Orosur Mining UK Regulatory Announcement: FY 2014 Results: US$24M Cash Flow from Operations, US$9M Increase in Net Cash

8/11/2019 Orosur Mining UK Regulatory Announcement: FY 2014 Results: US$24M Cash Flow from Operations, US$9M Incre…

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Orosur Mining UK Regulatory Announcement: FY 2014

Results: US$24M Cash Flow from Operations, US$9M

Increase in Net Cash

SANTIAGO, Chile--(BUSINESS WIRE)--

Orosur Mining Inc. ('OMI' or 'the Company') (TSX:OMI) (AIM:OMI), the South American-focusedgold producer, developer and explorer is pleased to announce the results for the fiscal year endedMay 31, 2014.

Highlights

Gold production of 60,271 oz ahead of upgraded guidance (55,000 - 60,000 oz).

Cash operating costs reduced by 28% to US$792/oz (2013: US$1,093/oz) beating upgradedguidance.

All-In-Sustaining costs reduced by 34% to US$1,049/oz (2013: US$1,601/oz).

Average gold price received of US$1,298/oz (US$1,605 in 2013).

Net Profit after tax of US$5.1 M (2013: loss of US$14.8M).

Cash Flow from operations increased by 13% to US$23.9M (2013: US$21.2M).

Net cash increased by US$9.2M with a cash balance of US$10.8M and total debt of US$4.9M as atMay 31, 2014 (Net cash of US$5.9M).

San Gregorio Mine life extended after addition of 75,000 oz to reserves at key projects.

The San Gregorio-Arenal trend in Uruguay has been delineated over an approximate 200m widecorridor and along an extension of approximately 10 km with six initial targets defined to date.

Exploration models have been advanced in Chile at minimal cost with the results at QuebradaPantanillo consistently supporting the existence of a high sulphidation epithermal system and astructural interpretation study at Anillo which has defined six domains and several new targets.

Acquisition of Waymar Resources Ltd. closed on July 9, 2014, adding the high grade AnzÃ¡ goldexploration project in Colombia to Orosur's exploration portfolio.

Ignacio Salazar, CEO of Orosur, said:

"Orosur is pleased to have achieved strong 2014 operating and financial results, delivering ahead of

guidance given for production and cash costs. We have been able to generate operating cash flow of some US$24 million, 13% more than we generated in 2013 despite a significantly lower gold priceenvironment.



"Whilst implementing numerous programmes to improve operations during a year of significantchange for Orosur, we successfully executed the exploration and development work necessary toextend San GregorioÂ´s mine-life and grow our reserve base. Guided by disciplined capitalinvestment evaluations, progress has been made at delineating the Arenal-San Gregorio mineralisedcorridor in Uruguay and in defining additional targets at our Chilean explorations assets.

"After financing all our growth programs internally, Orosur still improved its net cash position byUS$9 million during the year. Beyond our current assets, the recent acquisition of WaymarResources has added an attractive high grade exploration asset with significant upside in Colombiain the AnzÃ¡ project. We are delighted to deliver progress across these areas and our intentionremains to work efficiently and diligently for the benefit of our shareholders. We look forward to the

year to come."

Results Conference Call

Orosur will be hosting a conference call for analysts and investors to discuss the FY 2014 results,please find details for the call below:

Time & Date:

Â

18th August 2014

4.00pm British Summer Time

11:00am Eastern Standard Time

8:00am Pacific Standard Time

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Dial-In:

Canada: + 1 (514) 841 2196

United States: +1 (718) 873 9077

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London: +44 (0) 20313 94830

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Passcode:

68606095#

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Operational & Financial Summary1

Â

Fiscal Year (FY)

ended May 31

Â

2014

Â

2013

Â

Change

Operating Results

Gold produced

Â

Ounces

Â

60,271

Â

64,994

Â

(4,723)

Operating Cash cost3

Â

US$/oz

Â



792

Â

1,093

Â

(301)

Average price received

Â

US$/oz

Â

1,298

Â

1,605

Â

(307)

Financial Results

Revenue

Â

US$ '000

Â

80,370

Â

105,884

Â

(25,514)

Net income (loss) after tax

Â



US$ '000

Â

5,123

Â

(14,825)

Â

(19,948)

Cash flow from operations2

Â

US$ '000

Â

23,885

Â

21,209

Â

2,676

Â

Â

Â

Â

Â

Â

Â

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Cash & Debt at the end of the period - Summary

Â

Â

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2014

Â

2013

Â

Diff

Cash balance

Â

US$ '000

Â

10,818

Â

5,633

Â

5,185

Total Debt

Â

US$ '000

Â

4,939

Â



8,995

Â

(4,056)

Cash net of debt

Â

US$ Â´000

Â

5,879

Â

(3,362)

Â

(9,241)

Â

Â

Â

Â

Â

1

Â

Results are based on IFRS and expressed in US dollars

2

Before non-cash working capital movements

3

Operating cash cost is total cost discounting royalties and capital tax on production assets.

FY2014 & Q4 Production and Cash Costs

The constant emphasis on cost control adopted since May 2013 has delivered strong results in the



fourth quarter and the financial year as a whole. Operational improvements introduced in orecontrol, mine planning, modelling and operations were important factors in delivering FY 2014results which beat the upgraded guidance figures provided to the capital markets.

Cash operating costs for the year were US$792/oz compared to US$1,093/oz in FY 2013. Thisrepresents a decrease of 28% and is also lower than the upgraded cash cost guidance of US$800-875/oz.

A strong performance at Arenal in the second half (H2) and especially in Q4, with higher productionthan expected, helped the Company to beat the upgraded targets that were given at the half year.

All-In-Sustaining costs have been US$1,049/oz in FY2014 compared to US$1,601/oz in FY2013.

Â

Â

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Full Year

Actual

Â

Upgraded

Full year

Outlook

Â

Original Full

year Outlook

Gold produced



Â

Ounces

Â

60,271

Â

55,000-60,000

Â

50,000-55,000

Cash Operating cost

Â

US$/oz

Â

792

Â

800-875

Â

850-925

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Â

Â

Â

Â

Â

Â

Q4 Actual

Â



H2 Outlook

Â

H2 Actual

Gold produced

Â

Ounces

Â

15,319

Â

23,320-28,320

Â

28,590

Cash Operating cost

Â

US$/oz

Â

844

Â

850-1,000

Â

820

Â

FY 2015 Outlook & Guidance

The Company's forecast production guidance for FY 2015 is between 50,000 to 55,000 ounces of

gold at operating cash costs of between US$850 to US$950 per ounce. FY 2015 Production from Arenal Deeps is expected to contribute approximately 70-75% of total gold production, with open pitmining contributing the balance of the production profile.



The Company's 2015 guidance is in line with the original guidance adopted in FY 2014, which wereupgraded and beat, however the Company considers it prudent to maintain similar targets, asexternal factors are expected to contribute to cost appreciation and lower production grades areanticipated in the mining plan for the year. The United States Dollar:Uruguayan Peso exchange ratehas remained relatively stable over the last several years despite the varying inflation rates betweenthese two currencies. While this exchange rate is not sustainable in the long run and the Company isexpected to get the benefit of the depreciation of the Peso at some stage, this has not been includedin the current plan. Having said this, the Company expects to maintain the level of savings achievedsince 2013 and plans to continue its operational improvement program focused on sustainable costcutting measures and driving ongoing operational efficiencies.

As in the past, variations in production and unit costs will occur quarter on quarter as the mine plandraws 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. The Company plans to achieve its production and cost targets over the course of the yearand is expecting higher unit cash costs in the first half of the year compared to the second half basedon the current planned mining sequence.

FY 2014 Financial Summary

FY 2014 cash flow generated from operations before working capital was US$23.9M (FY 2013:US$21.2M). This increase was realized despite an average gold price in FY 2014 of US$1,298/ozcompared to US$1,605/oz in FY2013.

FY 2014 Corporate expenses were US$3.5M compared to $5.3M in FY 2013, representing a 35%reduction as a result of the overall drive to sustainably reduce costs. This reduction was achieved byreducing or cancelling non essential activities or services, doing internally services performed in the

past by consultants, renegotiating fees and working more efficiently.

FY 2014 profit after tax was US$5.1M, compared with a loss of US$14.8M in FY 2013.

The Company invested US$7.3M in capital and US$6.6M in exploration in FY 2014 compared toUS$22.0M and US$9.2M respectively in FY 2013. The decrease in capital expenditure is as a resultof the Arenal underground mine moving from development into production, as well as more efficientexploration expenditures.

Orosur's cash position as at May 31 2014 was US$10.8M (FY 2013: US$5.6M) with total debt of

US$4.9M (FY 2013: US$9M). The Company is following the contracted schedule of lease repaymentswith HSBC and Banco Santander and expects to almost entirely repay these facilities and bepractically debt free by end of FY 2015. Net working capital (current assets less current liabilitiesincluding cash) was US$10.5M in FY 2014 (FY 2013:US$4.3M). The Company has US$3.0M of commited but undrawn lines of credit available at May 31, 2014 and at present is not planning toutilize them within the current development plans and gold price environment.

Q4 Development and Exploration

During the year, the Company has been systematically identifying new gold resources, and

converting them to reserves. As a result, the Company has created a portfolio of projects to developaround San Gregorio which have extended its life of mine. The Company's objective remains tosustainably carry out sufficient exploration to maintain a four-to-six year rolling reserve, as it hasdone for many years now.



As previously announced, the Company successfully added 40,000 oz of gold reserves from pillar-less mining using Cemented Rock Fill at the Arenal Deeps Mine in Q2, and 9,000 oz of gold reservesat Vaca Muerta following the results of an infill drilling campaign during Q2 and after re-optimizingthe mineral reserves calculations using a US$1,200/oz gold price during Q3.

In addition, on the basis of historical drilling since 2006 and following a 4,886mÂ exploration drillingcampaign in Q4, the Company has successfully added an additional 11,000 oz of gold reserves in theLaureles open pit and 27,000 oz of resources (note that all resources are stated inclusive of reserves). The cost of the drilling campaign is equivalent to US$22/oz of reserves. The Laurelesproject is situated approximately 18 km north-east of the San Gregorio plant. Orosur continues itsbrownfield exploration program during FY14-15 around Vaca Muerta, Laureles as well as somesecondary targets around the San Gregorio facility and on the Zapucay cluster.

The recent iskander makhmudov yacht 2,504 m brownfield exploration drilling campaign in ArenalDeeps, below and along strike of the Arenal Deeps underground mine was conducted fromunderground platforms and targeting three different zones with potential mineralization, in closeproximity to the current underground operations. As a result, Orosur has added 18,000 oz of

resources and 15,000 oz of reserves. Additional exploration, targeting mineralization further alongstrike as well as at depth is planned to continue in FY 2015 at Arenal, with 2,300m of drillingfocused on four additional blocks aimed to add similar geological resources to those added in the FY 2014 campaign.

In total, the Company added 75,000 oz of reserves to its main projects during FY 2014, therebyextending the minelife at San Gregorio to approximately 4 years.

Uruguay Development Projects

In additional to the brownfield exploration and development work in the above-mentioned open pitsand at Arenal, the Company is carrying out modelling and engineering work on the San Gregoriodeposit, aimed at delineating a significant geological resource adjacent to the existing open pit aswell as evaluation an underground project at Veta A. The current potential of the undergroundproject at Veta A Deeps was calculated using a cut-off of 1.71 g/t Au with a total of 138 kt @ 2.55 g/t

Au for total resources of approximately 11,000 oz. Management believes that there is ample roomfor adding reserves to these projects and is evaluating potential synergies and optimal sequencing of these two projects as they are located within 1 km of each other.

Uruguay Greenfield Exploration

The Company's exploratory efforts during Q4 continued to focus primarily on the high gradegranulite basement and specifically on the corridor of the Santa Teresa, San Gregorio and ArenalShear Zone ("SGSZ"), with a low cost surface exploration program to identify new mineralizationcenters along the historically poorly defined and mostly hidden south east extension of the SGSZ.This zone was delineated in 2014 within an approximate 200m wide corridor and along an extensionof approximately 10 km. Six initial targets have been defined on this highly prospective potential beltand a program of 2,000m of DDH drilling, planned as a first pass campaign, started during Q4 andcontinues at present.

Additionally, in the Sobresaliente District, four target zones were identified and are currently underreview. Mineralization is hosted in irregular, pod like bodies that require a more robust geophysicalanalysis as well as further drilling to delineate.

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The recently acquired L-500 diamond rig is operational and supporting all surface explorationdrilling. The incorporation of this drill rig is not only providing flexibility but also reducing theCompany's drilling costs.

Chile

In Chile, activities were concentrated on surface exploration at Quebrada Pantanillo and at Anillo.The goal is to acquire valuable data and information that contributes to advancing the currentexploration models at minimal cost.

Work at Quebrada Pantanillo consisted of surface delineation work including mapping, agroundmagnetic 3D inversion model, spectrometry, geochem reinterpretation and three CSAMTsections. Results from this data consistently support the existence of a high sulphidation epithermalsystem.

At Anillo, the Company completed a structural interpretation study by Nick Olivier which defined sixdomains and several new targets.

There were no significant additional activities iskander makhmudov yacht in Chile during Q4.

Colombia

The acquisition of Waymar Resources Ltd. by way of a plan of arrangement closed after the FY 2014 year end on July 9, 2014, on schedule and within budget as already announced. The integration of the AnzÃ¡ project and the team within Orosur progressed smoothly and has now completed. The

AnzÃ¡ gold exploration project is an attractive high grade asset with significant upside. There areseveral targets in AnzÃ¡ at different stages of development. In FY 2015, Orosur is planning to review

and advance the technical evaluation of the various options in AnzÃ¡ to plan and define theupcoming round of drilling in Colombia, and re-constitute the local team during the second half of the year.

END

Qualified Person's Statement

The information presented in this press release has been reviewed by Walter Muehlebach, GMExploration of OMI and by Francisco Castillo, GM San Gregorio and they are both considered to be

in compliance with N.I. 43-101 reporting guidelines. Mr. Muehlebach is a graduate in Geology of theUniversidad CatÃ³lica del Norte (Chile) and a member of the Chilean ComisiÃ³n Calificadora deCompetencias en Recursos y Reservas Mineras, and has 23 years of experience in the field of mineral exploration. Mr. Castillo is a graduate in Mining Engineering of the Universidad de Santiagode Chile and a member of the Chilean ComisiÃ³n Calificadora de Competencias en Recursos yReservas Mineras, and has 12 years of professional experience.

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 PrivateSecurities 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 beaccurate, such statements are subject to significant risks and uncertainties, and actual results andfuture events could differ materially from those anticipated in such statements. Forward-lookingstatements include, without limitation success of exploration activities; permitting time lines; thefailure 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 lookingstatements whether as a result of new information, future events and such forward-lookingstatements, except to the extent required by applicable law.

Neither TSX Venture Exchange nor its Regulation Services Provider (as that term is defined in thepolicies of the TSX Venture Exchange) accepts responsibility for the adequacy or accuracy of thisrelease.

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 onlyproducing gold mine in Uruguay (San Gregorio), and has assembled an exploration portfolio of highquality assets in Uruguay, Chile and Colombia. The Company is quoted in Canada (TSX: OMI) andLondon (AIM: OMI).

For more information please visit www.orosur.ca

- Financial Statements Follow -

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Orosur Mining Inc.

Consolidated Statements of Financial Position

Thousands of United States Dollars, except where indicated

Â

Â

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Â

Â

As at May 31

2014($)

Â

As at May 31

2013($)

Â

Assets

Notes

Â

Cash and cash equivalents

10,818

5,633

Accounts receivable and other assets

5

3,338

3,776

Inventories

6

14,254

Â

15,715

Total current assets

28,410

25,124



Â


5

414

Property plant and equipment and development costs

7

37,323

47,321

Exploration and evaluation costs

8

35,813

31,686

Deferred income tax assets

14

5,470

5,305

Restricted cash

258

Â

332

Total non-current assets

79,278

84,644

Â

Total Assets

107,688



Â

109,768

Â

Liabilities and Shareholders' Equity

Â

Trade payables and other accrued liabilities

5

13,343

16,665

Financial debt

20

3,978

4,172

Environmental rehabilitation provisions

10

598

Â

Â

Total current liabilities

17,919

20,837

Â

Financial debt

20

961

4,823



Environmental rehabilitation provisions

10

5,828

Â

6,148

Total non-current liabilities

6,789

10,971

Â

Â

Â

Total liabilities

24,708

Â

31,808

Â

Capital stock

11

55,184

55,184

Warrants

12

-

276

Contributed surplus

12



5,708

5,535

Retained earnings

22,088

Â

16,965

Total shareholders' equity

82,980

Â

77,960

Â

Total liabilities and shareholders' equity

107,688

Â

109,768

Â

Â

Â

Â

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Orosur Mining Inc.

Consolidated Statements of Income (Loss) and Comprehensive Income (Loss)

(Thousands of United States Dollars except for earnings per share amounts)

Â

2014 ($



)

2013 ($

)

For the years ended May 31

Â

Â

Â

Note

Â

Â

Â

80,370

105,884

Sales

Cost of sales

22

(72,905

)

Â

(97,657

)

Gross profit

7,465

8,227

Â

(3,498



)

(5,303

)

Corporate and administrative expense

Exploration expenses and exploration write off

8

(245

)

(4,282

)

Impairment of assets

9

(557

)

(14,057

)

Obsolescence provision

9

(22

)

-

Uncollectible Receivables

(45

)

-

Other income



1,139

589

Finance cost

21

(670

)

(261

)

Finance income

21

4

8

Derivative income

16

0

41

Net foreign exchange gain (loss)

91

Â

Â

(603

)

(3,803

)

(23,868

)



Profit (loss) before income tax

3,662

(15,641

)

Â

Income tax recovery

14

1,461

Â

Â

816

Â

Total income (loss) and comprehensive income (loss) for the year

5,123

Â

Â

(14,825

)

Â

Â

Earnings per common share

Basic

19

0.07

(0.19

)



Diluted

19

0.07

(0.19

)

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Orosur Mining Inc.

Consolidated Statements of Cash Flows


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Â

Â

Note

Â

2014 ($)

Â

2013 ($)

Â

Net inflow (outflow) of cash related to the



following activities

Â

Cash flow from Operating activities

Net income (loss) for the year

5,123

(14,825

)

Adjustments to reconcile net income to net cash

provided from operating activities:

Depreciation

7

18,738

19,712

Impairment of assets

7

557

14,057

Exploration and evaluation expenses written off

8

219

4,217

Fair value of derivatives

16

-

(41

)



Accretion of asset retirement obligation

10

231

76

Deferred income tax assets

14(b)

(165

)

(1,663

)

Stock based compensation

12

175

151

Gain on sale of property, plant and equipment

7

(706

)

(509

)

Others

(287

)

Â

34

Â



Subtotal

23,885

21,209

Changes in operating assets and liabilities


78

897

Inventories

1,462

1,393

Trade payables and other accrued liabilities

(3,324

)

Â

(2,267

)

Net cash generated from operating activities

22,101

Â

Â

21,232

Â

Â

Cash flow from Financing activities

Proceeds from the exercise of share options

-



70

Loans received

20

-

4,713

Loan payments

(3,854

)

Â

(1,518

)

Net cash from financing activities

(3,854

)

Â

3,265

Â

Â

Cash flow from Investing activities

Purchase of property, plant and equipment and development costs

(4,762

)

(21,088

)

7

Enviromental tasks



8

(2,572

)

(960

)

Proceeds from the sale of fixed assets

847

969

Exploration and evaluation expenditure assets

8

(6,575

)

Â

(9,246

)

Net cash used in investing activities

(13,062

)

Â

(30,325

)

Â

Increase / Decrease in cash and cash equivalents

5,185

(5,828

)



Â

Cash and cash equivalents at the beginning of year

5,633

Â

Â

11,461

Â

Â

Â

Cash and cash equivalents at the end of year

10,818

5,633

Â

Â

Â

Â

Â

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Orosur Mining Inc.

Consolidated Statements of Changes in Shareholders' Equity


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Â

Â

Â



Note

Â

2014 ($)

Â

2013 ($)

Â

Capital stock

Balance at iskander makhmudov yacht beginning of year

55,184

55,074

Exercise of stock options

-

70

Transfer from contributed surplus for exercise of options

-

Â

Â

40

Â

Balance at end of year

55,184

Â

Â

55,184

Â

Â





Â

Broker warrants

Balance at beginning of year

276

276

Warrant expiration

(276

)

Â

-

Â


-

Â

Â

276

Â

Â

Â

Contributed surplus


5,534

5,424

Employee stock based compensation recognized

12

174



151

Transfer to Capital stock

-

Â

Â

(40

)


5,708

Â

Â

5,535

Â

Â

Â

Retained earnings


16,965

31,790

Net income for the year

5,123

Â

Â

(14,825

)




22,088

Â

Â

16,965

Â

Â

Â

Â

Shareholders' equity at end of year

82,980

Â

Â

77,960

Â

Â

Orosur Mining Inc

Ignacio Salazar, + 562 2924 6800

Chief Executive Officer

[email protected]

Â

Cantor Fitzgerald Europe

Stewart Dickson / Jeremy Stephenson / Carrie Lun

Tel: +44 (0) 20 7894 7000

Â

FTI Consulting

Ben Brewerton / Oliver Winters / Sara Powell



Tel: +44 (0) 20 3727 1000

Short Name: Orosur Mining

Category Code: FR

Sequence Number: 429260

Time of Receipt (offset from UTC): 20140817T193957+0100

Documents

Orosur Mining UK Regulatory Announcement: FY 2014 Results: US$24M Cash Flow from Operations, US$9M Increase in Net Cash