Production Increased At San Gregario Mine

SANTIAGO - Orosur Mining Inc. reported that the production amount for the fourth quarter ended May 31st was 17,387 ounces Au which is 27 per cent higher than the previous quarter.

For the fiscal year to 31 May 2012, full year production was increased to 55,458 ounces. This production level is in accordance with guidance of 55,000 to 57,500 ounces for the year.

In the year 1,619,510 tonnes of ore were processed at a gold grade of 1.15 grams per tonne (g/t) with recovery averaging 92.8 per cent. This compares to 1,535,468 tonnes at a gold grade of 1.21 g/t with recovery averaging 93.4 per cent for the prior financial year when 55,820 ounces were produced.

Production for this quarter benefitted from planned output from Arenal Deeps stopes and the commencement of mining from the relatively high grade ore produced from the Crucera pit (400 km south of San Gregorio). Arenal ore production has ramped up from 37,808 tonnes in the third quarter to 85,855 tonnes in the fourth quarter, which was in accordance with plan for the quarter and has now reached levels consistent with design capacity for the project.

During the second half of the fiscal year, productivity on development metres has been less than planned. A total of 3,729 metres were completed in the year to 31 May versus the plan of 4,161 metres. This shortfall and cost overruns by the contractor of approximately $US 3 million (18%), have increased cost per meter developed during the 2012 fiscal year increasing capital expenditure and operating cost. This performance is also expected to have an impact on the fiscal year to 31 May 2013 as it will reduce ounces produced from Arenal Deeps and increase costs. As a result Orosur has entered into discussions with the contractor to plan for a transition to owner mining.