Following a successful completion to mining at Arenal Deeps, Orosur (TO:OMI) has now transitioned most of its production to SGW UG. With ore mining now ramping up at SGW, we expect Orosur to meet its guidance mid-range at 37.5koz for FY17, at cash costs of between US$800/oz and US$900/oz. We also take a first-pass indicative value on its Anzá project, which we consider could grow materially and change the investment case for Orosur. Even on the basis of its announced exploration ‘target’ Anza could potentially add a third to OMI’s market capitalisation.
Cash costs steady, AISC up as expected due to SGW
As an expected result of funding SGW UG from cash-flow of SGW UG’s, Q217 all-in sustaining costs (AISC) rose 23% q-o-q from US$1,095/oz (Q117) to US$1,345/oz. Cash costs were US$914/oz, slightly outside full-year guidance of US$800/oz to US$900/oz. We see the mining in H217 of deferred higher-grade ore from SGW UG as key to bringing cash costs firmly back into OMI’s guidance range.
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