Orosur awards development contract to Redpath
following board approval for Arenal Deeps in Uruguay
MONTEVIDEO, Uruguay 21 December, 2010. Orosur Mining
Inc (TSX-V: OMI/AIM: OMI), a South American-focused gold producer and
explorer announces the approval of the Arenal Deeps project by its Board of
Directors and the execution of a Letter of Intent with Redpath Chilena
Construcciones y Compa��a Limitada (�Redpath�), a member of the Redpath Group
of companies, for the mining development contract. A definitive agreement is
expected to be signed early in 2011 with targeted commencement of development
in February 2011, following equipment delivery and final environmental
permitting.
The contract will involve the development of
approximately 2 km�s of decline, 8 km�s of lateral development and stope
preparation and is expected to be completed in approximately 30 months.
Redpath has committed to training Uruguayan personnel to allow Orosur to
develop a longer term capability to undertake owner operated mining.
Ore mining will be performed by Orosur and expected
to start in the second half of calendar 2011 and to be carried out
concurrently with development.
The Company submitted a request for an environmental
permit for the Arenal Deeps project on April 30, 2010 and is in the process
of obtaining the environmental approvals for the project from DINAMA, the
relevant authority in Uruguay by early calendar 2011.
At current gold prices the project can be funded
from cashflow from operations and modest debt levels. Orosur has received a
number of preliminary debt funding offers for the project and expects to
close financing arrange for $US5 million to $US10 million of debt funding in
Q1 of calendar 2011.
Mobilisation of Redpath is targeted for February
2011, when development is planned to start. Gold production is anticipated in
the second half of calendar 2011.
Commenting on the approval of Arenal Deeps and the
appointment of contractors, David Fowler, CEO of Orosur said: �Arenal Deeps
is an important step for the Company in our objective to extend the San
Gregorio mine life in Uruguay while maintaining production levels at
approximately 50,000 to 60,000 ounces of gold per annum and reducing cash
costs. The initial investment in capital and skills will also allow
additional underground reserves to be targeted at San Gregorio and
Argentinita to further extend mine life.�
"Arenal Deeps will be the first underground
mine in Uruguay. Partnering with Redpath, a premium international
underground mining contractor, is an important step
in reducing project risk. Redpath will contribute an experienced team, safety
systems and a focus on productivity that will allow time for Orosur to
develop longer term underground mining capabilities. It will also allow
Orosur to focus on optimizing the mine plan to extract the maximum benefit
from the project�.
An update of the financial projections for the
project to reflect Redpath contractual costs, equipment tendering, and
additional training costs of OMI staff will result in a net present value
(NPV) of US$11.5 million compared to US$16.3 million in the Feasibility
Study. Each 100 $/Oz above the $US1000/oz gold price assumed in the
projections will increase the NPV by US$10.2 million. All these numbers
are pre-tax. OMI will purchase the underground equipment improving
results after tax as the Company will qualify for the tax benefits in Uruguay
of an Investment Project. At the same time, this will also allow Orosur
to eventually assume responsibility for development.
Qualified Person's Statement
The information presented in this press release has
been reviewed by Mr. Randall Corbett, General Manager, San Gregorio, and is
considered to be in compliance with NI 43-101 reporting guidelines. Mr.
Corbett has a Bachelor of Engineering (Mining) Degree from Technical
University of Nova Scotia (T.U.N.S.), is a Professional Engineer (P. Eng.)
registered in the Province of Ontario and has more than 25 years operational,
engineering and development experience.
Forward-Looking Statements
All statements, other than statements of historical
fact, contained or incorporated by reference in this news release, including
any information as to the future financial or operating performance of the
Company, constitute "forward-looking statements" within the meaning
of certain securities laws, including the "safe harbour" provisions
of the Securities Act (Ontario) and the United States Private Securities
Litigation Reform Act of 1995 and are based on expectations estimates and
projections as of the date of this news release. There can be no assurance
that such statements will prove to be accurate; such statements are subject
to significant risks and uncertainties, and actual results and future events
could differ materially from those anticipated in such statements.
Forward-looking statements include, without limitation success of exploration
activities; permitting time lines; the failure of plant; equipment or
processes to operate as anticipated; accidents; labour disputes; requirements
for additional capital title disputes or claims and limitations on insurance
coverage. The Company disclaims any intention or obligation to update or
revise any forward-looking statements whether as a result of new information,
future events and such forward-looking statements, except to the extent
required by applicable law.
ENDS
Neither TSX Venture Exchange nor its Regulation Services
Provider (as that term is defined in the policies of the TSX Venture
Exchange) accepts responsibility for the adequacy or accuracy of this
release.
For further information, please contact:
Orosur Mining Inc
David Fowler, CEO
Ignacio Salazar, CFO + 598 2601 6354; info@orosur.ca
Matrix Corporate Capital LLP (Nominated Adviser
& Broker)
Louis Castro, +44 (0) 203 206 7209
Tim Graham, +44 (0) 203 206 7206
Blythe Weigh Communications (Public Relations and
Investor Relations)
Tim Blythe: +44 (0) 7816 924626
Ana Ribeiro: +44 (0) 7980 321505
Matthew Neal: +44 (0) 7917 800011
Notes to Editors
About Orosur Mining Inc.
Orosur Mining Inc. is a fully integrated gold
producer and exploration company focused on identifying and developing gold
projects in Latin America. The Company operates the only producing gold mine
in Uruguay (San Gregorio), and has assembled an exploration portfolio of high
quality assets in Uruguay and Chile. The Company is quoted in Canada
(TSX-Venture Exchange: OMI) and London (AIM: OMI).
Background
Arenal Deeps is the down plunge continuation of the
Arenal deposit that was mined as an open pit between October 2004 and April
2009 and produced 388,000 ounces of gold at an average grade of 2.16 g/t Au
using a 0.5 g/t Au cut off grade.
Feasibility Study Completed by AMEC in Aug 2010
envisages two underground mining methods, inclined room-and-pillar (IRP) and
transverse stoping (TS), based on probable mineral reserves, (effective date
1 June 2010), as follows: Previously released Sept 7, 2010
Method
|
Tonnes
(kt)
|
Grade
(g/t Au)
|
Contained Ounces
(koz)
|
IRP
|
276
|
2.53
|
22
|
TS
|
830
|
3.25
|
87
|
Total Probable Mineral Reserves
in Stopes
|
1,106
|
3.06
|
109
|
Development
|
462
|
2.38
|
35
|
Total Probable Mineral Reserves
|
1,568
|
2.87
|
145
|
Notes to accompany Mineral Reserve Table:
1.
Underground Mineral Reserves are confined to
designed stopes;
2.
A cut-off grade of 1.3 g/t Au is used for the TS,
and 1.5 g/t Au for the IRP;
3.
Mineral Reserves are reported using a gold price of
USD850/oz;
4.
Tonnages and ounces are rounded to the nearest 1,000
tonnes, grades are rounded to two decimal places;
5.
Tonnage and grade measurements are in metric units,
ounces are troy ounces
|