Orosur Mining

South American gold miner Orosur (OMI) blames a first-half production shortfall on permitting delays for underground mining in Uruguay.

Based in Uruguay and quoted on AIM and the Toronto Venture Exchange, the company, which had to hold up first underground mining of the Arenal Deeps at San Gregorio in Uruguay, saw its overall output fall 4.3% to 24,404 oz in the six months to November.

However, higher prices, the absence of the previous year's derivatives loss and higher income from other sources enabled Orosur to increase pre-tax profits 22% to $8.9m (£5.4m) on turnover 20% ahead at $42m. Chief executive officer David Fowler says Orosur, which ended the half-year with $17.1m cash, still expects full-year production to come out 'on target' at between 57,500 and 60,000 oz.

He cites a preliminary economic assessment of the company's Pantanillo project in northern Chile by consultant AMEC suggesting a net present value of $312.2m and a 17% internal rate of return on annual production of 97,000 oz, with a payback time of three years and nine months. Longer term, Fowler is particularly enthusiastic about another project in northern Chile, Talca, acquired last August, covering 1,680 hectares and with a previous history of gold production.

Highlighted by Growth Company Investor last month at 67.5p, Orosur shares have since eased to 56.5p. Long-term possibilities remain interesting, though immediate prospects are more uncertain, suggesting that it might make sense to reduce holdings, while retaining a chunk for future rewards.