Uruguay Mineral (SEE LSE:OMI) Share Discussion Threads

[argy2] 25/11/2009 15:48

Both Whingerfrith stocks....ooops!

[robson1974] 25/11/2009 15:43

you'd be better off sticking to NXS...maybe not :-p

[argy2] 25/11/2009 15:34

robson

Just stick to this thread you're becoming an embarrassment.

[robson1974] 25/11/2009 14:42

VGM 60k oz production Market Cap £55m

UGY 60k oz production Market Cap £17m

I know which one i'd rather be in

[robson1974] 25/11/2009 13:21

gold 1180

1200 looks unstoppable

[adam] 25/11/2009 09:14

as the article implies - the dollar weakness which is in part responsible for the gold price rise - will also increase costs. so you can't have your cake and eat it. overall the impact is likely positive but perhaps not as much as we'd all like.

[stevea171] 25/11/2009 09:14

It's easier to read if the full article is pasted here. Possibly further aquisitions to come according to Minesite. Interesting that the Minera IRL aquisition previously linked to UGY was also in the Maricunga belt but an earlier stage project.

Uruguay Minerals Makes A First Foray Into Gold Exploration In Chile With The Acquisition Of Fortune Valley
November 24, 2009 By Alastair Ford

"Things have changed quite a bit over the past three or four months", says David Fowler, chief executive of Uruguay Mineral Exploration. In a way, that's putting it mildly, given that Uruguay Minerals has taken a step unprecedented in its history to date – it's expanded its operations outside of Uruguay. The acquisition of Fortune Valley in a C$8 million all-share deal will give the company a footprint in Chile for the first time, and, reckons David Fowler, access to a lot more ounces of gold. Fortune Valley's Pantanillo property in the prolific Maricunga Belt looks like it might hold as much as two million ounces, while another project further north is along strike from one of Chile's most productive gold mines, Yamana's El Peñón mine. Uruguay plans an immediate US$4 million spend to work these projects up, and, according to the release which announced the closure of the acquisition, the immediate objective is the creation of "a second production asset for the group".

Uruguay has long needed to diversify. The company's flagship asset, the San Gregorio property on the Isla Cristalina belt, approximately 450 kilometres north of Montevideo, hasn't always been an easy proposition. Three deposits have been mined to date, San Gregorio, Santa Theresa, and the main mine, Arenal, and between them they've produced 800,000 ounces. But it's been a rocky ride for Uruguay shareholders, as mining conditions have been tough, and the Arenal open pit is gradually being mined out. The company's shares have more than doubled this year, and currently stand at 37p. But at the beginning of 2008, the same shares were worth 180p, while at the beginning of 2006 they were worth over 300p. Hard work to knock such significant value off a company in the gold space during that period, given that the gold price went from US$650 per ounce to over US$1,100 over the same time.

Still, a strong gold price is no use long-term if your reserves are about to be mined out. So Uruguay's had a two-pronged strategy for a while now. The first part of that strategy has called for the development of an underground operation at Arenal. This, says David Fowler, is proceeding well. An updated resource is due out next February, and a feasibility study should follow in June or July. "The idea is for first production from stopes early in 2011", says David. The second part of the strategy involves growth through acquisition. This is a more complex undertaking, though it will perhaps prove the more significant too.

The acquisition of Fortune Valley by no means marks the end of Uruguay's expansion plans, says David. The key to this initial deal, though, was to provide the market with a statement of intent, without being too dilutive of the shares. The company looked over several deals, including, as was rumoured in the market at one stage, Hidefield's property portfolio in Argentina, now being acquired by Minera IRL. In the end, though, Fortune Valley offered the best number of ounces on the best terms for Uruguay.

And now that the acquisition is about to complete, says David, Uruguay might go back and revisit some of the other earlier stage Chilean properties that it had to turn down first time round on the grounds that the company lacked the local capability to do the work required. There's also the small matter of the company's name to consider. Uruguay Mineral Exploration as a corporate entity is now not long for this world, given that the focus is likely to broaden fairly rapidly from here on in. At the last AGM the company was authorised by shareholders to initiate a name change, although the new name has yet to be decided upon.

In the meantime, there's still around 190,000 ounces due to come out of the Arenal pit, at what looks likely to be a very nice margin. There's no debt, and no hedging, and even if, due to heavy rains, production during the most recent quarter hasn't quite met expectations, David is confident that the company is still on track to produce its targeted 60,000 ounces for the year. Cash costs might be a little higher than originally envisaged, as currency movements go against the company, but the high gold price is having a hugely positive impact on margins nonetheless. That's certainly reason to be cheerful, and goes a long way to explaining why there have been more buyers than sellers around lately. Uruguay's still got a lot of ground to make up, but it looks like it's made a start.

[robson1974] 25/11/2009 09:06

gold spot now $1175

that's potential upside of $325/oz on 60k oz so almost $20m p.a.

[rivaldo] 25/11/2009 07:29

Fordtin, ta for the Minesite article. Some tasty extracts:

"The acquisition of Fortune Valley in a C$8 million all-share deal will give the company a footprint in Chile for the first time, and, reckons David Fowler, access to a lot more ounces of gold. Fortune Valley's Pantanillo property in the prolific Maricunga Belt looks like it might hold as much as two million ounces, while another project further north is along strike from one of Chile's most productive gold mines, Yamana's El Peñón mine. Uruguay plans an immediate US$4 million spend to work these projects up, and, according to the release which announced the closure of the acquisition, the immediate objective is the creation of "a second production asset for the group"."

"The first part of that strategy has called for the development of an underground operation at Arenal. This, says David Fowler, is proceeding well. An updated resource is due out next February, and a feasibility study should follow in June or July. "The idea is for first production from stopes early in 2011", says David. The second part of the strategy involves growth through acquisition. This is a more complex undertaking, though it will perhaps prove the more significant too."

"In the meantime, there's still around 190,000 ounces due to come out of the Arenal pit, at what looks likely to be a very nice margin. There's no debt, and no hedging, and even if, due to heavy rains, production during the most recent quarter hasn't quite met expectations, David is confident that the company is still on track to produce its targeted 60,000 ounces for the year. Cash costs might be a little higher than originally envisaged, as currency movements go against the company, but the high gold price is having a hugely positive impact on margins nonetheless. That's certainly reason to be cheerful, and goes a long way to explaining why there have been more buyers than sellers around lately. Uruguay's still got a lot of ground to make up, but it looks like it's made a start."

[robson1974] 24/11/2009 23:28

would not be very clever 'insiders' would they if they were selling based on 'heavy rains' and 'currency movements' when the potential cashflow upside on 60k oz p.a. is currently running at $18m

anyway...

over in Canada, FVX down 10% and UME up 10% so the arb potential has gone up to about 30% ish again

[adam] 24/11/2009 19:17

Seems the price weakness could be explained then by insider selling on "heavy rains" and "currency movements".

[robson1974] 24/11/2009 16:36

the rising tide of gold should lift all boats

[fordtin] 24/11/2009 16:06

Minews Story: November 24, 2009
Uruguay Minerals Makes A First Foray Into Gold Exploration In Chile With The Acquisition Of Fortune Valley

[skidaddle] 24/11/2009 11:31

Announcement of excellent profits would do the trick IMHO.

[corrientes] 24/11/2009 11:29

In my x-file mode,I have dreams of Mr Brown and his anti gold cronies telling the banks (and thereby market makers) to keep the lid on small precious metal stock prices so as to prevent the public becoming aware that their paper money is going to becomes so much toilet paper,so avoiding panic in the market place.Then I wake up and realise that this barbaric relic is just a mirage, and I've got absolutely nothing to worry about.

It's absolutely amazing to see the amount of interest in these type of stocks is about zilch when the likely profit figures are there for all to see. 'They' can't keep up this supression forever, surely. All of a sudden, people will wake up,because that's what's happened in the past, and gold purchases are presently going through the roof,never mind central bank being net buyers now. What will be the trigger for stocks though, I ask myself ?

[atlantic1953] 23/11/2009 13:30

thanks for that

[stevea171] 23/11/2009 12:52

Atlantic. Hope you are well.

Imo UGY has not lost its 'dog' tag from when it went sub 20p a while ago. The market is hesitant to give it a proper rating until it is more sure the problems are behind it. News like the Fortune Valley merger was well received but the final proof that the company has turned the corner will be in production figures and profitability.

PS. I would expect the UGY share price could at least double from here by the end of January if the gold price remains strong and Q2 results are favourable.

Re MCR I assume no news on Meekatharra means any deal will not be considered a particularly good one, hence the news coming out has been on Copper Flat, uranium stake etc.

[stevea171] 23/11/2009 12:44

When gold last took off exponentially investors in gold companies did rather well. Uruguay Minerals could do better than most because its recent marginal returns from production should turn into significant profitability even at a 60k oz annual run rate of production.

A reminder for those who sit tight – the rewards will be great.

[atlantic1953] 23/11/2009 12:43

stevea why is ugy so cheap!!

The fundamentals suggest it is a screaming buy but the market does not appear to think so.

Off topic have you any thoughts on whether mcr will be rerated any time soon and why they are not updating shareholders on Meekathara.


Many thanks

[explorer88] 23/11/2009 11:00

yes - isa-able

[scottishfield] 23/11/2009 10:55

I assume this is isa-able guys (as its listed elsewhere) ? tks in advance.