JOHANNESBURG (miningweekly.com) – TSX- and Aim-listed gold producer Orosur Mining on Monday lowered its production guidance to between 27 000 oz and 30 000 oz of gold, down from the initial 30 000 oz target at its San Gregorio (SG) mine, in Uruguay.
This is owing to production for the third quarter of its financial year, which ends in June, falling by 12.3% year-on-year to 6 859 oz, as production grades continued to decline.
The lower production at SG also resulted in higher cash operating costs, which increased from $858/oz in the third quarter of 2017 to 1 065/oz in the quarter under review.
Orosur also hiked its full-year operating cash cost guidance from between $800/oz and $900/oz to between $900/oz and $1 000/oz.
In the March quarter, the lower production and higher costs weighed on the company’s financial performance, with operating profit falling by 36% from $1.85-million in the third quarter of the 2017 financial year, to $1.17-million in the quarter under review. Orosur also swung to a third-quarter after-tax loss of $1.98-million, compared with a profit of $363 000 a year earlier.
The company stated that it had started to implement strategic initiatives aimed at reducing costs, as its focus shifted to profitability, rather than purely ounces produced.
As part of the initiative, greenfield exploration was suspended and nonessential corporate and support costs have been reduced, along with directors and officers agreeing to reduce their salaries by 20%.
Orosur plans to discontinue mining from marginal openpits during the fourth quarter of 2018 and consequently a reduction of 120 staff members has occurred from November 2017 to March 2018.
Meanwhile, the company is accelerating its preparation of Veta A – a new underground project that is 1.2 km from the plant. The company has submitted a permit application to an environmental agency in Uruguay.
Initial work indicates that Veta A is currently the highest-grade source of underground ore available in the SG mine complex. Veta A was previously mined as an openpit, producing 29 000 oz with an average grade of 3.1 g/t between September 2006 and March 2008.
Reserves at the end of May 2017 were 9 440 oz (122 328 t at 2.40 g/t of gold) and Orosur is targeting a significant increase in reserves after proving the continuity and extension of the orebody over 140 m from the current defined reserves, while it remains still open at depth and along strike.
Orosur is also active in Colombia, where a drilling campaign is under way.