Orosur Mining: Fiscal Q2 2015 Financial Results and Operational Update

SANTIAGO, Chile--(BUSINESS WIRE)--

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 second quarter of its fiscal 2015 ended November 30, 2014 (“Q2 2015” or the “Quarter”).

Highlights

Financial

• Gold production of 12,854 oz (14,829 oz in Q2 2014)
• Cash operating costs of US$984/oz (US$761/oz in Q2 2014)
• Both production and cash operating costs are in line with original guidance, and the Company remains on track to deliver its full year production guidance of 50,000 – 55,000 oz at a cash operating cost of US$850 - $950/oz
• All-In-Sustaining costs of US$1,258/oz (Q2 2014: US$866/oz) as the Company maintained its planned exploration and investment programmes
• Average gold price received in the Quarter was US$1,212/oz (Q1 13/14: US$1306/oz)
• Cash flow from operations of US$0.8M (Q2 2014: US$7.3M )
• Net loss after tax for the quarter was of US$ 1.2M (Q2 2014: Net profit after tax US$3.5M)
• The cash balance at November 30, 2014 was US$6.8 million compared to US$10.8 million at May 31, 2014
• Ongoing reduction in net debt with US$1.7M of debt repaid in the Quarter. The Company’s debt balance at November 30, 2014 was US$3.2 million compared to US$4.9 million at May 31, 2014.

Exploration

• Continued funding of exploration programs in the San Gregorio district of Uruguay, including approximately 5,640 m of drilling while on-going pre-development work focused on the main known extension of the San Gregorio deposit
• As part of the San Gregorio pre-development program, two drill holes tested an area east of the Ombú pit and west of the San Gregorio deposit
• Encouraging results at Ombú including:
  • OZDD14-018: 15.7 m at 2.97 g/t Au
  • OZDD14-019: 5.1 m at 4.70 g/t Au
• Underground drilling at Arenal Deeps yielded high-grade gold intercepts and has generated new targets that indicate potentially significant extensions of the deposit
• Significant results at Arenal Deeps including:
  • DDHUG14N20_01: 6 m at 9.79 g/t Au
  • DDHUG14N20_03: 11.2 m at 5.30 g/t Au and 16.3 m at 4.50 g/t Au

Corporate

• During the Quarter, Orosur extended the terms of its farm-in with Corporación Nacional del Cobre de Chile (“Codelco”) until January 2020 at zero cost, with an option to extend for an additional two years.
• Orosur also entered into a non-binding letter of intent to option up to 40% of its interest in the Anillo project in Chile to Asset Chile Exploración Minera Fondo de Inversión Privado for non-dilutive funding of up to US$3.5 million.

Ignacio Salazar, CEO of Orosur, said:

“Orosur has once again delivered quarterly results in line with its guidance. The Company anticipated a quarter with higher unit costs pursuant to the mine plan and this, coupled with the weakness in the current gold price environment, has impacted the Company during the Quarter. However, the operational improvements implemented over the most recent months have positioned the Company to continue generating positive cash flow from operations, whilst advancing exploration and development efforts, most notably in Uruguay around the San Gregorio mine.

“In Anillo, the Company signed two separate agreements during the Quarter, with CODELCO and Asset Chile respectively, to significantly extend and advance the project As previously stated, the Company expects lower cash operating costs during the second half of the year as Orosur continues to focus on cost reduction initiatives, cash optimization and operational excellence.”

Results Conference Call

Orosur will be hosting a conference call for analysts to discuss the results, details for the call are below:

Time & Date:	14 January 2015
	2:00pm Greenwich Mean Time, 9:00am Eastern Standard Time.
Dial-In Details:	London	[phone]
	Canada	[phone]
	United States	[phone]
Passcode:	32538891#

Operational & Financial Summary^1		Q1 ended August 31
		Q2 14/15	Q2 13/14	Diff
Operating Results
Gold produced	Ounces	12,854	14,829	(1975)
Operating cash cost^3	US$/oz	984	761	(223)
Average price received	US$/oz	1,212	1,306	(94)
Financial Results
Revenue	US$ ‘000	17,404	20,375	(2,971)
Net loss after tax	US$ ‘000	(1,244)	3,537	(4,781)
Cash flow from operations^2	US$ ‘000	818	7,280	(6,462)
Cash & Debt at the end of the period – Summary		November 30^th 2014	May 31, 2014	November 30th, 2013
Cash balance	US$ ‘000	6,815	10,818	8,817
Total debt	US$ ‘000	3,192	4,939	6,808
Cash net of debt	US$ ´000	3,623	5,879	2,009

^1Results are based on IFRS and expressed in US dollars ^2Before non-cash working capital movements ^3Operating cash cost is total cost discounting royalties and capital tax on production assets.

Q2 Production and Cash Costs

Production and cash operating costs for Q2 2015 are in line with both the Company’s mine plan and previously stated guidance. As previously stated, Orosur planned for higher unit costs in the first half of fiscal 2015 resulting from the current mining sequence, which was observed during the Quarter.

During Q2 2015, and in accordance with the mine plan, gold production from Arenal Deeps accounted for approximately 45% of total production in the Quarter. The Company expects this figure to average between 70-75% in the second half of fiscal 2015. Due in large part to the implementation of pillarless mining in the Arenal stopes, the Company maintains a specific mining sequence to safely and optimally operate the mine, which has, as planned, resulted in varying grade and volume figures over the fiscal year to date. As previously announced, the Company expects to return to mining higher grade, larger transverse stopes in the second half of its fiscal year, which is expected to reduce cash operating costs as well as mining open pits with lower strip ratios.

Orosur continues to focus on cost reduction initiatives, cash optimization and operational excellence.

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.

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.

Q2 2015 Financial Summary

Cash flow from operations before working capital was US$0.8 million for the quarter compared to US$7.3 million for Q2 2014, primarily due to a lower gold price and coupled with lower production than in Q2 2014. Net loss after tax for the quarter was US$1.2 million compared to a profit of US$3.5 million in Q2 2014.

The Company invested US$2.3 million in capital expenditures and US$1.1 million in exploration expenditures in the quarter compared to US$1.7 million and US$1.5 million respectively in Q2 2014.

The cash balance at November 30, 2014 was US$6.8 million compared to US$10.8 million at May 31, 2014. The Company’s debt balance at November 30, 2014 was US$3.2 million compared to US$4.9 million at May 31, 2014. 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 November 30, 2014 and at present is not planning to utilize them within the current development plans and gold price environment.

Q2 DEVELOPMENT AND EXPLORATION

URUGUAY

During the Quarter, the Company continued its exploration programs in the San Gregorio district of Uruguay, including approximately 5,640 m of drilling while continued pre-development work focused on the main known extension of the San Gregorio deposit.

URUGUAY DEVELOPMENT PROJECTS

In Q2 2015, a program of more than 3,000 m of drilling commenced to further evaluate a significant geological resource adjacent to the San Gregorio open pit that has undergone prefeasibility level engineering work. The work program, scheduled to be completed during Q3 2015, is aimed at gathering geotechnical data, and validating or improving the current geological model with the goal of enabling an informed development decision in the current fiscal year. Most of the drilling carried out in the Quarter as part of this program was geotechnical in nature and several drill holes are still in the process of being sampled and assayed.

As part of this program, two drill holes tested an area east of the Ombú pit and west of the San Gregorio deposit. The results are encouraging both for the potential to use the Ombú pit as a portal location for an underground development of the San Gregorio extension and/or for a potential expansion of the Ombú pit.

Significant results from these two drill holes are summarized below:

Hole Number	Northing	Easting	Elevation	Azimuth	Dip	Total Depth	From	To	Interval	Au
	(m)	(m)	(m)	(°)	(°)	(m)	(m)	(m)	(m)	(g/t)
OZDD14-018	6506537.78	527652.72	169.564	55	-60	104.60	55.1	70.8	15.7	2.97
OZDD14-019	6506510.9	527658.832	169.499	55	-50	96.40	74.3	79.4	5.1	4.70
							87.3	91.5	4.2	1.55

URUGUAY BROWNFIELDS EXPLORATION

Underground exploration drilling at Arenal Deeps consisted of 1,134 m in nine drill holes and was successful in identifying extensions of the Arenal orebody at Levels 20 and 107 towards the west of the previously predicted margins. Significant intercepts of this drill program include:

Hole Number	Northing	Easting	Elevation	Azimuth	Dip	Total Depth	From	To	Interval	Au
	(m)	(m)	(m)	(°)	(°)	(m)	(m)	(m)	(m)	(g/t)
DDHUG14N20_01	6505354.99	530636.11	-20.35	221.05	0	116.65	52.7	60.2	7.5	3.74
						65.2	65.2	71.2	6.0	9.79
						75.2	75.2	83.1	7.9	1.58
DDHUG14N20_02	6505354.99	530636.11	-20.35	235.04	0	147.05	83.2	89.6	6.4	1.41
						92.9	92.9	109.2	16.3	1.73
DDHUG14N20_03	6505354.99	530636.11	-20.35	221.05	-8	182.85	29.7	37.2	7.6	1.35
						71.1	71.1	83.1	12.0	2.48
						100.9	100.9	110.3	9.4	1.30
						164.3	164.3	175.5	11.2	5.39
DDHUG14N107_01	6505257.99	530576.14	-108.30	195.79	1	125.95	75.0	91.2	16.3	4.50
						100.3	100.3	120.0	19.8	2.80
DDHUG14N107_04	6505258.18	530576.06	-108.31	207.31	1	129.45	52.7	55.7	3.0	1.63
						105.4	105.4	114.9	9.5	2.50
DDHUG14N107_05	6505258.38	530575.98	-108.32	207.31	10	117.15	37.1	41.6	4.5	1.78
						59.5	59.5	64.2	4.7	1.05
						74.4	74.4	80.0	5.7	3.07
						90.4	90.4	94.6	4.2	2.59
						106.2	106.2	115.3	9.1	1.04

The intercepts described above are likely to represent potential additions to resources and reserves in areas where current models predict non-economic grades of less than 0.8 g/t Au. As the mineralization in Level 107 is the projected down-dip extension of that intercepted in Level 20, these results have also produced an attractive target for follow-up drilling between Levels 20 and 107.

Other brownfields programs focused on finding extensions of the orebodies that were subject to open pit operations in the Quarter, including Vaca Muerta, Veta Rey, Veta Guillo, and Cross Hill.

URUGUAY GREENFIELDS EXPLORATION

The greenfields program continued acquiring data and testing targets to the east of the Arenal deposit, along the structural corridor defined in the previous fiscal year. In Q2 2015, most of this work was aimed at delineating targets and executing first-pass drilling on some of these. Seven diamond drill holes for a total of approximately 780 m were completed, intersecting positive geological indicators and anomalous gold values at two different targets where further work is ongoing.

CHILE

As previously announced by the Company, two separate agreements were signed during Q2 2015, with CODELCO and with Asset Chile Exploración Minera Fondo de Inversión Privado (“Asset Chile”), for significant extension and advancement of the Anillo project.

The agreement with CODELCO, as announced on November 5^th, 2014, extends the term of the Company’s farm-in contract on the Anillo project from 2015 until 2020, with a further option to extend it until 2022.

The agreement with Asset Chile was announced on November 19^th, 2014. A Letter of Intent was signed for non-dilutive financing of up to $3.5 million to advance the exploration at the Anillo project. The first of three phases of the work program related to this agreement will consist of a new round of drilling with a budget of approximately $950,000 scheduled to start in the second half of the current fiscal year. Negotiations of the definitive agreements with Asset Chile are progressing at present. Once a definitive agreement is signed, the Company plans to perform CSAMT lines and RC drilling to follow-up and delineate the mineral intercepts obtained at the last drilling campaign, including the west border of the property in the north-south corridor of the Ventura vein new discovery at El Peñon (which was recently announced by Yamana). The Anillo project is located to the northeast of Yamana Gold’s El Peñón operation, a well established and significant gold producer.

Further exploration work at Pantanillo is scheduled to begin in Q3 with very limited capital as the exploration team plans to complete the field categorizing of the porphyry and epithermal targets defined during the past summer season, in line with a priority effort for identifying additional Au oxidized mineral sources to improve the economics of Pantanillo Norte project.

COLOMBIA

At the Anzá project in Colombia, community relations and environmental monitoring and activities continued as per the normal schedule. Technical programs for the next round of exploration work in the Anzá deposit and prioritization of targets are being defined internally and with the aid of consultants. Anzá remains a high priority target for organic growth of the Company.

END

Qualified Person's Statement

The scientific and technical information related to the current assets of Orosur Mining in this press release has been reviewed and approved by Michael Schwabe, an Exploration Consultant who is a Qualified Person under NI 43-101 reporting guidelines. Mr. Schwabe is a graduate in Science, majoring in Geology from the University of Tasmania and is Fellow of the Australian Institute of Mining and Metallurgy, a Senior Fellow of the Society of Economic Geologists and a Professional Member of the Society for Mining, Metallurgy and Exploration. Mr. Schwabe has 47 years of professional experience in the field of mineral exploration, 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 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. Please note the accompanying notes included in the unaudited interim consolidated financial statements available on www.sedar.com or the Company’s website are an integral part of these Statements.

Orosur Mining Inc. Condensed Interim Consolidated Statements of Financial Position Thousands of United States Dollars, except where indicated
	Note Ref.	As at November 30, 2014 ($)	As at May 31, 2014 ($)
Assets
Cash and cash equivalents		6,815	10,818
Accounts receivables and other assets	4	2,791	3,338
Inventories	5	14,969	14,254
Total current assets		24,575	28,410
Accounts receivables and other assets	4	414	414
Property plant and equipment and development costs	6	33,576	37,323
Exploration and evaluation costs	7	44,469	35,813
Deferred income tax assets	13	6,063	5,470
Restricted cash		288	258
Total non-current assets		84,810	79,278
Total assets		109,385	107,688
Liabilities and Shareholders’ Equity
Trade payables and other accrued liabilities	4	14,620	13,343
Current portion of long-term debt	18	2,681	3,978
Environmental rehabilitation provisions	8	598	598
Total current liabilities		17,899	17,919
Long-term debt	18	511	961
Environmental rehabilitation provisions	8	5,448	5,828
Total non-current liabilities		5,959	6,789
Total liabilities		23,858	24,708
Capital stock	9	60,544	55,184
Warrants	11	62	-
Contributed surplus		5,876	5,708
Retained earnings		19,045	22,088
Total shareholders’ equity		85,527	82,980
Total liabilities and shareholders’ equity		109,385	107,688

Approved on behalf of the Board of Directors
Ignacio Salazar	Chief Executive Officer	Daniel J. Moretti	Chief Financial Officer

Orosur Mining Inc. Condensed Interim Consolidated Statements of Profit (Loss) and Comprehensive Profit (Loss) Thousands of United States Dollars, except for earnings per share amounts
	Note Ref.	Three months ended November 30,		Six months ended November 30,
		2014 ($)	2013 ($)	2014 ($)	2013 ($)
Sales		17,404	20,375	33,930	43,320
Cost of sales	20	(18,925)	(16,194)	(35,399)	(36,093)
Gross profit		(1,521)	4,181	(1,469)	7,227
Corporate and administrative expense		(993)	(901)	(1,875)	(1,732)
Exploration and evaluation expenses written off		(4)	(374)	(33)	(890)
Other income		200	86	388	126
Finance cost	19	(57)	-	(152)	(120)
Finance income	19	1	1	3	2
Net foreign exchange gain (loss)		(29)	(285)	25	13
		(882)	(1,473)	(1,644)	(2,601)
(Loss) profit before income tax		(2,403)	2,708	(3,113)	4,626
Recovery (Provision) for income taxes	13	1,159	829	589	(2,125)
Total (loss) profit for the period		(1,244)	3,537	(2,524)	2,501
Other comprehensive loss
Foreign exchange differences on translating foreign operations		(466)	-	(520)	-
Total comprehensive (loss) profit for the period		(1,710)	3,537	(3,044)	2,501
(Loss) profit per common share
Basic and fully diluted	17	(0.02)	0.05	(0.04)	0.03

Orosur Mining Inc. Condensed Interim Consolidated Statements of Cash Flows Thousands of United States Dollars, except where indicated
	Note Ref.	Six months ended November 30,
		2014 ($)	2013 ($)
Net inflow (outflow) of cash related to the following activities   Cash flow from operating activities
Net (loss) profit for the period		(2,524)	2,501
Adjustments to reconcile net income to net cash provided from operating activities:
Depreciation		7,682	8,746
Exploration and evaluation expenses	7	30	39
Accretion of asset retirement obligation	8	38	38
Deferred income tax assets	13	(593)	2,162
Stock based compensation	10	74	96
Gain on sale of property, plant and equipment		(156)	9
Others		(190)	3
Subtotal		4,361	13,594
Changes in operating assets and liabilities
Accounts receivables and other assets		566	240
Inventories		(716)	1,894
Trade payables and other accrued liabilities		650	(3,423)
Net cash generated from operating activities		4,861	12,305
Cash flow from financing activities
Repayment of long-term debt	18	(2,508)	(1,985)
Net cash used in financing activities		(2,508)	(1,985)
Cash flow from investing activities
Purchase of property, plant and equipment and development costs	6	(4,506)	(1,856)
Environmental tasks	8	(419)	(2,276)
Proceeds from the sale of fixed assets		767	-
Exploration and evaluation expenditure assets	7	(2,198)	(3,004)
Net cash used in investing activities		(6,356)	(7,136)
(Decrease) Increase in cash and cash equivalents		(4,003)	3,184
Cash and cash equivalents at the beginning of period		10,818	5,633
Cash and cash equivalents at the end of period		6,815	8,817

Orosur Mining Inc.       Condensed Interim Consolidated Statements of Changes in Shareholders’ Equity       Thousands of United States Dollars, except where indicated
	Six months ended November 30,
	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	74	95
Issued for Waymar acquisition	94	-
Balance at end of period	5,876	5,629
Retained earnings
Balance at beginning of period	22,088	16,965
Warrant expiration	-	276
Net loss for the period	(2,524)	2,501
Currency translation reserve	(520)	-
Balance at end of period	19,045	19,742
Shareholders’ equity at end of period	85,527	80,555

Orosur Mining Inc
Ignacio Salazar, + 562 2924 6800
Chief Executive Officer
[e-mail]
or
Cantor Fitzgerald Europe
Stewart Dickson / Jeremy Stephenson
[phone]
or
FTI Consulting
Ben Brewerton / Oliver Winters / Sara Powell
[phone]

Category Code: IR

Sequence Number: 448370

Time of Receipt (offset from UTC): 20150113T212706+0000