Annual production upwards of 95,000 ounces

A common thread throughout this recession, this time of almost historic uncertainty, has been the strong performance of the gold sector. As the fortunes of many other industries have waxed and waned like the surface of the moon in just a few short months, gold has pointed almost uniformly upward, peaking at or near the thousand-dollar U.S. mark. Moreover, as other sectors gained momentum, gold would lose some of its steam, but usually not for very long.

Appropriately, it’s time we refocused on the gold sector and shined a light on one of the junior mining companies with glad tidings to tell.

Uruguay Mineral Exploration Inc. (TSX: V.UME, Stock Forum), with offices worldwide including both Toronto and New York – and which trades on the TSX Venture Exchange under the symbol UME - is a gold production and exploration company that identifies and develops mineral opportunities in South America. In business since 1997, UME adopted its current name in June 2002, and shifted much of its mining operations’ focus offshore. The following year, the company purchased the Uruguayan subsidiaries of Crystallex International Corporation for US$4.7 million in cash, outstanding debt and hedging obligations. The assets acquired included a 1.2-million-tonne-per-annum gold treatment facility and the San Gregorio Gold Project.

During 2004, the company discovered the Arenal deposit approximately four kilometres from the San Gregorio process plant. Its most recent work at Arenal includes a 3.16-million-tonne resource estimated at 2.21 g/t using a gold cut-off of 1.5 g/t. The open pit is expected to be completed to design sometime this month, with feasibility studies to be finished sometime this summer. Total cost of completing this work is estimated at US$3 million and is expected to be funded from operating cash flow.

Annual gold production for UME has been upwards of 95,000 ounces, and the company boasts about 700,000 hectares of exploration concessions. Exploration funding is projected around US$8 million for fiscal 2008.

If investors are as serious about adding a bargain gold stock to their portfolio as the company is about new finds and expanding the ones they already have, they couldn’t do much better than to give UME a second look. The stock is in the lower region of a 52-week price range bottoming out at 20 cents last January, after rocketing to $3.05 last May. Mid-April saw the price around the 33-cent mark, which could make the stock very attractive, particularly in a competitive field such as gold.