News

April 20, 2009

Uruguay Minerals Is Not Yet Out Of Options: Underground At Arenal Beckons As One Way Forward, Acquisitions Could Be Another

By Alastair Ford

True an undertaking given to Minesite a month ago, David Fowler gets straight on to the phone after his company, Uruguay Mineral Exploration, delivers its third quarter results for the period to the end of February 2009. Such commitment to communicating with the market is one positive sign that Uruguay’s battered investors will be able to take comfort from. There haven’t been many of those lately. Because, in a world where gold has been pressing upwards towards US$1,000 per ounce, and has only recently fallen back, Uruguay Minerals has managed to deliver to market a share price that has dropped by a factor of nearly eight over the past 12 months. Or, to put it in simple cash terms, last May the company’s shares were trading at over 150p; today they are just a shade above 20p. What’s gone wrong?

Partly, it’s structural. The company’s key asset, the Arenal mine in Uruguay has always had a short projected life, in terms of verifiable reserves. Even now, says David Fowler, “based on what we believe our reserves are, we have a four year mine life”. For the analysts who crunch the numbers that the big investors (sometimes) use to base their investment decisions on, four years is not much to go on. So, the key issue for Uruguay lately has been how to get the reserve numbers back up again....