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Orosur Mining back in profit as costs tumble

Published: 09:16 18 Aug 2014 EDT

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Orosur Mining (LON:ORM) (TSE:OMI) bounced back into the black as lower costs  offset the impact of a weak gold price.

Cash costs fell by 28 percent to US$792 per ounce in the year to May as the company opened new higher grade areas at its San Gregorio mine in Uruguay.

All-in sustaining costs, the new measure recommended for miners, were 34 percent lower at US$1,049 an ounce.

Production over the year dropped to 60,271 ounces from 65,000, but a strong final quarter from the newly opened underground Arenal Deeps zone meant output was just above the company’s previous guidance.

Reflecting the lower costs, net profits were US$5.1 mln (2013 loss US$14.8mln), while cashflow generated rose 13 percent to US$23.9mln, though revenue dropped 24 percent to US$80.4mln.

Orosur added it had also extended the life of San Gregorio Mine life after adding 75,000 oz to reserves. Exploration at the San Gregorio-Arenal trend had now delineated an approximate 200m wide corridor. 

In July, it acquired Waymar Resources, which brought with it the Anzá gold exploration project in Colombia.

In the current year, production is forecast at 50,000 to 55,000 ounces of gold at a cash cost of US$850 to US$950 per ounce. Arenal Deeps is expected to contribute approximately 70-75 percent of this, with open pit mining contributing the remainder.

Ignacio Salazar, Orosur‘s chief executive, said 2014 was a strong performance, ahead of guidance for both production and cash costs and extending San Gregorio's mine-life and increasing the reserve base.

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