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Orosur carrying out review of operations as subsidiary hits problems at San Gregorio

Published: 02:46 15 Jun 2018 EDT

Orosur mining
Orosur is looking for ways to advance the higher grade Veta A project in Colombia

Orosur Mining Inc (LON:OMI) is carrying out a review of its operations at the San Gregorio gold mine in Uruguay.

Since the end of last year, the firm’s operating subsidiary, Loryser, has been hindered by various operational challenges at San Gregorio which has left it in financial difficulty.

The ideal solution would be to move on to the higher-grade Veta A project but this would require outside funding and an environmental permit, neither of which are currently available.

Reorganisation proceedings

“As a result of the current circumstances, the board of directors has been actively exploring a number of alternatives for Orosur and its subsidiaries,” Friday’s statement said.

Orosur has decided to apply for reorganisation proceedings in Uruguay which will give Loryser protection from creditors while management decides the best way forward.

The application was filed on Thursday and the Uruguayan authorities are expected to take several days to either approve or deny it.

Orosur and its other subsidiaries are not included in the reorganisation proceedings, just Loryser, which will continue underground production at San Gregorio until the end of July, after which time the mine will be placed into care and maintenance.

AIM-quoted Orosur – which reminded investors it has zero debts and US$174,000 in the bank – said it is still exploring ways to advance the “exciting” Veta A project.

Strategic decision

“The decision to commence the Loryser reorganisation proceedings is a strategic one that we believe will best protect our business and preserve cash while we endeavour to achieve the best possible outcome for our company, employees, suppliers, other business partners and stakeholders,” said chief executive Ignacio Salazar.

“By commencing the Loryser Reorganisation Proceedings, the company preserves its ability to enter into any number of potential transactions which may be beneficial to our stakeholders.”

He added: “We intend to treat all our stakeholders with the utmost respect and care through the Loryser Reorganisation Proceedings process with every intention of arriving at a fair and balanced plan in a swift time period while allowing the company to continue advancing its Anzá project in Colombia.”

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