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Monday, 29 April 2013
Orosur Mining reviews operations after gold price drop
Orosur Mining (LON:OMI) is to review operations at its San Gregorio mine in Uruguay after the recent steep fall in the gold price.
Pre-stripping work at San Gregorio Deeps has been halted and, going forward, Arenal Deeps will form the mainstay of near-term production alongside the mining of reserves at Sobresaliente and Vaca Muerta later in the year.
Orosur added that becasue stoping started late at Arenal Deeps, production for the current year to May will be lower than expected at approximately 63,000 ounces. Its previous target was a range of 63-68,000 ounces.
For the 2013/2014 financial year, San Gregorio Deeps’ deferral (which was expected to contribute approximately 12,000 ounces) and a lower gold price assumption will mean lower production and lower revenues, Orosur added.
Costs are being cut heavily with a significant reduction in the company's workforce anticipated.
Cash at the end of April was US$3.6mln, against debt of US$9.4mln and US$6.5mln of undrawn debt facilities.
Tony Shearer, chairman, said implementing the results of the operational review will be challenging.
“Like many gold producers, Orosur is reacting to reduced long term gold price expectations.
"We are focussing on lowering costs to ensure we maintain an operating margin. The decision not to proceed with the San Gregorio Deeps pre-stripping will be reviewed as and when we have greater certainty.”