Orosur Mining (LON: OMI) has had bad news from one of its exploration projects and this explains the near on third fall in the share price. This does happen with exploration stage mining companies of course - exploration is the process of finding out what's there. Often enough the answer is, well, not much, so the money spent finding out is gone and there's little to show for it.
This is not, to be fair, necessarily so. It could be that the partner in the adventure has run out of money or something. But given that the partner here is a JV including Newmont Mining that's simply not going to be the case. This is a decision, not a mistake. The specific here is that certain hills were thought to be alive with the sound of gold and the information coming back is that there's no gold in them thar' hills. Actually, not even that - there's always gold in rock. Not enough gold to continue exploring is the insistence.
There is a little linguistic giggle at the company name of course. In a reasonable translation from either of the Iberian languages Orosur means “gold south” but the finding seems to be “NaoOro”.
Orosur Mining share price from London Stock Exchange
The update itself is here. It can look a little complex as they walk through the details of past deals. But the basics are simple enough. It's entirely common that the work on a prospect is split up. Say one company gets the mining leases and does the first, very sketchy, exploration. When there's something that looks good - good enough for further exploration to be done - then another company might come in. They'll pay some cash for the right to do so, also “earn in” to the project (ie, end up with a piece of the equity of the possible mine) by spending the money on doing that further exploration work.
Which is a nice split of the risks, costs and potential rewards. But of course sometimes that further exploration work turns up nothing that's worth doing more about. Which is what this phrase means: “MMA has advised the Company that it has reduced exploration expenditures on the Project and effectively placed it in care and maintenance.”. Or, as we can put that, there's not enough evidence of lots of gold in these hills so we're going to stop looking.
Which is a bit of a problem for an exploration stage gold miner like Orosur. Not finding gold is an answer but it's not actually the one wanted.
