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Orosur Mining options non-core Uruguay gold assets to Ferlesol

Published: 12:03 24 May 2011 BST

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Orosur Mining Inc (LON:OMI, CVE:OMI) has granted an option to Mineral Group Corp (UMG) subsidiary Ferlesol SA to earn up to 80 percent in the Arroyo Polanco, Casupá-Madre, Mal Abrigo-Cerros Negros and María Albina gold and other metals projects in Uruguay.

The farm-out is in line with Orosur’s strategy to concentrate on its core assets and extract maximum value from the rest, it said in a statement.

UMG is committed to spend US$300,000 in exploration work within a period of twenty four months to earn 20 percent interest in the assets. Subsequently, UMG will have the right to earn a further 31 percent, reaching a total of 51 percent, by spending a further US$750,000 on exploration within the following year.

Subsequently, UMG will have the right to earn an additional 29 percent for the full 80 percent interest by completing a bankable feasibility study for the assets, no later than 4 years after having reached the 51 percent interest.

The Casupá and Mal Abrigo projects are located in the Piedra Alta Terrane in south-central Uruguay along the northern limit of the La Florida greenstone belt of southern Uruguay.

Casupa is around 25 kilometers south of Orosur’s Crucera gold project. The Mal Abrigo-Cerros Negros project further to the west features nickel and platinum group elements mineralisation.

The María Albina, Old Texas and Arroyo Polanco projects are all located in the Nico Perez Terrane in central eastern Uruguay within the constraints of the Don Feliciano Mobile Belt.

Marina Albina, prospective for base metals, is approximately 25 kilometers due north of Orosur’s Presidente Terra project. The Old Texas and Arroyo Polanco projects lie within two splays of Sierra Ballena Fault Zone, along the eastern and western margins of the mobile belt respectively, and host lead, zinc, and copper mineralization.

Orosur is a 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.

Last month, the group revealed improving economics in its mining operations, cutting cash costs per ounce significantly in the third quarter to US$521 (Q310: US$984).

Consequently Orosur now expects that 2011’s full year cash costs to be US$750 an ounce, rather than the previous US$850 forecast.

From an operational point of view Orosur is also making good progress. At the Arenal Deeps mine development project it has contracted the work programme, permitting work is underway and it has arranged US$5.5 million in financing from HSBC.

Meanwhile at Sobresaliente it carried out metallurgical tests on a 50,000 tonne trial parcel, achieving 90 percent recoveries – 10 percent more than assumed in current resource estimates.

Orosur is also busily exploring Sobresaliente and a new resource update is expected in August. Elsewhere at Pantanillo drilling is currently underway in preparation for a feasibility study, which will start towards the end of 2011.

A maiden resource estimate is scheduled for the Vaca Muerta prospect in August and first pass drilling will get underway at the Anillo prospect next month.

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