Orosur Mining Orosur Mining Inc. - Q3 2019 Update and Results

 
TIDMOMI 
 
 

Orosur Mining Inc. ("Orosur" or "the Company") (TSX/AIM: OMI), a South American-focused gold developer and explorer announces the results for the third quarter ended February 28, 2019 ("Q3 19" or the "Quarter").

HIGHLIGHTS

 
 
    -- In February 2019, Orosur received US$500,000, being the first of four 

half yearly cash payments from Newmont Mining Corporation ("Newmont")

as part of the previously announced Exploration Agreement with Venture

Option for the Anzá project in Colombia.

 
    -- In March 2019, Minera Anzá (Orosur's Colombian subsidiary), received 

US$240,000 from Newmont Colombia S.A.S., a subsidiary of Newmont, to

fund the property maintenance costs in Colombia during the first 6

months of the exploration period (October 2018 to March 2019). This

occurred after the end of the Quarter and is therefore not reflected

in the Q3 19 balance sheet.

 
    -- In Uruguay, as previously announced, Loryser SA ("Loryser"), the 

Company's largest Uruguayan subsidiary, has received to date support

from approximately 72% of its creditors by value (comprising 67

different creditors) for its proposed reorganisation agreement ("the

Agreement"). Under the Agreement, Loryser will manage a process, to be

completed within two years, whereby the net proceeds from the sale of

assets in Uruguay will be used to reclaim and close operations

responsibly, and any remaining funds together with the issue of 10

million Orosur common shares will be used to fully satisfy all amounts

owing to Loryser's creditors.

 
    -- During Q3 2019, Loryser started part of the work included in the 

Agreement. This work has included advancing the remediation of the

tailings dam and dewatering, taking advantage of the summer months,

approximately 700,000 cubic metres, equivalent to 26 hectares of the

total 40 hectares covered by the dam. In parallel, Loryser is starting

to cover the dry area of the tailings dam with gravel.

 
    -- In March 2019, Loryser executed a brokerage agreement with Savona 

Equipment Ltd to support the sale of specialized mining equipment of

the San Gregorio mine, including its CIL plant, in the international

markets.

 
    -- As previously announced, on March 28, 2019, the Arbitral Tribunal in 

Chile rendered its decision, ruling that Fortune Valley Resources

Chile S.A. ("FVRC") (an indirect, wholly-owned subsidiary of Orosur)

is required to pay Anglo American Inversiones SA approximately US$1.6

million plus interest at Chile´s current interest rate calculated from

December 2015 until its effective payment. The Tribunal's decision is

exclusively against FVRC. Orosur was not named in the decision from

the Tribunal. FVRC is evaluating its options with its Chilean lawyers.

 
    -- At February 28, 2019, the Company had a cash balance of US$1.0 million 

of which US$246k is held by Loryser and not accessible to the Company

(November 30, 2018 - $1.0 million; May 31, 2018 - $1.4 million).

 
    -- On April 12, 2019, Mr. Robert Schafer was formally appointed Chairman 

of the Board of Directors.

Ignacio Salazar, CEO of Orosur, said:

"At the end of 2018, the Company managed to close two key strategic agreements which provide a platform to transform Orosur: in Colombia with Newmont and with Loryser creditors in Uruguay.The Company has been working diligently to deliver on both agreements during last quarter and remains committed to its plan to restructure its businesses, and recapitalize and transform the Company."

Outlook and Strategy

During the year ended May 31, 2018, the Board adopted an aggressive strategic plan to restructure its businesses, and recapitalize and transform the Company by advancing its operations in Colombia (now with Newmont as a partner), as well as finding a fair solution in Uruguay for all stakeholders and reducing its activities in Chile. The strategy remains unchanged.

In Colombia, Newmont is performing a strategic review of the Anzá project to define an exploration program in the area in cooperation with Orosur.

In Uruguay, Loryser has commenced implementing the Agreement with creditors in anticipation of ratification by the Court. The reorganisation process and the Agreement are subject to consideration by the Court and the Intervenor. The process will continue with the Court confirming that the majorities required for the Agreement were effectively obtained, to be followed by public notice of the Agreement to all interested parties. Provided there is no valid opposition, the ratification process is expected to be completed by the end of the first half of 2019. Once approved by the Court, the Agreement will be legally binding on all Loryser's creditors and Loryser's creditor protection status will cease together with the Intervenor's control over Loryser.

Orosur Mining Inc., [phone]Ignacio Salazar, Chief Executive OfficerRyan Cohen, VP Corporate [e-mail] Angel Corporate Finance LLP, [phone]Nominated Adviser & Joint BrokerJeff Keating / Stephen WongNumis Securities Limited, [phone]Joint BrokerJohn Prior / James Black / Paul Gillam

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 and the funding from Newmont of those plans, Newmont´s decision to continue with the option agreement, the ability to continue operations in Uruguay, and the approval by the Court of the Agreement in Uruguay, expectations that the Agreement will become legally binding on all creditors of Loryser and successful emergence from creditor protection proceedings and Intervenor control, and the outcome of the arbitration process in Chile against FV and any effects of that arbitration´s decision to the Company. 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 those as described in Section "Risks Factors" of the Management's Discussion and Analysis for the three months ended February 28, 2019 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. 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.

About Orosur Mining Inc.

Orosur Mining Inc. (TSX: OMI; AIM: OMI) is a precious metals developer and explorer focused on identifying and advancing gold projects in South America. The Company operates in Colombia and Uruguay.

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].

Orosur Mining Inc.Condensed Interim Consolidated Statements of Financial Position(Expressed in thousands of United States Dollars)Unaudited

 
                                                 As at           As at 
                                                 February 28,    May 31, 
                                                 2019            2018 
ASSETS 
Current assets 
Cash and cash equivalents                        $ 1,033         $ 1,390 
Accounts receivable and other assets               928             1,550 
Inventories                                        5,301           6,100 
Asset held for sale                              -                 120 
Total current assets                               7,262           9,160 
Non-current assets 
Accounts receivable and other assets               73              73 
Property, plant and equipment                      3,261           6,578 
Exploration and evaluation assets                  9,724           9,755 
Restricted cash                                    49              201 
Total assets                                     $ 20,369        $ 25,767 
EQUITY AND LIABILITIES 
Current liabilities 
Accounts payable and accrued liabilities         $ 20,500        $ 17,845 
Current portion of long-term debt                  1,711           1,730 
Warrants                                           409             68 
Environmental rehabilitation provision             139             139 
Total current liabilities                          22,759          19,782 
Non-current liabilities 
Long-term debt                                     211             211 

Environmental rehabilitation provision             5,248           5,283 
Total liabilities                                  28,218          25,276 
Equity 
Share capital                                      65,290          63,290 
Contributed surplus                                5,965           5,893 
Currency translation reserve                       (1,037)         (912) 
Deficit                                            (78,067)        (67,780) 
Total equity                                       (7,849)         491 
Total equity and liabilities                     $ 20,369        $ 25,767 
 
 

The accompanying notes to the unaudited condensed interim consolidated financial statements are an integral part of these statements.

Orosur Mining Inc.Condensed Interim Consolidated Statements of Loss and Comprehensive Loss(Expressed in thousands of United States Dollars)Unaudited

 
                 Three Months   Three Months   Nine Months    Nine Months 
                 Ended          Ended          Ended          Ended 
                 February 28,   February 28,   February 28,   February 28, 
                 2019           2018           2019           2018 
Gross profit 
(loss) 
Sales            $ -            $ 8,555        $ 4,202        $ 29,534 
Cost of          -                (9,234)        (7,119)        (28,714) 
sales 
Gross profit     -                (679)          (2,917)        820 
(loss) 
Operating 
expenses 
Corporate          (528)          (382)          (1,569)        (1,776) 
and 
administrative 
expenses 
Restructuring      (81)           (597)          (4,048)        (1,407) 
costs 
Exploration        (28)           (6)            (121)          (32) 
written 
off 
Exploration        (1,850)        (417)          (2,012)        (417) 
expenses 
Obsolescence     -                10             (5)            (35) 
provision 
Other income       1,236          92             1,535          222 
Net finance        (17)           (63)           (87)           (209) 
cost 
Care               (571)        -                (1,184)      - 
and 
maintenance 
Loss on fair       (320)        -                (341)          (10) 
value of 
financial 
instrument 
Net foreign        133            65             462            328 
exchange 
gain/(loss) 
                   (2,026)        (1,298)        (7,370)        (3,336) 
Loss before        (2,026)        (1,977)        (10,287)       (2,516) 
income 
taxes 
Income tax       -              -              -                (2) 
recovery 
Net loss for     $ (2,026)      $ (1,977)      $ (10,287)     $ (2,518) 
the period 
Other 
comprehensive 
income 
(loss) 
Items that 
will be 
reclassified 
subsequently 
to income 
Cumulative       $ 624          $ 70           $ (125)        $ (66) 
translation 
adjustment 
Other              624            70             (125)          (66) 
comprehensive 
income 
(loss) for 
the period 
Total            $ (1,402)      $ (1,907)      $ (10,412)     $ (2,584) 
comprehensive 
loss 
for the 
period 
Basic and        $ (0.01)       $ (0.02)       $ (0.08)       $ (0.02) 
diluted 
net 
loss per 
share 
Weighted 
average 
number 
of common 
shares 
outstanding        150,278        117,587        136,774        113,867 
 
 

The accompanying notes to the unaudited condensed interim consolidated financial statements are an integral part of these statements.

Orosur Mining Inc.Condensed Interim Consolidated Statements of Cash Flows(Expressed in thousands of United States Dollars)Unaudited

 
                                            Nine Months     Nine Months 
                                            Ended           Ended 
                                            February 28,    February 28, 
                                            2019            2018 
Operating activities 
Net loss for the period                     $ (10,287)      $ (2,518) 
Adjustments for: 
Depreciation                                  3,533           5,911 
Share-based payments                          72              50 
Exploration and evaluation                    121             32 
expenses written off 
Obsolescence provision                      5                 35 
Fair value of financial instrument            341             (20) 
Accretion of asset retirement obligation      57              57 
Gain on sale of property,                     (902)           (65) 
plant and equipment 
Other                                         383             (23) 
Changes in non-cash working 
capital items: 
Accounts receivable and other assets          622             234 
Inventories                                   794             397 
Accounts payable and accrued liabilities      2,655           2,212 
Net cash provided by (used                    (2,606)         6,302 
in) operating activities 
Investing activities 
Purchase of property, plant and equipment     (340)           (7,897) 
Environmental tasks                           (92)            (114) 
Proceeds from sale of fixed assets            938             10 
Exploration and evaluation expenditures       (510)           (4,553) 
Net cash used in investing activities         (4)             (12,554) 
Financing activities 
Issue of common shares                        2,000           2,894 
Restricted cash                               152           - 
Loan payments                                 (19)            (176) 
Investment in Anillo                          120             69 
Loans received                              -                 1,500 
Net cash provided by financing activities     2,253           4,287 
Net change in cash and cash equivalents       (357)           (1,965) 
Cash and cash equivalents,                    1,390           3,357 
beginning of period 
Cash and cash equivalents, end of period    $ 1,033         $ 1,392 
 
 

The accompanying notes to the unaudited condensed interim consolidated financial statements are an integral part of these statements.

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(END) Dow Jones Newswires

April 16, 2019 02:00 ET (06:00 GMT)