Orosur Mining is set to shut down its San Gregorio West gold mine in Uruguay due to lower grades at the project and a difficult financial position.
The decision is part of Orosur’s broader strategy to restructure its businesses and recapitalise the company through cost-cutting measures in Uruguay and reducing activities in Chile.
For the fiscal year ending 31 May this year, the company posted pre-tax loss of $27.18m.
Revenues fell $37.1m from $44.22m during the corresponding period last year, while gold production declined from 35,371oz to 27,586oz due to lower than expected output at San Gregorio.
The company noted that the underground operation continued to produce until the end of last month and that it is to be placed in care and maintenance this month.
During the first quarter of the 2019 financial year, the San Gregorio mine is expected to produce between 2,500oz and 3,500oz of gold, after which production will be terminated.
Orosur Mining stated: “All future production shall depend on material developments in the funding and environmental permitting of the Veta A underground project in Uruguay and the ongoing discussions with the Government Of Uruguay and other third parties.”
The company is shifting its focus to the high-grade Anzá project in Colombia as it is working on securing funding for the next stage of exploration.
Following a drilling campaign at the project, the firm encountered high-grade gold intercepts, leading to the extension of the known extent of mineralisation.
Orosur Mining CEO Ignacio Salazar said: “The weaker mineralisation encountered at our SGW UG mine in Uruguay placed the company in a precarious situation, leading to weak operating and financial performance for the year and also a number of financial impairments.”
Meanwhile, Orosur divested its remaining 25% interest in Talca in Chile last month, marking its exit from the project.
The company also returned its interest in the Anillo project to Chilean state-owned miner Codelco.