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Orosur Mining moves attention to Colombia as new investors come on board

“The funds raised should allow the company to swiftly commence resource definition drilling in our high potential Anzá gold project"
picture of drill rig
Drilling will start this year in Colombia

An oversubscribed placing for a junior gold miner is something to be proud of, especially when the money is going straight into holes in the ground.

Orosur Mining Limited's (LON:OMI CVE:OMI) C$4mln (£2.44mln) placing at 24.1c (14.7p) was warmly received and the money means drilling can start at Anza (in Colombia) without having to divert funds from the producing San Gregorio mine in Uruguay.

Ignacio Salazar, Orosur’s chief executive, said: “The completion of this financing, which was oversubscribed and at a premium to the prevailing market when negotiated, is a testament to the quality of our assets and growth prospects.

“We are delighted to have two new institutional shareholders join our shareholder base while limiting dilution to our existing shareholders.

“The funds raised should allow the company to swiftly commence resource definition drilling in our high potential Anzá gold project in the Mid Cauca belt of Colombia.

WATCH: Orosur Mining funds new grabs for gold in Colombia

Cantor Fitzgerald encouraged by potential in Colombia

The funding has given an opportunity for Orosur to become a substantial gold producer, according to house broker Cantor Fitzgerald.

In addition to the cash already raised, warrants exercisable at 20.4p up to 2020 may bring in a further £1.7mln.

More importantly, says Cantor, the money has been earmarked for exploration of the Anza licence, near Medellin in Colombia, which will allow cash generated from the producing San Gregorio in Uruguay to be utilised to add to its mine life.

READ:Orosur Mining gets warm response to Colombia exploration plans

Anza covers an area of 100 sq km and has valid mining and environmental permits with two small gypsum projects on the licence already.

The prospect also lies on the Mid-Cauca gold belt, an area that has already seen a number of discoveries including one 10m oz project just 50km away.

Drilling by the previous owner hit intercepts of 40.5m at 14.1g/t and 14m at 40 g/t from depths of around 175m while metallurgical work indicated recoveries of 96%, all impressive numbers.

Orosur’s initial exploration target is 200,000oz of gold at APTA, but Cantor says that with mineralisation open to the north, south and down dip, a much larger resource ‘must be possible’ over time.

At San Gregorio ...

At San Gregorio, work is currently being undertaken by consultant SRK on a scoping study to expand the central, east and Deeps sections, another underground target, Veta A, and some surface targets.

More step-out drilling can also now be carried out on the 100km Cristalina greenstone belt that extends to the east and west of San Gregorio.

Production from the existing operations at San Gregorio meanwhile is estimated at 30-35,000oz this year at a cash cost of US$800-900 per oz or US$1,025 per oz including sustainable capital expenditure.

The broker’s target price is 38p, trimmed slightly due to the shares issued in the placing, while the sum-of-the-parts valuation is 25p.

Shares were trading at 15.3p.

--updates for Cantor note--

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