25 May 2012

Uruguay cheer for Orosur

13/09/2010 Robert Tyerman

Orosur Mining has announced an encouraging feasibility study on its Arenal gold project in Uruguay but sees the big prize in Chile.

The company (formerly Uruguay Minerals) says the study, by AMEC E & C Services, concludes Arenal holds probable reserves of 145,000 oz and could yield a 32.3 per cent internal rate of return over six years at a gold price of $1,000 an ounce, against almost $1,250 today.

AIM-quoted Orosur, based in Montevideo, Uruguay, is pleased with prospects at Arenal, which is part of its already producing San Grogorio project, holding updated reserves of 345,786 oz of gold at a low grade of 1.51 grammes of gold per tonne of ore. The company hopes to produce 55,000 oz of gold from San Gregorio next year, at a cash cost of $825 an ounce, but for the longer term, chief executive officer David Fowler has his eyes focused on Chile.

There, Orosur's Pantanillo project in the rich Maricunga gold belt sports an initial measured and indicated resource estimate of 1.05 million oz at 0.69 grammes a tonne, with another 5,166 oz inferred. Drilling is proceeding there. Fowler says the company is particularly excited by the potential at another Chilean project, Anillo, to the north and east of another miner Yamana's rich El Penon mine.

With cash flow from San Gregorio, some $8.7 million (£5.6 million) in the bank and no debt, Orosur has an option on Anillo from its present owner, Codelco, Chile's giant copper corporation. At 29.75p, against a year's high of 39.5p and a low of 20.5p, the shares have interesting speculative potential.

Tags: AIM, Cash, Commodities, Emerging markets, Speculative punts

Sector: Mining

Companies: Orosur Mining

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