Orosur Mining Orosur Mining Inc. - First Quarter 2019 Results

 
TIDMOMI 
 
 

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, compared 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.

 
    -- 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 expenditures 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 balance4                   US$ '000   1,119     1,390    (271) 
Total debt5                     US$ '000   1,922     1,941    (19) 
Cash net of debt                US$ ´000   (803)     (551)    (252) 
 
 

1Results 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.

2Before non-cash working capital movements

3Operating 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.

5All 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, the Court has scheduled a meeting of creditors for December 2018. In parallel with ongoing discussions with third parties, the 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 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 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.

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: [phone].

- Financial Statements Follow -

 
Orosur Mining Inc. 
Condensed Interim Consolidated 
Statements 
of Financial Position 
Thousands of United States Dollars, 
except where indicated 
                                          As at August 31, As at May 31, 
                                          2018 ($)         2018 ($) 
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              4,199            6,578 
and development costs 
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                  19,513           17,845 
accrued liabilities 
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                     20,859           25,767 
shareholders' equity 
 
 
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) 
 
 
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                   66       10 
expenses written off 
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,             19       (44) 
plant and equipment 
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                     1,724    (585) 
accrued liabilities 
Net cash generated from                      (17)     2,788 
operating activities 
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                      291      2,891 
financing activities 
Cash flow from investing activities 
Purchase of property, plant and equipment    (260)    (2,860) 
and development costs 
Environmental tasks                          (52)     (40) 
Proceeds from the sale of fixed assets       -        10 
Exploration and evaluation                   (233)    (1,613) 
expenditure assets 
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 
 
 

For further information, please contact:Orosur Mining IncIgnacio Salazar, Chief Executive OfficerRyan Cohen, VP Corporate [e-mail]: [phone]orCantor Fitzgerald Europe - Nomad & Joint BrokerDavid Porter/Keith DowsingTel: [phone]orNumis Securities Limited - Joint BrokerJohn Prior / James Black / Paul GillamTel: [phone]

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(END) Dow Jones Newswires

October 15, 2018 02:00 ET (06:00 GMT)