David Fowler, Chief Executive Officer commented:
“Production for 2012 is expected to be on target at 57,500 to 60,000 ounces despite a delay in receiving permits to commence production from Arenal Deeps. This has affected production for the quarter, however, excellent progress is now being made in the development of Arenal Deeps.
“A preliminary economic assessment prepared by AMEC for Pantanillo has shown a positive pre-tax NPV of US$32 million at a discount rate of 8 per cent and a gold price US$1,200. With exploration upside to define additional resources and further opportunities to improve the project, Pantanillo has the potential to develop into a high quality production asset for Orosur.”
- The Company’s target production for the year remains unchanged at 57,500 to 60,000 ounces, however, production for the quarter was 11,916 ounces of gold which was below the Company’s expectations of 12,750 to 13,250 ounces. Permission to start production at Arenal Deeps was received in December.
- Cash operating cost for the quarter was US$1,007 per ounce of gold which was above expectations due to lower production levels.
- Excellent progress has been made on development of the Arenal Deeps underground mine with 1,388 metres of decline and access development along with 446 metres of ore development completed to the end of November 2011.
- Revenue for the quarter was US$ 21.0 million (US$ 16.6 million in Q2 of 2010/11), an increase of 26 per cent with realized gold price up significantly to US$ 1,717 per ounce (US$ 1,332 per ounce in Q2 of 2010/11)
- Net profit after tax for the quarter was US$ 2.6m (US$ 2.8m in Q2 of 2010/11).
- Cash flow from operations for the quarter was US$ 4.7m (US$ 5.1m in Q2 2010/11).
- Cash balance at the quarter end of US$ 17.1m (US$ 13.9m in Q2 2010/11)
Exploration and development
- AMEC has completed an independent preliminary economic assessment of the current Pantanillo resource. The financial analysis undertaken was based on a gold price of US$1,200 per ounce. The resulting before tax NPV at an 8 per cent discount rate is US$32 million.
- A consortium made up of OMI and the LUMAX S.A. received a water exploration permit from the Chilean Water authority DGA for its Pantanillo Project in Chile.
- First pass drilling at Talca was focused on the northern section of the Metalera Fault and Niebla vein. Drilling in the central and southern sections of the Metalera which has seen the most significant historical production is planned for the third quarter of 2012. Limited drilling was completed in these sectors during the quarter as drill platforms were built.