Cost cutting measures by Uruguay-focused Orosur Mining (LON:OMI, TSX:OMI) are paying off - as it unveiled improved operating metrics in its latest quarter.
The firm, which runs the San Gregorio gold mine, said operating costs were US$858 per ounce in the three months to end November - a significant improvement from US$984/oz in the same period last year, but also against the first quarter of this year - at US$953 per ounce.
In the year to date, the mine has produced 20,643 ounces, which is ahead of its 30,000 – 35,000 ounce guidance for the full year.
Orosur chief Ignacio Salazar said: “During the quarter, we have managed to implement a number of substantive changes within the company, including significant staff reductions, cost cutting and increasing focus on Arenal underground production.
"The current level of operations is intended to better position the company as a more resilient producer in this current low gold price environment.
"We are pleased to see the reductions in cash operating costs demonstrated so swiftly."
The firm has also received support from the Uruguay government, which has granted Orosur an exemption on the royalty payment of 3% of sales for one year, starting from March this year.
In all second quarter production came in at 8,172 ounces of yellow metal compared with 12,854 ounces in the second quarter of last year.
City broker Cantor rates the shares a 'buy' targetting 22p. "Full year production guidance looks well within reach, and the cost target should be achievable if the expected savings in 2H materialise," said mininbg analyst Asa Bridle. "Away from the production base in Uruguay, further news flow should come from the drilling campaign at the Anillo project in Chile."
Orosur shares added 4.4% in early deals to 5.875p.