Orosur Mining Inc. – First Quarter 2019 Results
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Orosur Mining Inc. – First Quarter 2019 Results
Medellin, Colombia, October 15, 2018. Orosur Mining Inc. (“Orosur” or “the Company”) (TSX: OMI) (AIM:
OMI) announces the unaudited results for the fiscal first quarter ended August 31, 2018 (“Q1 19”). All
dollar figures are stated in US$ unless otherwise noted.
Highlights
Operational
• In August 2018 , the Company placed its San Gregorio operations in Uruguay under care and
maintenance.
• The reorganization process of Orosur’s Uruguayan operating subsidiary, Loryser S .A., has been
ongoing since June 2018. Under the reorganisation proceedings, the term for credit verification ended
on September 3, 2018, and a court-appointed Controller has validated all the credits and has filed a
report on the assets and debts of Loryser on October 3, 2018. The report is currently subject to review
and potential reassessment before the creditors’ meeting scheduled for December 2018. A final date
for approval of the report, including the final list of creditors and assets, is dependent on whether there
are any challenges. The Controller is preparing a second report assessing the status of Loryser and
explaining the causes that led Loryser to the current situation.
• Q1 19 production was 3,029 oz of gold, compared to 8,626 oz in Q1 18.
• 65,163 tonnes of ore were processed at a grade of 1.28 g/t with recovery averaging 93.01%. This
compares to 268,964 tonnes at 0.96 g/t and recoveries averaging 93.64%. for Q1 18.
• The average gold price realized for the Quarter was US$1,261/oz (Q1 18: US$1,260/oz).
• Average cash operating cost was US$1,040/oz, comp ared to US$901/oz in Q1 18 due primarily to
lower production and higher processing and administrative unit costs.
• All-In-Sustaining Costs (“AISC”) were US$1,342/oz compared to US$1,348/oz in Q1 18. The decreases
in capital expenditure and brownfield exploration were offset by lower production.
Financial
• Restructuring costs of US$3.3 million (Q1 18: US$0.06 million) were recognized as a provision for
layoffs as a result of substantial reductions in staff at San Gregorio, leaving the Company with 24
employees at the end of August.
• Loss before tax was US$6.0 million compared to a loss of US$0.4 million in Q1 18. This was mainly
due to diminished operations and higher restructuring costs.
• The Company invested US$0.3 million in capital expenditures and US$0.2 million in exploration
compared to US$2.9 million and US$1.6 million respectively in Q1 18. The Company has significantly
decreased its investment related to the San Gregorio project compared to Q1 18 by putting the mine
in care and maintenance during Q1 19.
• The Company’s cash balance at August 31, 2018 was US$1.1 million compared to US$1.4 million at
May 31, 2018, with a deficiency in net working capital (current assets less current liabilities including
cash) of US$14.6 million compared to US$10.6 million at May 31, 2018. The total liabilities under the
Loryser reorganization proceedings subject to the recent validation by the Controller were US$12.3
million. This amount relates mainly to commercial creditors and financial debt as $6.2 million in labour
liabilities and $5.4 million in environmental liabilities are not part of the proceedings unless Loryser is
put into liquidation.
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• As of the date of this announcement, the Company has a cash balance of US $1.5 million, of which
US$0.4 million is held by Loryser and subject to the reorganisation procedures. All the debt (US$1.9
million) is held by Loryser and subject to the reorganisation procedures.
Significant Transaction After the Quarter
On September 10, 2018, the Company completed a non-brokered private placement of US$2.0 million with
Newmont Mining Corporation (NYSE: NEM) and an exploration agreement with venture option with
Newmont Colombia S.A.S., a wholly -owned subsidiary of Newmont, for the Anzá exploration property in
Colombia. The Exploration and Option Agreement includes a three -phase earn -in structure allowing
Newmont to earn up to a 75% ownership interest in the Anzá Project by spending a minimum of US$30
million in qualifying e xpenditures over twelve years, completing an NI 43 -101 compliant feasibility study
and making cash payments to Orosur equaling a total of US$4.0 million over Phases 1 and 2. Newmont
purchased 29,213,186 common shares at a price of C$0.091 per share for aggregate proceeds of US$2.0
million which includes the initial advance of US$250,000 previously announced on July 10, 2018. Newmont
now holds 19.9% of the share capital of the Company.
Operational & Financial Summary1
First Quarter
ended August 31
2018 2017 Change
Operating Results
Gold produced Ounces 3,029 8,626 (5,597)
Operating cash cost3 US$/oz 1,040 901 139
Total cash cost US$/oz 1,096 944 152
AISC US$/oz 1,342 1,348 (6)
Average price received US$/oz 1,261 1,260 1
Financial Results
Revenue US$ ‘000 4,202 11,951 (7,749)
Net income (loss) before tax US$ ‘000 (6,118) (384) (5,734)
Cash flow from operations2 US$ ‘000 (3,617) 1,454 (5,071)
Cash & Debt as at August 31 2018 2017 Diff
Cash balance 4 US$ ‘000 1,119 1,390 (271)
Total debt 5 US$ ‘000 1,922 1,941 (19)
Cash net of debt US$ ´000 (803) (551) (252)
1 Results are based on IFRS and expressed in US dollars. Certain measures such as operating cash costs and AISC are non-
IRFS measures and are explained in the Company’s MD&A for the three months ended August 31, 2018.
2 Before non-cash working capital movements
3 Operating cash cost is total cost discounting royalties and capital tax on production assets.
4 $1,068 of the cash shown is held in Loryser and is under reorganisation proceedings.
3 All of the debt shown is under reorganisation proceedings.
FY19 Outlook
As a consequence of the weaker mineralization encountered at the San Gregorio UG mine in Uruguay and
the consequently difficult financial situation of the Company, the Board adopted an aggressive strategic
plan which is being implemented , with the main objective to restructure its businesses, recapitalize and
transform the Company by advancing Colombia with Newmont as partner, finding a fair solution in Uruguay
for all stakeholders and reducing its activities in Chile.
Orosur is planning the next stages of exploration of the high grade Anzá project in Colombia in coordination
with Newmont.
The Company is hard at work and anticipates reaching a fair and balanced solution in Uruguay in the
interest of all our stakeholders . As part of the reorganisation procedures, t he Court has scheduled a
meeting of creditors for December 2018. In parallel with ongoing discussions with third parties , the
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Company has started working on a payment plan proposal agreement with the creditors which should be
negotiated in advance of the creditors’ meeting.
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
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 exploration plans in Colombia, 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, 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 Management ’s Discussion and Analysis for the three months ended
August 31, 2018 and for the year ended May 31, 2018. 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 uncertaint ies 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 t he Company has been successful in the
past in obtaining financing there is no assurance that it will be able to obtain adequate financing in 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.
Condensed Interim Consolidated Statements of Financial Position
Thousands of United States Dollars, except where indicated
As at August 31,
2018 ($)
As at May 31,
2018 ($)
Assets
Cash 1,119 1,390
Accounts receivable and other assets 1,141 1,550
Asset held for sale - 120
Inventories 4,537 6,100
Total current assets 6,797 9,160
Accounts receivable and other assets 73 73
Property plant and equipment and development costs 4,199 6,578
Exploration and evaluation costs 9,596 9,755
Restricted cash 194 201
Total non-current assets 14,062 16,607
Total assets 20,859 25,767
Liabilities and Shareholders’ Equity
Trade payables and other accrued liabilities 19,513 17,845
Current portion of long-term debt 1,711 1,730
Warrants 47 68
Environmental rehabilitation provision 139 139
Total current liabilities 21,410 19,782
Long-term debt 211 211
Environmental rehabilitation provision 5,249 5,283
Total non-current liabilities 5,460 5,494
Total liabilities 26,870 25,276
Capital stock 63,540 63,290
Contributed surplus 5,906 5,893
Deficit (74,355) (67,780)
Currency translation reserve (1,102) (912)
Total shareholders’ equity (6,011) 491
Total liabilities and shareholders’ equity 20,859 25,767
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Orosur Mining Inc.
Condensed Interim Consolidated Statements of profit/ (loss) and Comprehensive profit/ (loss)
Thousands of United States Dollars, except for loss per share amounts
Three months ended
August 31,
2018 ($) 2017 ($)
Sales 4,202 11,951
Cost of sales (7,119) (11,772)
Gross profit/(loss) (2,917) 179
Corporate and administrative expenses (402) (561)
Exploration expenses (20) -
Explorations expenses and write off (66) (10)
Restructuring costs (3,322) (60)
Obsolescence provision - (35)
Other income 81 115
Net finance cost (42) (87)
Gain/(loss) on fair value of financial instruments, net 21 (10)
Foreign exchange gain 549 85
(3,201) (563)
Loss before income tax (6,118) (384)
Provision for income taxes - (3)
Total loss for continuing operations (6,118) (387)
Other comprehensive loss
Cumulative translation adjustment (190) (278)
Total comprehensive loss from continuing operations
(6,308) (665)
(Loss)/profit from discontinued operations (267) 97
Total comprehensive (loss)/profit from discontinued
operations
(267) 97
Total comprehensive loss for the period
(6,575) (568)
Basic and diluted net loss per share
Continuing operations (0.06) (0.01)
Discontinued operations (0.00) (0.00)
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Orosur Mining Inc.
Condensed Interim Consolidated Statements of Cash Flows
Thousands of United States Dollars, except where indicated
Three months ended August
31,
2018 ($) 2017 ($)
Net inflow/(outflow) of cash related to the following
activities
Cash flow from operating activities
Net loss for the period (6,385) (290)
Adjustments to reconcile net income to net cash provided from
operating activities:
Depreciation 2,635 1,961
Exploration and evaluation expenses written off 66 10
Obsolescence provision - 35
Fair value of derivatives (30) (12)
Accretion of asset retirement obligation 19 19
Stock based compensation 13 11
Loss (gain) on sale of property, plant and equipment 19 (44)
Other 46 (236)
Subtotal (3,617) 1,454
Changes in working capital:
Accounts receivable and other assets 316 150
Inventories 1,560 1,769
Trade payables and other accrued liabilities 1,724 (585)
Net cash generated from operating activities (17) 2,788
Cash flow from financing activities
Loan payments (19) (72)
Investment in Anillo - 69
Proceeds from the sale of Talca 60 -
Proceeds from private placement 250 2,894
Net cash generated from financing activities 291 2,891
Cash flow from investing activities
Purchase of property, plant and equipment and development
costs
(260) (2,860)
Environmental tasks (52) (40)
Proceeds from the sale of fixed assets - 10
Exploration and evaluation expenditure assets (233) (1,613)
Net cash used in investing activities (545) (4,503)
Increase (decrease) in cash
(271)
1,176
Cash at the beginning of period 1,390 3,357
Cash at the end of period 1,119 4,533