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