FY17: profit of $2 .7mm) including the recognition of the
provision for layoffs ($2 .8mm), write off of exploration projects ($ 6.0mm), loss for discontinued
operation ($6.5mm), impairment ($1 1.0mm) and obsolescence provision of spare parts and
consumables inventories ($4.7mm) .
• Cash flow generated by operations before working capital investment was $3.4mm (FY17: $9.7mm).
Cash balance at the end of FY18 $1.4mm (FY17: $3.4mm) with net working capital deficiency (current
assets less current liabilities including cash) of $ 10.6mm (FY17: Positive net working capital of
$3.1mm). Excluding Loryser assets and liabiliti es, the Company had total cash and cash equivalents
of US$0.1mm at the end of FY18. Total debt of $1.9mm (FY17 $0.4mm). The increase is due mainly
to Loryser, the Company’s primary operating subsidiary drawing the $1.5mm line of credit. At present,
the Company has a cash balance of $0.45mm and total debt of $1.9mm.
Exploration
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• In Colombia, the Company reported high grade results of its 2018 step -out drilling campaign at APTA
including 5.00g/t Au over 23m, 4.89 g/t over 13.9m, 4.86 g/t Au over 25.0m, 9.42g/t Au over 7m, 9,62g/t
over 6m and 5.28 g/t over 12m.
• Drilling extended the mineralized zone at APTA down dip, up dip and along strike. Mineralized zones
remain open along strike and at depth at APTA.
• To date, Orosur has reported 18 holes (MAP_54 to MAP_71) totaling 6,314 metres at APTA and as at
June 7, 2018 announced the completion of a further 3,045m of diamond drilling at its Charrascala target
successfully encountering gold in the system, including intersects of 3.43 g/t Au and 30.60 g/t Ag over
1.5m and 2.62 g/t Au and 14.30 g/t Ag over 0.90m.
Corporate
• On June 14, 2018 the Company applied for the Loryser Reorganization Proceedings and creditor
protection, in the interest of Loryser, the Company and their stakeholders.
• Loryser continued production at SG UG until the end of July after which, during August, it is placing the
mine in care and maintenance. Loryser will remain able to enter into transactions with its suite of
Uruguayan assets. Orosur is currently conducting conversations with the Government and third parties
to analyze different options to continue its operations in Uruguay.
• In Chile, the Company is discontinuing its operational unit. On July 2018, the Company sold its
remaining 25% interest in Talca for consideration of $120k. With this sale, the Company is left with no
interest or obligation in Talca. In respect of the Anillo project, Asset Chile forfeited the 16% interest it
had earned and Fortune Valley returned the project to Codelco.
• The Company continues to advance d iscussions to finance the next stage of exploration at the Anzá
project in Colombia. In connection with these discussions, and as announced on July 10, 2018, a
sophisticated international mining company has advanced $250 k to subscribe for 3,603,077 common
shares of Orosur at a price of CAD$0.091 per share. The subscription price represent s a 102%
premium to the closing price of the Company's common shares on the Toronto Stock Exchange on
July 9, 2018.
Ignacio Salazar, CEO of Orosur, commented:
“FY18 has been a challenging year for Orosur . The weaker mineralization encountered at our SGW UG
mine in Uruguay placed the Company in a precarious situation, leading to weak operating and financial
performance for the year and also a number of financial impairments. The Company reacted quickly and
decisively; drastically reducing costs and restructuring its various business units. In mid -June, the
Company applied to place its key operating subsidiary in Uruguay, Loryser, into voluntary creditor
protection. This process is underway and the Company is making every effort to arrive at a fair and
balanced plan in the interest of all our stakeholders. In Chile, we have returned the Anillo project to Codelco
and sold the remaining 25% interest in Talca.
In Colombia, the drilling campaign in Anzá resulted in a number of high grade gold intercepts, providing
support for our geologi cal model as well as materially extending the known extent of mineralis ation. The
drilling started in October 2017 and was completed in early June 2018 and the Company has been planning
the next stages of exploration as well as hosting advanced negotiations with a sophisticated senior mining
company interested in progressing the Anzá project with the Company. This is an exciting development for
Orosur and we look forward to updating the market shortly.”
Operational & Financial Summary1
Fiscal Year (FY)
ended May 31
2018 2017 Change
Operating Results
Gold produced Ounces 27,586 35,371 7,785
Operating Cash cost3 US$/oz 970 829 141
Total Cash cost US$/oz 989 882 107
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AISC US$/oz 1,453 1,228 225
Average price received US$/oz 1,280 1,258 22
Financial Results
Revenue US$ ‘000 37,100 44,226 (7,126)
Net income (loss) before tax US$ ‘000 (27,180) 2,337 (29,517)
Cash flow from operations2 US$ ‘000 3,361 9,664 (6,303)
Cash & Debt at the end of the period 2018 2017 Diff
Cash balance US$ ‘000 1,390 3,357 (1,967)
Total Debt US$ ‘000 1,941 403 1,538
Cash net of debt US$ ´000 (551) 2,954 (3,505)
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.
FY19 Outlook
As a consequence of the weaker mineralization encountered at our SGW UG mine in Uruguay and the
consequently difficult financial situation of the Company, the Board adopted an aggressive strategic plan
which has been implemented during FY18, with the main objective to restructure its businesses,
recapitalize and transform the Company by reducing corporate structure and costs in Uruguay, advancing
Colombia and reducing its activities in Chile. In this process, Orosur has been actively considering options
and potential partnerships to create shareholder value and is currently in advanced discussions on several
alternatives to bolster capital resources to develop its assets.
During FY19, the Company expects to produce between 2,500 - 3,500 ounces of gold, with operating costs
of US$1,000 - US$1,100 per ounce from the San Gregorio mine in Uruguay in Q119, after which point all
production is expected to be ceased and is not expected to resume in FY19 , with operations placed on
care and maintenance . All future production shall depend on material developments in the funding and
environmental permitting of the Veta A Underground project in Uruguay and the ongoing discussions with
the government of Uruguay and other third parties.
Orosur is focusing on financing the next stages of exploration of the high grade Anzá project in Colombia
and is in the process of advancing a strategic alliance with a sophisticated international mining Company.
The Company anticipates that reaching a fair and balanced solution in Uruguay in the interest of all our
stakeholders while partnering and advancing the next stages of exploration at the Anzá project will be the
primary focus of the Company during FY19.
END
Qualified Person
The technical information related to the current assets of Orosur in this announcement has been reviewed
and approved by independent Mining engineer Miguel Fuentealba, a qualified person as defined by
National Instrument 43-101.
About Orosur Mining Inc.
Orosur Mining Inc. (TSX: OMI; AIM: OMI) is a fully integrated gold producer, developer and explorer
focused on identifying and advancing gold projects in South America. The Company operates in Colombia
and Uruguay.
Forward Looking Statements
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All statements, other than statements of historical fact, contained in this news release constitute "forward -
looking statements" within the meaning of applicable securities laws, including but not limited to the "safe
harbour" provisions of 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. Forward -looking statements
include, without limitation the expected completion of a US$250,000 subscription for common shares, the
negotiation and execution of definitive agreements with respect to the Anzá project, the ability to advance
the Anzá property, the approval of the TSX and other approvals , the ability to continue operations in
Uruguay, and the ability to find a fair and balanced reorganisation plan in the interests of all stakeholders .
There can be no assurance that such statements will prove to be accurate. Actual results and future events
could differ materially from those anticipated in such forward looking statements. Such statements are
subject to significant risks and uncertainties including the outcome of current discussions and negotiations
with respect to the Company’s assets in Uruguay and Colombia, the results of future exploration in
Colombia, the ability to successfully permit and develop the Veta A underground project and other risks
and uncertainties which are described in Section 8 of the Q4 2018 Management Discussion and Analysis.
The Company’s continuance as a going concern is dependent upon its ability to obtain adequate financing
and to reach profitable levels of operations. These material uncertainties may cast significant doubt upon
the Company’s ability to realize its assets and discharge its liabilities in the normal course of business and
accordingly the appropriateness of the use of accounting principles applicable to a going concern. Although
the Company has been successful in the past in obtaining financing there is no assurance that it will be
able to obtain adequate financing i n future or that such financing will be on terms advantageous to the
Company. 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.
For further information, please contact:
Orosur Mining Inc
Ignacio Salazar, Chief Executive Officer
Ryan Cohen, VP Corporate Development
Tel: +1 (778) 373-0100
Cantor Fitzgerald Europe – Nomad & Joint Broker
David Porter/Keith Dowsing
Tel: +44 (0) 20 7894 7000
Numis Securities Limited – Joint Broker
John Prior / James Black / Paul Gillam
Tel: +44 (0) 20 7260 1000
The information contained within this announcement is deemed by the Company to constitute inside
information as stipulated under the Market Abuse Regulation ("MAR"). Upon the publication of this
announcement via Regulatory Information Service, this inside information is now considered to be in the
public domain . If you have any queries on this, then please contact Ryan Cohen, VP Corporate
Development of the Company (responsible for arranging release of this announcement on behalf of the
Company) on: +1 (778) 373-0100.
– Financial Statements Follow –
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Orosur Mining Inc.
Consolidated Statements of Financial Position
(Thousands of United States Dollars, except where indicated)
As at May
31 2018($)
As at May 31
2017($)
Assets
Cash 1,390 3,357
Accounts receivable and other assets 1,550 1,519
Inventories 6,100 13,157
Asset held for sale 120 -
Total current assets 9,160 18,033
Accounts receivable and other assets 73 550
Property plant and equipment and development costs 6,578 16,160
Exploration and evaluation costs 9,755 17,677
Deferred income tax assets - 3,115
Restricted cash 201 229
Total non-current assets 16,607 37,731
Total Assets 25,767 55,764
Liabilities and Shareholders’ Equity
Trade payables and other accrued liabilities 17,845 14,518
Current portion of long-term debt 1,730 202
Warrants 68 -
Environmental rehabilitation provision 139 243
Total current liabilities 19,782 14,963
Long-term debt 211 201
Environmental rehabilitation provision 5,283 5,405
Total non-current liabilities 5,494 5,606
Total liabilities 25,276 20,569
Capital stock 63,290 61,162
Contributed surplus 5,893 5,836
Deficit (67,780) (30,913)
Currency translation reserve (912) (890)
Total shareholders’ equity 491 35,195
Total liabilities and shareholders’ equity 25,767 55,764
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Orosur Mining Inc.
Consolidated Statements of Profit/(Loss) and Comprehensive Profit/(Loss)
(Thousands of United States Dollars except for earnings per share amounts)
For the years ended May 31 Note 2018 ($) 2017 ($)
Sales
37,100
44,226
Cost of sales (38,170) (40,271)
Gross profit/(loss) (1,070) 3,955
Corporate and administrative expenses (2,231) (2,037)
Restructuring costs (2,840) 143
Exploration expenses (207) -
Exploration and evaluation costs written off (5,999) (131)
Impairment of assets (11,083) -
Inventory write-downs (1,161) -
Obsolescence provision (4,678) (113)
Other income 995 1,525
Finance cost net (177) (164)
Gain/(loss) on fair value of financial instruments, net 680 (458)
Foreign exchange gain/(loss) 591 (383)
(26,110) (1,618)
Profit/(loss) before income tax (27,180) 2,337
Recovery (expense) for income taxes (3,121) 557
Total profit/(loss) for continuing operations (30,301) 2,894
Other comprehensive profit/(loss)
Cumulative translation adjustment (22) 93
Total comprehensive profit/(loss) from continuing
operations
(30,323) 2,988
Loss from discontinued operations (6,544) (310)
Total comprehensive loss from discontinued operations (6,544) 2,678
Total comprehensive (loss)/ profit for the year
(36,867) 2,678
Basic and diluted net profit/(loss) per share
Continuing operations (0.26) 0.03
Discontinued operations (0.06) (0.00)
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Orosur Mining Inc.
Consolidated Statements of Cash Flows
(Thousands of United States Dollars, except where indicated)
For the years ended May 31 Note 2018 ($) 2017 ($)
Net inflow (outflow) of cash related to the following
activities
Cash flow from operating activities
Net profit/(loss) for the year (36,845) 2,585
Adjustments to reconcile net income to net cash
provided from operating activities:
Depreciation 8,901 7,143
Impairment of assets 11,083 -
Inventory write-downs 1,161 -
Exploration and evaluation costs written off 5,999 131
Loss from discontinued operations 6,544 310
Obsolescence provision 4,678 113
Fair value of derivatives (399) 458
Accretion of asset retirement obligation (10) 18
Deferred income tax assets 3,115 (581)
Stock based compensation 57 93
Loss/(gain) on sale of property, plant and equipment (828) (241)
Other (95) (55)
Subtotal 3,361 9,664
Changes in working capital
Accounts receivable and other assets 112 (211)
Inventories 1,217 (1,200)
Trade payables and other accrued liabilities 3,146 3,932
Net cash generated from operating activities 7,836 12,185
Cash flow from investing activities
Purchase of property, plant and equipment and
development costs
(9,712) (10,621)
Payments for environmental rehabilitation (122) (213)
Proceeds from the sale of fixed assets 782 240
Exploration and evaluation expenditure assets (5,183) (2,604)
Net cash used in investing activities (14,235) (13,198)
Cash flow from financing activities
Proceeds from private placement, net of issuance
costs
2,894 -
Loan proceeds 1,740 320
Loan payments (202) (270)
Net cash generated from financing activities 4,432 50
Decrease in cash (1,967) (963)
Cash at the beginning of year 3,357 4,320
Cash at the end of year 1,390 3,357