Analyst Research Report Snapshot

Title:

ABID - Orosur Mining - Due Diligence and Valuation Report

Price:

$219.00

Provider:

Arrowhead BID

Date:

27 May 2013

Pages:

22

Type:

AcrobatPDF

Companies referenced:

OMI.TO

Available for Immediate Download
Summary:

Orosur Mining Inc. (OMI) is a Canada-listed gold production and exploration company with assets in Uruguay and Chile. The Uruguay operations produced 55,458oz of gold in FY2012 from San Gregorio. San Gregorio, a gold-producing operation held by OMI, derives its ores from Arenal Deeps underground mine and other open pit mines in the San Gregorio district. Arenal Deeps, a high-grade underground deposit, is expected to reduce the cash cost significantly once it gets access to high grades transverse stope ore in FY2013. The project has a NI 43-101 compliant reserve of 4.78MMT at 1.95g/t Au and M&I resource of 4.33MMT at 1.28g/t Au. OMI has interests in many properties surrounding the San Gregorio operations. The Company plans to conduct exploration, drilling and resource estimation at Sobresaliente, Argentinita, Laureles, and Mahoma properties in 2013. Mahoma is the most advanced property, with NI 43-101 resource estimate expected in 2Q 2013 followed by a feasibility study. Ore from these properties will feed into the San Gregorio operations and is expected to increase the life of the operations. Chilean operations are in its advanced exploration stages. OMI has three gold projects Pantanillo, Anillo, and Talca in Chile. Pantanillo holds potential to be its second operating project, with commissioning and plant startup expected by end-2015. A preliminary economic assessment for the Pantanillo project highlighted NPV (at 8%) of US$49.7MM and an IRR of 19%, with a mine life of five years. In 2013, further exploration will be carried out at the project to expand and define mineralization at Pantanillo central and the new zones – Quebrada Pantanillo and Oro 52. The work carried out in 2012 highlighted results of 2.67 g/t Au from 22m at the Anillo Project and 100 g/t Ag from 224m at the Anillo Central Zone. Also, the CSAMT geophysical survey pinpointed silica-bearing structures with the potential to host economic gold-silver mineralization. These structures will be drill-tested in May 2013. The drilling campaign at the Talca Project could not yield any mineralization at economically minable grades and widths. The project is currently awaiting a comprehensive review of potential. In 2012, the production at the San Gregorio operations has fallen due to lower grades. However, with the Arenal Deeps ramp, access to high grade ore is expected for the May 31, 2013 quarter onwards. With the sudden fall in the gold prices, OMI is reviewing its operations in Uruguay and Chile. Given due diligence and valuation estimations based on discounted cash flow method, Arrowhead believes that OMI’s fair share value lies in the CA$0.22 to CA$0.34 bracket . This valuation is based on the San Gregorio, San Arenal Deeps, and Pantanillo Project. This is a conservative estimate and does not take into account the potential value of the company’s Anillo Project in Chile, Mahoma deposit in Uruguay and other non-gold assets.

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