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Orosur Mining expects Arenal Deeps resource estimate and feasibility study before summer

As expected, Orosur Mining (TSX-V, LSE: OMI), the South American focused gold producer, announced lower second quarter production compared to the corresponding period in the previous year, but higher than Q1 2010.
Production for Q2 (ended November 30) totalled 13,580 ounces (362,366 tonnes @ 1.25 g/t), up from 13,173 ounces in Q1 2010, but below Q2 2009 when the company produced 15,837 ounces.   Production was hit by a combination of exceptionally high levels of rainfall and lower grades at the mill. Cash costs for Q2 2010 were US$871 per ounce compared to a realized gold price of US$1065 per ounce.

The strong gold price helped offset lower production and higher costs; cash flow from operations in Q2 2010 were US$1.76 million. Cash in the bank at the end of the quarter was a healthy US$9.39 million and the company reported that it had net working capital in excess of $20 million.

Orosur is in a transitional period, having recently completed the acquisition of Fortune Valley Resources, which brought into the company further upside through exploration of the Pantanillo and Anillo properties in Chile.  At the same time, Orosur is currently in the midst of a definition drilling program at Arenal Deeps - the down dip extension of the Arenal deposit - which is expected to extend the life of the San Gregorio plant.

A feasibility study on Arenal Deeps is due for completion in June, and a resource estimate is expected in March. Orosur also confirmed a 7,500 meter resource definition drill program will occur at Pantanillo this year, as well as a NI 43-101 compliant resource estimate.

"Over the past quarter, our Company, now named Orosur Mining Inc. has made substantial progress in its plan to develop as a Latin American focused gold company,” David Fowler, Chief Executive Officer commented, “…In December 2009, we completed infill drilling on the Arenal Deeps deposit enabling OMI to publish the final resource estimate by March 2010 where resource grade is expected to increase significantly… [We] acquired all of the issued and outstanding common shares of Fortune Valley Resources. This is a major milestone for OMI and significantly improves the Company's growth profile in a recognized mining market such as Chile. Our exploration team has been established in Chile and we plan to commence exploration on one of the newly acquired and high potential projects immediately."

Orosur also adjusted its full year production guidance to 55,000 to 57,000 ounces of gold at a cash cost per ounce of US$825.

Disclosure: The author holds no positions in the company