Uruguay Mineral Exploration Inc.
TSX VENTURE : UME
AIM : UGY

Uruguay Mineral Exploration Inc.

January 16, 2006 02:01 ET

Uruguay Mineral Exploration Inc.-Media Release: Interim Results; Consistent Production At 100,000 Ounces Per Year Rate Generates Strong Profits As Exploration Ramps Up

LONDON, UNITED KINGDOM--(CCNMatthews - Jan. 16, 2006) - Uruguay Mineral Exploration Inc. (TSX VENTURE:UME)(AIM:UGY) today announces results for its second quarter ended November 30, 2005 (Interims). Profit for the half was US$ 4.184 m as production continued at a steady equivalent rate of 100,000 ounces per annum at a cash cost of US$ 197 per ounce. As the group's capital refurbishment plans around the Minas de Corrales mine are nearing completion, exploration and development focus is shifting to replacing reserves and greenfield gold and nickel exploration.

Operations

Production highlights for the quarter and six months ending November 30, 2005 were:

- Gold production of 25,323 ounces for the quarter at an average cash cost of US$ 182 per ounce; half year production of 50,486 ounces at a cash cost of US$ 197 per ounce.

- Net profit after tax of US$ 1.944 m or basic earnings per share of US$ 0.042 for the quarter; US$ 4.184m or basic earnings per share of US$ 0.091 for the half year.

- Cash flow from operations (before non-cash working capital movements) of US$ 5.121 m for the quarter; US$ 9.310 m for the half year.

- Sales for the quarter were US$ 11.326m and the average price of gold sold was US$ 456 per ounce. Sales for half year were US$ 23.047m, with an average gold price received of US$ 443 per ounce.

- The group moved to full ownership of the Minas de Corrales Project with the acquisition of the outstanding 10% net profit interest in key tenements for a total consideration of US$ 4.246 m

Exploration and Development

- A contract for an airborne geophysical survey of the Lascano area was finalised during the quarter and data collection commenced in December 2005.

- Three additional expatriate geologists have been recruited to accelerate gold and diamond projects and key experienced consultants have been appointed to strengthen the exploration team.

Chairman Tony Shearer commented: "Our production levels and costs confirm we stand among the best operators in the sector. The cashflow and income are excellent and augur well for the year even before the recent rise in gold prices. "

The balance sheet, cash flow and profit and loss statements are attached. The full quarterly report, including Consolidated Interim Financial statements and Management Discussion and Analysis, can be obtained from SEDAR.

Editors notes:

1. Uruguay Mineral Exploration Inc., which joined AIM in December 2004, is a gold producer and exploration company focussed on identifying and developing mineral opportunities in Uruguay. UME is a fully integrated mining company, possessing the skills necessary to explore and develop its discoveries. The Company operates the only producing gold mine in the country (San Gregorio), and is also the leading mineral exploration company in Uruguay having assembled an exploration portfolio based on gold, base metals (copper, nickel, lead, zinc) and diamond prospects. In the first half of 2003, the Company discovered the Arenal deposit, currently the largest known gold resource in Uruguay. It is quoted in Canada (TSXV) and London (AIM) and Collins Stewart is the nominated adviser and broker.

2. All dollars referred to in the company's reports and releases are US dollars.



For further information, please contact

Uruguay Mineral Exploration Inc.
Tony Shearer, Chairman + 44 20 7460 8935; tony@tonyshearer.com
Chris Clark, President +59 82 601 6354; urumin@adinet.com.uy
PJ Lewis + 44 7950 003 138; pjlewis@tiscali.co.uk

Collins Stewart Ltd
Andrew Smith +44 20 7523 8351
Martin Eales +44 20 7523 8351



Uruguay Mineral Exploration Inc.
Consolidated Balance Sheets
(Unaudited)
(Thousands of United States Dollars, except where indicated)

As at As at As at
November 30, May 31, November 30,
2005 2005 2004
---------------------------------------------------------------------
Assets $ $ $

Current assets
Cash and cash equivalents 6,287 5,501 2,984
Accounts receivable 2,777 1,785 1,790
Inventories 7,360 7,170 4,790
Prepaid expenses and other 824 722 906
-----------------------------------
17,248 15,178 10,470

Property, plant and equipment 24,428 19,675 19,431
Deferred exploration costs 6,973 5,088 4,372
Future income tax 934 1,787 -
Deferred stripping and
other non current assets 2,335 923 375

-----------------------------------
Total assets 51,918 42,651 34,648
-----------------------------------
-----------------------------------

Liabilities and
Shareholders' Equity

Current liabilities
Accounts payable and
accrued liabilities 4,711 4,945 3,973
Debt - - 3,000
Unrealized fair value of
derivatives 1,592 180 1,654
Deferred payment on equipment 3,893 4,256 4,986
Deferred payment on acquisition 1,008 - 200
-----------------------------------
11,204 9,381 13,813

Asset retirement obligation 1,602 1,558 1,395
Deferred payment on acquisition 1,780
Deferred payment on equipment - 391 -
Deferred subscriptions 1,096 - 125
-----------------------------------
Total liabilities 15,682 11,330 15,333

Equity instruments 30,310 29,571 21,258
Contributed surplus 1,569 1,577 1,637
Cumulative translation adjustment (19) (19) (19)
Retained Earnings / (Deficit) 4,376 192 (3,561)
-----------------------------------
Total Shareholders' Equity 36,236 31,321 19,315

-----------------------------------
Total Liabilities and
Shareholders Equity 51,918 42,651 34,648
-----------------------------------
-----------------------------------



Uruguay Mineral Exploration Inc.
Consolidated Statements of Income and Retained Earnings (Deficit)
(Unaudited)
(Thousands of United States Dollars, except where indicated)

Three months ended Six months ended
November 30 November 30
2005 2004 2005 2004
---------------------------------------------------------------------
$ $ $ $
Sales 11,326 6,328 23,047 12,406
Net profit interest (329) - (635) -
------------------------------------------------
Net Sales 10,997 6,328 22,412 12,406

Operating expenses 4,970 5,468 10,730 10,003

Amortization,
depletion and
accretion 2,567 694 4,316 938

Other expenses
Compensation
expense - stock
based 158 348 158 755
Fair value
adjustment for
derivatives 1,215 1,440 1,412 1,650
General and
administrative 655 701 1,247 1,044
Interest and
financing fees 81 71 174 267
------------------------------------------------
2,109 2,560 2,991 3,716

------------------------------------------------
Income (loss) before
other items and
taxes 1,351 (2,394) 4,375 (2,251)

Other items
Gain on settlement
of net profit
interest 888 - 888 -
Interest and other
income/(expense) (130) 23 (98) 29
Foreign exchange
loss (28) (64) (46) (21)

------------------------------------------------
Income (loss)
before taxes 2,081 (2,435) 5,119 (2,243)

------------------------------------------------
Income taxes 137 - 935 -

Net income (loss)
for the period 1,944 (2,435) 4,184 (2,243)

------------------------------------------------
Retained earnings
(deficit),
beginning of
period 2,432 (1,126) 192 (1,318)

Retained earnings
(deficit), end of
period 4,376 (3,561) 4,376 (3,561)
---------------------------------------------------------------------
---------------------------------------------------------------------

Basic earnings
(loss) per share 0.042 (0.056) 0.091 (0.052)
Diluted earnings
(loss) per share 0.039 (0.050) 0.085 (0.046)

Basic weighted
average no. of
shares 46,263,746 43,174,913 46,227,580 43,039,413
Diluted weighted
average no. of
shares 49,889,413 48,993,080 49,507,913 48,876,413
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---------------------------------------------------------------------



Uruguay Mineral Exploration Inc.
Consolidated Statements of Cash Flows
(Unaudited)
(Thousands of United States Dollars, except where indicated)

Three months ended Six months ended
November 30 November 30
2005 2004 2005 2004
---------------------------------------------------------------------
$ $
Operating activities
Net income/(loss) for
the period 2,106 (2,435) 4,346 (2,243)
Adjustments for:
Amortization, depletion
and accretion 2,567 694 4,316 938
Future income taxes (393) - 405
Deferred stripping (646) (137) (1,441) (137)
Fair value adjustment of
derivatives 1,215 1,440 1,412 1,650
Compensation expense -
stock based 158 348 158 755
Loss on sale of assets 114 - 114
Finance fees - stock based - - - 188
--------------------------------------
5,121 (90) 9,310 1,151
Net change in non-cash
working capital balances (2,327) (31) (1,996) (885)
--------------------------------------
2,794 (121) 7,314 266
--------------------------------------
--------------------------------------

Financing activities
Proceeds from the issue
of share capital, net
of costs 36 204 204 254
Deferred subscriptions - 125 - 125
Proceeds from bank debt,
net of costs - 1,929 - 2,928
--------------------------------------
36 2,258 204 3,307
--------------------------------------

Investing activities
Refundable deposits (3) (5) (3) (42)
Purchase of property, plant
and equipment (3,585) (2,236) (6,252) (3,761)
Payments for exploration (687) (613) (1,127) (1,257)
Proceeds on sale of assets 350 - 650 -
Payments on subsidiaries
acquired, net of cash
acquired - (500) - (500)
--------------------------------------
(3,925) (3,354) (6,732) (5,560)
--------------------------------------

Increase (decrease) in cash (1,095) (1,217) 786 (1,987)

Cash and cash equivalents,
beginning of period 7,382 4,201 5,501 4,971
--------------------------------------

Cash and cash equivalents,
end of period 6,287 2,984 6,287 2,984

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---------------------------------------------------------------------


The TSX Venture Exchange has not reviewed and does not accept responsibility for the adequacy or accuracy of this news release.

Contact Information

  • Uruguay Mineral Exploration Inc.
    Tony Shearer
    Chairman
    + 44 20 7460 8935
    tony@tonyshearer.com
    or
    Uruguay Mineral Exploration Inc.
    Chris Clark
    President
    +59 82 601 6354
    urumin@adinet.com.uy
    or
    Uruguay Mineral Exploration Inc.
    PJ Lewis
    + 44 7950 003 138
    pjlewis@tiscali.co.uk
    or
    Collins Stewart Ltd
    Andrew Smith
    +44 20 7523 8351
    or
    Collins Stewart Ltd
    Martin Eales
    +44 20 7523 8351