South America-focused Orosur Mining (LON:OMI, TSE:OMI) said production so far in the current financial year is ahead of guidance for the full year.
Production in the three months to the end of November totalled 8,172 ounces (oz), bringing year-to-date production up to 20,643 ounces, comfortably on course to meet the company's full-year guidance of 30,000 – 35,000 oz.
The company recently implemented a cost cutting plan, the results of which are clearly beginning to filter through, as operating cash costs of US$858/oz represented a significant improvement on the figure of US$984/oz the year before, and US$954/oz in the preceding quarter.
All-in sustaining costs (AISC) tumbled to US$1,095/oz, versus US$1,258/oz the year before and US$1,166/oz in the previous quarter.
Orosur said it is sticking with its guidance of AISC of between US$1,000 and US$1,100 per ounce for the whole year.
While Orosur has made impressive progress over the cost of digging up the yellow metal, it has little control over the price it receives, and the average price during the reporting period fell to US$1.100 per ounce from US$1,212/oz in the second quarter of the previous fiscal year.
The company ended the reporting period with a healthy looking US$2.6mln, down from US$4.8mln as at the end of May 2015, and debt of US$0.8mln, versus debt of US$1.6mln six months earlier.
Gross profit in the quarter was US$0.04mln compared to a loss of US$1.5mln in the same period of 2014.
Lower revenue of US$10.19mln versus US$17.40mln the year before was offset by lower cost of sales due to the implementation of the strategic cost reduction plan during the quarter.
“We are pleased to see the initial reductions in cash operating costs and in AISC already being demonstrated as we remain on track to reducing AISC to below US$1,000/oz for the remainder of the year. These efforts were followed by the decision of the Government of Uruguay to grant a one-year royalty exemption and the decision of the directors and the senior executives to reduce their cash remuneration and the reorganisation and streamlining of the management team as already announced,” said Ignacio Salazar.
“We have been working in many fronts and are encouraged with the smooth progress achieved from these drastic measures,” he added.
“Orosur has a solid portfolio of exploration assets and, in the current environment, our priorities are to advance our projects with near term returns in Uruguay, those of higher quality in Colombia and those which are already financed such as Anillo,” he added.