News

August 27, 2008

All Hands On Deck At Uruguay Minerals As The Quest To Find The Next Economic Orebody Continues

By Alastair Ford

“Whether we should hedge now is a good question”, Tony Shearer, chairman of Uruguay Minerals, told Minesite last week. A good question, and now we have the answer: as far as the Uruguay board is concerned it’s a resounding yes. The market doesn’t seem so sure, but more of that later. Following on from a fairly comprehensive update given to Minesite by Mr Shearer on 21st August, Uruguay announced the following day that it has hedged 70 per cent of its anticipated gold production for the nine months to the 31st May 2009 at a price of US$795 per ounce. That amounts to forward sales for 45,000 ounces out of an anticipated total of 63,000 ounces. So, one thing’s clear, the boys at Uruguay aren’t raging short-term gold bulls.

Tony Shearer is very explicit on this point. “The gold price is very uncertain at the moment. It’s been up, and now it’s been down. The best thing we can do is conserve our cash and put it into exploration”. With an average cost per ounce produced of US$413, based on a projected annual production rate of 90,000 ounces, Uruguay does have some room for manoeuvre if the gold price continues to weaken. But output at Arenal will start to come down in the next few years, and to compensate the company...