Orsu Metals Corporation ("Orsu" or the "Company" or the "Group"), the dual
listed (TSX:OSU)(AIM:OSU) London-based precious and base metals exploration and
development company today reports its unaudited results for the period ended
March 31, 2011.
A full Management's Discussion and Analysis of the results for the period ended
March 31, 2011 ("MD&A") and Consolidated Financial Statements ("Financials")
will soon be available on the Company's profile on SEDAR (www.sedar.com) or on
the Company's website (www.orsumetals.com). Copies of the MD&A and Financials
can be also be obtained upon request to the Company Secretary.
The Financials for the interim period ended March 31, 2011 have been prepared
under in accordance with International Financial Reporting Standards ("IFRS")
for the first time.
All amounts are reported in United States Dollars unless otherwise indicated.
Canadian Dollars are referred to herein as CAD$ and British Pounds Sterling are
referred to as GBPGBP .
The following information has been extracted from the MD&A and the Financials.
Reference should be made to the complete text of the MD&A and the Financials.
BUSINESS REVIEW OF THE THREE MONTHS ENDED MARCH 31, 2011
The for the three months ended March 31, 2011 the Company prepared consolidated
financial statement in accordance with IFRS and reported net income of $1.4
million. In accordance with IFRS the Company prepared consolidated balance
sheets, statements of net income and comprehensive income and consolidated
statements of changes in equity which reconcile the impact to the Company of the
transition from Canadian GAAP to IFRS ( details can be found in the consolidated
financial statements and MD&A as at March 31, 2011).
During the first quarter of 2011 the Company continued to focus on its principle
exploration project, the Karchiga Project, and achieved key steps towards the
completion of the Karchiga Definitive Feasibility Study with the announcement of
results from its 2010 in-fill drilling programme, completion of hydrological and
metallurgical test work. The results from the 2010 in-fill drilling programme
enabled the Company to engage SRK to update the pit constrained mineral
estimates for the Karchiga Project. In addition the Company announced that it
had received permission to commence mineral extraction for copper at the
Karchiga Project. The Company was also able to announce the completion in April
of the remaining 26.1% of Eildon Enterprises Limited, which owns 94.75% of GRK
MLD LLC ("GRK") the holder of the exploration license for the Karchiga Project.
Finally, the Company received $1.5 million of deferred consideration relating to
the Varvarinskoye Project.
QUARTER HIGHLIGHTS
-- January 2011 - the Company confirmed that it had earned deferred
consideration for 2010 relating to the Varvarinskoye Project of $2.7
million and, of this amount, had received $1.5 million, with the balance
of $1.2 million being rolled over and added (with interest accruing at a
rate of 2.8% per annum) to any payment earned by the Company for 2011.
-- February 2011 - the Company announced the assay results for its 2010
infill drilling programme in the North East lode at the Karchiga
Project. Please see "Operational Review - Karchiga Copper Project,
Kazakhstan" of the Company's MD&A.
POST QUARTER HIGHLIGHTS
-- April 2011 - the Company announced that, pursuant to a sale and purchase
agreement entered into on May 20, 2010 (the "Karchiga SPA"), it had
increased its interest in the Karchiga Project to 94.75% by completing
the acquisition of the remaining 26.1% interest in its indirect
subsidiary, Eildon Enterprises Limited ("Eildon"), which owns 94.75 per
cent of GRK MLD LLC ("GRK"), for cash consideration of $6,187,500 (the
"Karchiga Acquisition").
-- April 2011 - the Company announced that it had received permission from
the Ministry of Industry and New Technologies of the Republic of
Kazakhstan ("MINT") to commence mineral extraction for copper at the
Karchiga Project.
-- April 2011 - the Company announced the results of final metallurgical
test work, which was carried out by the Eastern Research Institute for
Base Metals ("VNIITsvetMet") based in Ust-Kamenogorsk, Kazakhstan, under
the direction of SRK Consulting (UK) Limited ("SRK") as part of the
ongoing definitive feasibility study for the Karchiga Project (the
"Karchiga Definitive Feasibility Study"). Please see "Operational Review
- Karchiga Copper Project, Kazakhstan" of the Company's MD&A for further
information.
-- May 2011 - the Company announced updated pit-constrained mineral
resource estimates for its Karchiga Project, prepared by SRK as part of
the ongoing Karchiga Definitive Feasibility Study. Please see
"Operational Review - Karchiga Copper Project, Kazakhstan" of the
Company's MD&A for further information.
OPERATIONAL REVIEW
The Company's principal and most advanced exploration project is the property
comprising a 47.3km(2) licence area in eastern Kazakhstan containing the
Karchiga volcanogenic massive sulphide ("VMS") deposit (the "Karchiga Project"),
which is part of the Rudny Altai polymetallic belt. The Company's other
principal exploration asset is its property in northwest Kyrgyzstan, which is
comprised of four licence areas within the Tien Shan gold belt of north western
Kyrgyzstan: the Taldybulak, Barkol, Korgontash and Kentash licences
(collectively, the "Talas Project"). Approximately 100km to the south west of
the Talas Project is the Akdjol-Tokhtazan licence area comprising the Akdjol and
Tokhtazan licences (the "Akdjol-Tokhtazan Project").
KARCHIGA COPPER PROJECT, KAZAKHSTAN
Key achievements Q1 2011 and progress update for the Karchiga project
During the three months to March 31, 2011 the Company completed the following
key milestones
-- In order to satisfy the requirements for the Karchiga Definitive
Feasibility Study, during 2010 the Company undertook in-fill resource
drilling (aiming to convert Inferred mineral resources into Indicated
mineral resources in the North East lode of the Karchiga deposit),
geotechnical drilling for an open pit design, metallurgical sample
drilling and hydrological drilling for monitoring holes and pumping
wells. The results of these drilling activities were received in the
first quarter and are discussed in further detail below;
-- Following the results of the in-fill drilling mentioned above the
Company engaged SRK who prepared an updated pit-constrained mineral
resource update using the results of the 2010 in-fill drilling programme
and updated drill hole database.
In-Fill resource drilling Test Work
All assay results of the infill resource drilling programme were received by the
Company by February 10, 2011.
The 2010 mineral resource estimate showed that the mineralization in the North
East lode was located within three shallow-dipping zones of massive and
disseminated sulphide bodies. The 2010 infill drilling programme, however,
demonstrated that there is continuity between these lenses and in fact they form
a single lode with two mineralized lenses, occurring stratigraphically one above
another, with a strike length of approximately 1.0km.
Hydrological Test Work
The Company commenced the hydrological field tests in November 2010. The results
of the tests will be used to determine open pit slope angles. Hydrological
holes, drilled at various locations around the site, are being monitored and
used to test water quality and ground water flow modeling. The first round of
ground water sampling for the ESIA was carried out in December 2010.
Metallurgical Test Work
Metallurgical sample drilling has been completed and the core has been sampled.
The metallurgical test work on both sulfide and oxide ore commenced in December
2010, including both Froth Floatation test work and Heap Leaching test work and,
on April 28, 2011, the Company announced the results of the test work which was
carried out by VNIITsvetMet under the direction of Orsu personnel and SRK.
a) Froth Flotation Test Work
A test work programme, staged in three phases, was performed on a composite
sample of sulphide ores from both the Central and North East lodes, mixed in the
proportion of 40% to 60%, respectively (the "Main Composite").
The results from the locked cycle test performed on the Main Composite is given
in the Table below, which compares the results from the locked cycle test
performed by VNIITsvetMet in 2009 on a similar composite sample.
Locked cycle tests for Main Composite
----------------------------------------------------------------------------
% Cu Grade in % Zn Grade in % Cu % Zn
Test Year % Mass Concentrate Concentrate Recovery Recovery
----------------------------------------------------------------------------
2009 10.11 19.90 3.32 91.05 83.84
----------------------------------------------------------------------------
2011 8.86 27.90 5.00 95.76 81.54
----------------------------------------------------------------------------
The results shown in the table above shows a significantly improved copper
recovery into concentrate from 91.05% to 95.76%, achieved during the Phase 3
test work programme. At the same time, the copper grade of the concentrate
produced from the Main Composite has increased from 19.9% Cu to 27.9% Cu,
whereas the overall mass recovery into the concentrate has been reduced from
10.11% to 8.86%, which will ultimately translate to reduced transportation
costs.
The zinc recovery has been lowered from 83.84% to 81.54% while the zinc grade of
the concentrate has increased, partly due to the higher zinc head grade, still
remaining at an acceptable level of 5% Zn. The greater flotation selectivity,
achieved in this round of test work, affords the opportunity to operate at a
lower concentrate grade of, for instance, 25% Cu, which would result in an
increase in the copper recovery and a decrease in the zinc grade in the
concentrate.
In addition, the gold grade in the Main Composite concentrate was 1.57 g/t Au,
with 50.44% recovery.
The table below shows results from locked cycle tests performed on the Central
and North East Composites from the Central and North East lodes, respectively,
and the respective potential pits of the Karchiga deposit. The Central Composite
is a blend of 15% massive and 85% disseminated ores, whereas the North East
Composite is a blend of 25% massive and 75% disseminated ores.
Locked cycle test for the Central and North East Composites
----------------------------------------------------------------------------
%
Mass % Cu Grade % Zn Grade g/t Au
of in in in % Cu % Zn % Au
Lode Ore Concentrate Concentrate Concentrate Recovery Recovery Recovery
----------------------------------------------------------------------------
Central 10.34 24.15 1.28 0.34 96.20 73.97 28.18
----------------------------------------------------------------------------
North
East 9.98 21.60 7.20 1.65 91.59 86.93 54.95
----------------------------------------------------------------------------
The results for the Central Composite are similar with those of the Main
Composite in terms of copper and zinc grades. The gold grade in the Central
Composite concentrate is 0.34 g/t Au.
In the North East Composite, however, the copper grade in concentrate is 21.6%,
with a gold grade of 1.65 g/t Au. The level of zinc in the concentrate was
higher than expected. Orsu believes that this result is related to a build up of
frother in the locked cycle test, leading to poor selectivity between the copper
and zinc sulphides, and may be simple to rectify. For instance, the ore from the
Central pit may be processed alone in Year 1. A blend of ores from the Central
and North East pits may then be processed during Years 2 to 6, and this may be
followed by just over 4 years of further processing of ore from the North East
pit only. Optimisation for mine planning and milling will be undertaken as part
of the Karchiga Definitive Feasibility Study to determine the best way to blend
and treat these ores.
Variability testing using the optimised flotation process has been performed on
nine different samples from different locations in the deposit or their
composite make up. The variability test results did not highlight any major
behavioural deviation in metallurgical response from that of the standard
composite in terms of recovery and grade.
b) Heap Leaching Test Work
The Central lode of the Karchiga deposit has an Indicated mineral resource of
the oxide ore in the amount of 0.93Mt (at 0.5% Cu cut-off) grading 1.39% Cu and
containing 12,868 t Cu (see technical report entitled "Updated Report on the
Karchiga Property held by Orsu Metals Corporation, Kazakhstan" and dated March
22, 2010). Three acid leach columns were loaded with a blend of oxide and
transitional secondary sulphide from the Central pit area and subsequently
irrigated with a weak acid solution. Of the three columns, one, which contained
added bacteria and which was aerated at the base, significantly outperformed the
other two columns. This result was not unexpected and serves to demonstrate the
efficiency of bacterial leaching for this type of ore. After 100 days, this
column had achieved 68% Cu recovery, which corresponds very closely to 100% of
the total material that was available in the sample for leaching.
Metallurgical Test Work Quality Assurance & Quality Control
The Quality Assurance (or "QA") and Quality Control (or "QC") carried out on the
metallurgical test work was undertaken by the VNIITsvetMet Research Institute,
which is part of the National Centre for the processing of minerals belonging to
the MINT, and was under the direction of Orsu personnel and SRK. VNIITsvetMet is
accredited for testing and calibration (Accreditation Certificate number RK
ISO/IEC 17025-2007), holds a state licence for mining and production facilities
design (Licence number 002268) and holds a state licence for services relating
to environmental protection (Licence number 44763). The test work was supervised
by Dr David Pattinson CEng., MIMM, BSc (an employee of SRK and independent of
Orsu).
Both the QC and QC tests carried out on the ore samples provided by the Company
were in accordance with the Quality Management System procedures as defined and
required by the MINT. The QA and QC process involved taking an independent known
'Standard' sample and cross checking this against every 10 ore samples from the
metallurgical tests provided by the Company. In addition, random ore samples
provided by the Company were cross checked using three different techniques:
atomic absorption; Induction Couple Plasma and classical chemical assay
determination.
Updated Pit-Constrained Mineral Resource Estimates
The SRK 2011 Mineral Resource Estimates, prepared by SRK according to the
Canadian Institute of Mining, Metallurgy and Petroleum Standards on Mineral
Resources and Reserves, relate to the sulphide mineralisation in both the
Central and North East lodes of the Karchiga deposit. SRK has interpreted and
wireframed a series of narrow mineralised lenses with varying dips in both the
Central and North East lodes using a nominal 0.1%Cu cut-off. SRK constrained the
mineral resources to material with reasonable prospects for economic extraction
in two optimised open pits and by applying a cut-off grade of 0.3% copper. The
Indicated mineral resources are 7.1Mt of ore, grading 1.85% copper and
containing 131,860t of copper metal, and the Inferred mineral resources are
1.2Mt of ore, grading 1.68% copper and containing 19,860t of copper metal. The
following table shows the breakdown of the mineral resources for each lode and
resource category.
Pit-Constrained SRK 2011 Mineral Resource Estimates (Effective May 6, 2011)
----------------------------------------------------------------------------
Indicated Mineral Resources
----------------------------------------------------------------------------
Cut- Metal Grade Metal
off Cu Tonnes Grade Metal Cu Au Metal Au
Lode Type (%) (Mt) Cu (%) Cu (t) (Mlb) (g/t) Au (t) (koz)
----------------------------------------------------------------------------
Central Sulphide 0.3 4.4 1.92 84,590 186.48 0.08 0.36 11.73
----------------------------------------------------------------------------
North East Sulphide 0.3 2.7 1.74 47,270 104.21 0.23 0.63 20.32
----------------------------------------------------------------------------
Total Sulphide 0.3 7.1 1.85 131,860 290.69 0.14 1.00 32.05
----------------------------------------------------------------------------
----------------------------------------------------------------------------
Inferred Mineral Resources
----------------------------------------------------------------------------
Cut- Metal Grade Metal
off Cu Tonnes Grade Metal Cu Au Metal Au
Lode Type (%) (Mt) Cu (%) Cu (t) (Mlb) (g/t) Au (t) (koz)
----------------------------------------------------------------------------
North East Sulphide 0.3 1.2 1.68 19,860 43.77 0.18 0.21 6.73
----------------------------------------------------------------------------
(i)Some figures may not sum exactly due to rounding.
The reported mineral resources in the above table are relatively insensitive to
moderate changes in the cut-off grade up to 0.5% copper cut-off. In addition,
the deposit contains gold which is recoverable, based on the metallurgical
studies conducted as part of the Karchiga Definitive Feasibility Study and
reported by the Company above under "Metallurgical Test Work".
The oxide mineral resource estimates in the Central lode remain unchanged from
that which was previously reported by the Company in the Karchiga Technical
Report (see technical report entitled "Updated Report on the Karchiga Property
held by Orsu Metals Corporation, Kazakhstan" and dated March 22, 2010) (the "WAI
2010 Estimate").
Whilst SRK used the same digital surface topography model and weathered horizon
to distinguish the oxide from the sulphide as previously used for the WAI 2010
Estimate, the SRK 2011 Mineral Resource Estimates are also based on the recent
in-fill drilling completed by Orsu in 2010 and an updated drill hole database,
the integrity of which has been verified by Ms Tracey Laight from SRK. Assays
for the 2010 in-fill drilling programme have been completed for Cu, Zn, Pb, and
Au in the VNIITsvetMet laboratory, which is independent from Orsu and SRK.
Standard, blank, and duplicate samples were inserted after approximately every
20 ordinary core samples. The ordinary half core samples have been taken from
visually mineralised intervals and 5 m of visually unmineralised material below
and above the mineralized intervals. The remaining half core samples are stored
at the Orsu facility in Ust-Kamenogorsk, Kazakhstan. The SRK 2011 Mineral
Resource Estimates have been derived using all data available at the end of
April 2011, which SRK has reviewed and which SRK is confident is sufficient in
terms of both quantity and quality to support the SRK 2011 Mineral Resource
Estimates.
Specific gravity measurements were carried out for the different material types
collected from Karchiga diamond drill core and an in-situ bulk density value
assigned to the block model based on the relationship between grade and bulk
density below the weathered surface revealed by a regression analysis. Data from
the Company's 2008 and 2010 drilling has enabled density regression plots to be
established for the Central and North East lodes.
The table below shows the pit optimisation parameters that were used to define a
pit outline which was then used to constrain the mineral resource to material
with reasonable prospects for economic extraction. The slope angle parameters
are the result of the geotechnical study undertaken by SRK. The Mining,
Processing, and Operating Cost and the Net Smelter Return ("NSR") parameters
have been taken from the Karchiga Scoping Study. A long term metal price of
$2.95/lb Cu was assumed by SRK, in contrast to $3.00/lb Cu used in the Karchiga
Scoping Study. Currently, no mineral reserve has been estimated as part of SRK's
work, although a mineral reserve estimate is planned as part of the Karchiga
Definitive Feasibility Study on the basis of the SRK 2011 Mineral Resource
Estimates.
Pit Optimisation Parameters
------------------------------------------------------------------
Parameter Value
------------------------------------------------------------------
Overall slope angle
Central Pit:
Hanging Wall 49 degrees
Footwall 49 degrees
North East Pit:
Hanging Wall 51 degrees
Footwall 47 degrees
Northern Wall 47 degrees
------------------------------------------------------------------
Mining & Processing
Mining Recovery 95.0%
Mining Dilution 5.0%
Cu Processing Recovery 90.00%
------------------------------------------------------------------
Costs
Mining Cost
Ore $1.80/t
Oxide $1.30/t
Waste $1.60/t
Processing Cost $9.00/t ore feed
General & Administrative Cost $5.00/t ore feed
Royalty 6% of ore feed
------------------------------------------------------------------
Price
Cu Selling Price $6500/t product ($2.95/lb)
NSR 83% of product
------------------------------------------------------------------
Comparison with Previous Pit-Constrained Estimates
The table below shows a comparison between the SRK 2011 Mineral Resource
Estimates and previously reported mineral resource estimates in the Karchiga
Scoping Study, both pit-constrained. The cut-off grade of 0.34% copper used in
the mineral resource estimates in the Karchiga Scoping Study was back-calculated
based on the economic parameters used in the Karchiga Scoping Study and shown in
the table above. It should be noted that the SRK 2011 Mineral Resource Estimates
are reported without dilution and loss, while the mineral resource estimates
contained in the Karchiga Scoping Study were reported allowing for 5% mining
loss and 5% mining dilution.
Comparison of Pit-Constrained Mineral Resource Estimates for the Karchiga Project
----------------------------------------------------------------------------
Indicated Mineral Resources
----------------------------------------------------------------------------
Estimate Effective Cut-off Lode Type Tonnes Grade Metal Metal
Date Cu (%) (Mt) Cu Cu (t) Cu
(%) (Mlb)
SRK 2011 May 6, 0.34 Central & Sulphide 7.1 1.85 131,789 290.5
2011 North East
Micon 2010 May 25, 0.34 Central & Sulphide 6.5 1.97 127,804 281.7
2010 North East
----------------------------------------------------------------------------
Inferred Mineral Resources
----------------------------------------------------------------------------
Estimate Effective Cut-off Lode Type Tonnes Grade Metal Metal
Date Cu (%) (Mt) Cu Cu (t) Cu
(%) (Mlb)
SRK 2011 May 6, 0.34 North East Sulphide 1.2 1.68 19,849 43.8
2011
Micon 2010 May 25, 0.34 North East Sulphide 1.1 1.71 18,810 41.5
2010
(i) Some figures may not sum exactly due to rounding. Mineral resources
that are not minerals reserves have not demonstrated economic viability.
The figures for the Karchiga Scoping Study are extracted as quoted in
the Orsu's press release dated May 25, 2010.
Other
Two key issues to be investigated by SRK as part of the Karchiga Definitive
Feasibility Study will be the use of high quality Chinese equipment in order to
minimise the project capital costs and potential off-takers for the copper
concentrate in both the People's Republic of China and the Republic of
Kazakhstan. The Karchiga Project is favourably located approximately 220 km
south east of the regional centre, Ust-Kamenogorsk, where Glencore International
AG has commissioned its new smelter and approximately 40 km from the Chinese
border to the east. The nearest copper mining operation in China at the Ashele
VMS deposit, containing 1Mt of copper, is located approximately 85 km
east-southeast from the Karchiga deposit.
The milestones for the Karchiga Definitive Feasibility Study are expected to be:
-- Q2 2011 - finalisation of the metallurgical flow sheet (completed);
-- Q2 2011 - updated NI 43-101 mineral resource, incorporating 2010
drilling results (completed);
-- Q2 2011 - start of detailed mine design;
-- Q3 2011 - completion of the locally commissioned Kazakh Feasibility
Study and submission for approval;
-- Q4 2011 - review of the Karchiga Project financing options;
-- October 2011 - completion of the Karchiga Definitive Feasibility Study;
-- Q1 2012 - approval of the Kazakh Feasibility Study;
-- Q1 2012 - start of construction.
TALAS COPPER-GOLD-MOLYBDENUM PROJECT, KYRGYZSTAN
Exploration Programme
Pursuant to the joint venture agreement dated December 3, 2008, as amended on
August 14, 2009, between the Company, Gold Fields Orogen Holding BVI ("Gold
Fields"), Lero, Kami Associates Limited (the "JV Company") and Talas Copper Gold
LLC ("TCG") (the "JV Agreement"), Gold Fields is the project operator for the
Talas Project. Pursuant to the JV Agreement Gold Fields has a 60% interest in
the Talas Project and is the project operator and the Company retains a 40% in
the Talas Project.
In January 2011 the Kyrgyz Government reviewed all exploration licences in the
country to improve transparency and accountability in natural resource
exploration, which led to a temporary suspension of all exploration activities
in the country. The Ministry of Natural Resources reviewed the Talas Project on
24 April 2011 and recognised that it had fully complied with all licence
requirements. It also approved a request from TCG for a three month suspension
of the 2011 exploration requirements to allow TCG time to win support from the
local communities for the Talas Joint Venture's long term exploration goals.
In May 2011, Gold Fields and Orsu completed an internal geological and technical
review of the Talas Project, which identified and prioritized several new
exploration targets in the immediate vicinity of the deposit (falling within a
three kilometre radius as well as at deeper levels of the deposit itself) which,
when explored. The testing of these targets could potentially further enlarge
the mineral endowment of the Taldybulak mineral resources and could see further
improvements in metal grades via in-fill drilling of the existing resources at
the Taldybulak deposit.
For 2011, Gold Fields, the operator for the Talas Project, is planning an infill
drilling in the western area of the Taldybulak deposit with 6,000m of HQ size
diamond drilling. Upon completion of the 6,000m drilling programme, the Company
expects to update the mineral resource estimates for Taldybulak. These works are
expected to form a foundation for the decision to proceed with the
prefeasibility study for the Taldybulak deposit.
AKDJOL-TOKHTAZAN PROJECT, KYRGYZSTAN
Licence Information
The Akdjol-Tokhtazan Project contains the Akdjol (108km(2)) and Tokhtazan
(4km(2)) exploration licences, located in the Jebel-Abad Oblast, western
Kyrgyzstan, both of which are held by Oriel in Kyrgyzstan LLC in which the
Company holds a 100% interest.
Progress update of the Akdol-Tokhtazan Project
The Company is currently formulating its 2011 exploration programme for the
Akdjol-Tokhtazan Project, but it is expected that the analysis of the results
from the 2010 drilling programme and their integration with the results of the
geophysical survey will form the basis for the 2011 exploration programme.
FINANCIAL RESULTS FOR THE THREE MONTHS ENDED MARCH 31, 2011
For the three months ended March 31, 2011, prepared in accordance with IFRS, the
Company recorded net income of $1.4 million.
As at March 31, 2011 the Company had net assets of $41.9 million ($40.4 million
as at December 31,2010) of which $19.4 million was cash and cash equivalents
($19.6 million as at December 31,2010).
The net income of $1.4 million consisted of unrealized derivative gains of $3.3
million and net foreign exchange gains of $0.1 million, partially offset by
administrative costs of $0.8 million, legal and professional expenses of $0.3
million, exploration costs of $0.5 million, a stock-based compensation charge of
$0.1 million and the Company's share of the Talas Joint Venture losses of $0.3
million.
For the three months to March 31, 2011 the company re-measured the fair value of
56 million warrants with a remaining expected life of greater than one year and
recorded an unrealised gain of $3.3 million (see "Derivative warrant
liabilities" note below).
The Company's administrative costs and legal and professional expenses of $0.8
million were broadly in line year on year.
Exploration costs of $0.5 million was due mainly to the continued funding of
work relating to the Karchiga Definitive Feasibility Study expected to be
completed in October 2011.
For the three months ended March 31, 2011 the Company expensed $0.3 million
relating to its 40% pro-rata share of the Talas Joint Venture operating.
As at March 31, 2011, the Company's cash and cash equivalents were $19.4 million
compared to $19.6 million as at December 31, 2010. The decrease of $0.2 million
for the three months to March 31, 2011 was due primarily to exploration
expenditure of $0.5 million, corporate expenditure of $1.3 million and Orsu's
pro-rata funding for the Talas Project of $0.2 million, partially offset by
deferred consideration received of $1.5 million and royalty income in respect of
the Company's investment in the Tasbulat Oil Corporation of $0.3 million.
CONVERSION TO IFRS FROM CANADIAN GAAP
Effective January 1, 2011, the Canadian Accounting Standards Board required all
publicly listed companies to prepare their financial statements in accordance
with IFRS. The financial statements for the period ended March 31, 2011 are the
first set of financial statements the Company has prepared under IFRS. As part
of the transition to IFRS the Company also prepared re-stated consolidated
balance sheets as at January 1, 2010, March 31, 2010 and December 31, 2010 along
with re-stated consolidated statements of net income and comprehensive income
for the three months ended March 31, 2010 and the year ended December 31, 2010.
During 2010 the Company implemented a plan for the conversion from Canadian GAAP
to IFRS and has now completed the scoping and planning, detailed assessment and
operations implementation phases. The post implementation review phase is
ongoing.
The Company's financial statements as at March 31, 2011 set out in detail how
the transition from Canadian GAAP to IFRS has affected its consolidated balance
sheet, statement of net income and comprehensive income, consolidated statement
of changes in equity and consolidated cash flows.
Impact on the consolidated balance sheet and equity
The following table summarises the impact of conversion to IFRS on the Company's
consolidated equity, as previously reported under Canadian GAAP for the three
months ended March 31, 2010 and the year ended December 31, 2010:
March 31 December 31
2010 2010
$000 $000
Equity as previously reported under Canadian
GAAP as at January 1, 2010 24,833 24,833
----------------------------
Reclassification of share purchase warrants to
derivative liabilities (note a) (42,041) (42,041)
Expense of share issue costs prior to January 1,
2009 (note b) (4,598) (4,598)
Re-measurement of fair value of derivative
warrant liabilities (note c) 35,411 35,411
----------------------------
Re-stated Equity under IFRS as a January 1, 2010 13,605 13,605
----------------------------
Share issue (net of share issue and broker
warrant issue costs) - 18,705
Share purchase warrants issued - 1,131
Share based payments 105 1,817
Net loss as previously reported under Canadian
GAAP for the period (1,611) (4,622)
Re-measurement of fair value of derivative
warrant liabilities in period (note c) 10,216 11,184
Expense of share issue costs from 2010 (note d) - (793)
Reversal of future income tax adjustments (note
e) - (639)
----------------------------
Equity under IFRS 22,315 40,388
----------------------------
----------------------------
Impact of significant accounting policy changes on transition to IFRS
a) The Company has listed share purchase warrants outstanding that are
exercisable in Canadian dollars. As the functional reporting currency of the
Company is United States dollars, share purchase warrants with an exercise price
in a different currency are considered a derivative instrument under IFRS (IAS
32). Previously under Canadian GAAP all share purchase warrants, net of issue
costs, were considered to be equity instruments. On transition from Canadian
GAAP to IFRS the Company re-classified $42 million, net of issue costs of $4.6
million, from equity to derivative liabilities as at January 1, 2010;
b) During 2005 and 2006 the Company incurred warrant issue costs in relation to
public offerings for units in the Company totalling $4.6 million. Under Canadian
GAAP these issues costs were capitalised to equity. Following the above
mentioned re-classification of share purchase warrants from equity to derivative
liabilities under IFRS these issues costs are required to be expensed and hence
the Company has recorded an adjustment to retained earnings of $4.6 million as
at January 1, 2010;
c) Following the re-classification of share purchase warrants to derivative
liabilities as at January 1, 2010 (as mentioned in note a) above, under IFRS the
Company is required to re-measure the fair value of these as at each reporting
date and any adjustments recorded against retained earnings. As a result the
Company recorded an adjustment of $35.4 million to retained earnings as at
January 1, 2010. In subsequent comparative periods the Company re-measured the
fair value of its derivative warrant liabilities outstanding as at March 31,
2010 and as at December 31, 2010 and recorded adjustments of $10.2 million and
$11.2 million respectively;
d) In April 2010, the Company completed the "Offering" pursuant to which it
issued 56 million share purchase warrants and incurred associated issue costs of
$0.7 million which, under Canadian GAAP, had been capitalised. Under IFRS these
issue costs are required to be expensed and the Company recorded an adjustment
of $0.7 million against retained earnings as at December 31, 2010;
e) Under Canadian GAAP the Company re-measured the deferred tax liabilities on
its mineral properties for changes in exchange rate and recorded a foreign
exchange gain of $0.6 million for the year ended December 31, 2010. Under IFRS,
IAS 12 prohibits the recognition of any deferred tax for the acquisition of
assets that do not constitute a business combination. Accordingly, on transition
to IFRS, the Company reversed this adjustment between net income and deferred
tax liabilities on the balance sheet as at December 31, 2010.
Impact on consolidated statement of net income and comprehensive income
As a result of the IFRS policies mentioned above, impacted the net operating
results of the company for the following periods:
- For the three months to March 31, 2010 the Company had previously under
Canadian GAAP reported a net loss of $1.6 million. Under IFRS the Company has
now reported net income for the three months to March 31, 2010 of $8.6 million;
- For the year ended December 31, 2010 the Company had previously under Canadian
GAAP reported a net loss of $4.6 million. Under IFRS the Company has now
reported net income for the year ended December 31, 2010 of $5.1 million.
Further details of the above changes can be found in the Company's financial
statements section "5. Transition of IFRS".
FINANCIAL POSITION AS AT MARCH 31, 2011 AND DECEMBER 31, 2010
As at March 31, 2011, the Company's net assets were $41.9 million, compared with
$40.4 million as at December 31, 2010. The increase of $1.5 million was due to a
$3.3 million decrease in derivative warrant liabilities partially offset by
funding of the Company's 40% interest in the Talas Joint Venture of $0.2 million
and corporate and exploration expenditure of $1.6 million.
A summary of the carrying value of the Company's equity investment in the Talas
Joint Venture as at March 31, 2011 is set out below:
$000s
Fair value of equity investment as at January 1, 2011 10,221
Funding provided by the Company during the three months ended
March 31, 2011 200
Less: Company's 40% share of operating losses for the three
months ended March 31, 2011 (310)
-------------
Fair value of equity investment as at March 31, 2011 10,111
-------------
-------------
LIQUIDITY AND CAPITAL RESOURCES
As at March 31, 2011 the Company's main source of liquidity was unrestricted
cash of $19.4 million, compared with $19.6 million as at December 31, 2010.
The Company's working capital needs include the maintenance of the Company's
interests in, and the further exploration and the development of, the Company's
mineral properties in Kazakhstan and Kyrgyzstan (minimum license expenditure
obligations of approximately $1.7 million for 2011), the completion of the
Karchiga Definitive Feasibility Study (budgeted expenditures of approximately
$2.5 million for 2011), the completion of the Karchiga Acquisition (cash
purchase price of approximately $6.2 million completed on April 12, 2011), the
funding of general corporate expenses (budgeted expenditures of approximately
$4.6 million for 2011) and the contribution towards the pursuit of future growth
opportunities (which may include acquiring one or more additional assets), if
and when such opportunities arise.
The future advancement, exploration and development of the Company's properties,
including continuing exploration and development projects, and the construction
of mining facilities and commencement of mining operations, if any, will require
substantial additional financing in the future. To the extent that such funding
is required in the future, the Company expects that it would try to raise such
funding through equity financing if and when required. Whilst the Company has
been successful in raising equity financing in the past, the Company's ability
to raise additional equity financing may be affected by numerous factors beyond
the Company's control, including, but not limited to, adverse market conditions
and/or commodity price changes and economic downturn and those other factors
that are listed under "Risks and Uncertainties" on the Company's MD&A.
DERIVATIVE FINANCIAL INSTRUMENTS
The Company's derivative instruments consist of derivative assets in the form of
deferred consideration relating to the sale of the Varvarinskoye Project,
discontinued operations, and derivative warrant liabilities in relation to its
share purchase warrants.
Deferred consideration
In relation to the Company's discontinued operations, the Company has the
ability to earn deferred consideration, the fair value of which is partly
dependent on future copper and gold metal prices and, for this reason, is
classified as a derivative instrument and has been disclosed as a "deferred
consideration receivable" asset and "deferred consideration income" in the
Company's financial statements for the three months ended March 31, 2011 and the
year ended December 31, 2010.
The Company has recognized a deferred consideration receivable asset of $5.1
million in its financial statements for the year ended December 31, 2010,
representing the net present value of the Company's estimated future deferred
consideration earnings, based upon the Company's forecast of future gold and
copper metal prices and adjusted for counterparty credit risk (see above for
further information).
The net present value of the estimated future deferred consideration earnings
which the Company recognised as at December 31, 2010 represents the maximum the
Company may earn for deferred consideration after taking into account the limit
of $1.5 million it may receive for any one year and accruing interest on any
amounts carried forward as mentioned. For this reason, the Company has not
recorded any deferred income for the three months to March 31, 2011.
A description of the risks associated with this financial instrument is
contained in the 'Risks and Uncertainties' section of the Company's MD&A under
the heading of "Risks and Uncertainties Relating to the Varvarinskoye Deferred
Consideration Receivable (Derivative Financial Instrument)".
Derivative warrant liabilities
In prior years the Company has issued listed share purchase warrants in
conjunction with public offerings for the purchase of common shares of the
Company. These share purchase warrants were issued with an exercise price in
Canadian dollars, rather than U.S. dollars (the reporting and Functional
Currency (as defined in "Critical accounting policies and estimates" in the
Company's MD&A) of the Company), were only issued to participants in these
public share offering, are not able to be tracked by the Company and are
transferable by the warranty holder. Such share purchase warrants are considered
to be derivative instruments and the Company is required to re-measure the fair
value of these at the reporting date. The fair value of these listed share
purchase warrants are re-measured at each balance sheet date using the Black
Scholes model using the exchange rates at the balance sheet date and measured
over their remaining life. Adjustments to the fair value of the Share purchase
warrants as at the balance sheet date are recorded to the income statement.
Share purchase warrants that have expired or have been forfeited are adjusted to
the net income statement. As at March 31, 2011 the Company calculated a fair
value for its warrant derivative liabilities of $2.9 million, compared to $6.2
million as at December 31, 2010 and recorded the adjustment of $3.3 million to
net income.
Consolidated Statements of Net Income, and Comprehensive Income (Unaudited)
(Prepared in accordance with IFRS)
----------------------------------------------------------------------------
Three months ended March 31,
2011 2010
$000 $000
Income/ (expenses)
Administration (770) (717)
Legal and professional (291) (324)
Exploration (539) (199)
Stock based compensation (142) (105)
Stock based compensation - non employees (20) -
Unrealized derivative gains 3,346 10,216
Foreign exchange gains/ (losses) 97 (55)
-----------------------------
Net income from operations 1,681 8,816
Company's share of Talas Joint Venture losses (310) (214)
Finance income 17 11
Finance expense - (8)
-----------------------------
Net income and comprehensive income for the
period 1,388 8,605
-----------------------------
-----------------------------
Net income/ (losses) attributable to:
Shareholders of the Company 2,353 8,652
Non-controlling interest (965) (47)
-----------------------------
1,388 8,605
-----------------------------
-----------------------------
Earnings per share
Basic $0.01 $0.19
Diluted $0.01 $0.19
Weighted average number of common shares 157,696 45,696
Consolidated Balance Sheets (Unaudited)
(Prepared in accordance with IFRS)
----------------------------------------------------------------------------
March 31 December 31 January 1
2011 2010 2010
Assets $000 $000 $000
Current assets
Cash and cash equivalents 19,368 19,596 3,386
Current deferred consideration receivable 1,500 1,500 -
Prepaid and receivables 1,234 1,217 1,860
---------------------------------
22,102 22,313 5,246
Non-current assets
Deferred consideration receivable 2,092 3,592 -
Exploration properties 10,458 10,458 20,321
Property, plant and equipment 415 449 1,078
Equity investment in Talas Joint Venture 10,111 10,221 -
Other assets 392 392 643
---------------------------------
23,468 25,112 22,042
---------------------------------
Total assets 45,570 47,425 27,288
---------------------------------
---------------------------------
Liabilities
Current liabilities
Accounts payable and accrued liabilities 613 672 1,941
Current portion of derivative warrant
liabilities - - 2,676
---------------------------------
613 672 4,617
Non-current liabilities
Derivative warrant liabilities 2,899 6,245 8,552
Other liabilities 120 120 514
---------------------------------
3,632 7,037 13,683
Equity
Share capital 380,145 380,145 361,440
Share purchase warrants 4,897 4,897 6,609
Share purchase options 6,066 5,904 12,550
Contributed surplus 22,483 22,483 11,177
Non-controlling interest (966) (773) -
Deficit (370,687) (372,268) (378,171)
---------------------------------
41,938 40,388 13,605
---------------------------------
Total equity and liabilities 45,570 47,425 27,288
---------------------------------
---------------------------------
Consolidated Statements of Cash Flows (Unaudited)
(Prepared in accordance with IFRS)
----------------------------------------------------------------------------
Three months ended March 31,
2011 2010
$000 $000
-----------------------------
Operating activities
Income for the period 1,388 8,605
Items not affecting cash:
Company share of Talas Joint Venture losses 310 214
Depreciation and amortization 33 39
Share-based payments 162 105
Unrealized foreign exchange losses 74 46
Unrealized derivative gains (3,346) (10,216)
-----------------------------
(1,379) (1,207)
Changes in non-cash working capital
Accounts receivable and other assets (251) (1,114)
Accounts payable and accrued liabilities (52) 746
-----------------------------
Net cash used by the operating activities (1,682) (1,575)
Cash flows from investing activities
Expenditures on property, plant and equipment (2) (2)
Proceeds from net investment in residual oil
and gas interests 251 241
Deferred consideration received 1,500 -
Funding of investment in Talas Joint Venture (200) -
-----------------------------
Net cash from investing activities 1,549 239
-----------------------------
Effect of exchange rate changes on cash and
cash equivalents (95) 7
-----------------------------
Net decrease in cash and cash equivalents (228) (1,329)
-----------------------------
Cash and cash equivalents - Beginning of period 19,596 3,386
-----------------------------
Cash and cash equivalents - End of period 19,368 2,057
-----------------------------
-----------------------------
Consolidated Statements of changes in Equity (Unaudited)
(Prepared in accordance with IFRS)
-----------------------------------------------------------------
Consolidated statement of changes to equity as at March 31, 2010:
Share capital
------------------------
Share Share Share
Number capital purchase purchase
of shares warrants options
(000s') $000 $000 $000
--------------------------------------------------
Balance as at January 1,
2010 45,696 361,440 6,609 12,550
Share-based payments - - - 105
Share options forfeited
or lapsed - - - (2,170)
Net income/ (loss) for
the period - - - -
--------------------------------------------------
Balance as at March 31,
2010 45,696 361,440 6,609 10,485
--------------------------------------------------
--------------------------------------------------
Non-
Contributed controlling Total
surplus interest Deficit equity
$000 $000 $000 $000
---------------------------------------------------
Balance as at January 1,
2010 11,177 - (378,171) 13,605
Share-based payments - - - 105
Share options forfeited
or lapsed 2,170 - - -
Net income/ (loss) for
the period - (47) 8,652 8,605
---------------------------------------------------
Balance as at March 31,
2010 13,347 (47) (369,519) 22,315
---------------------------------------------------
---------------------------------------------------
Consolidated Statements of changes in Equity (Unaudited)
(Prepared in accordance with IFRS)
----------------------------------------------------------------------------
Consolidated statements of changes to equity as at December 31, 2010 and
March 31, 2011:
Share capital
------------------------
Share Share
Number Share purchase purchase
of shares capital warrants options
(000s') $000 $000 $000
--------------------------------------------------
Balance as at January 1,
2010 45,696 361,440 6,609 12,550
Share issue 112,000 21,445 - -
Share issue costs - (1,862) - -
Broker Warrant issue
costs - (878) - -
Share-based payments - - - 1,817
Share purchase warrants
issued - - 1,131 -
Share purchase warrants
lapsed - - (2,843) -
Share options forfeited
or lapsed - - - (8,463)
Net income/ (loss) for
the period - - - -
--------------------------------------------------
Balance as at December
31, 2010 157,696 380,145 4,897 5,904
--------------------------------------------------
--------------------------------------------------
Share-based payments - - - 162
Net income/ (loss) for
the period - - - -
--------------------------------------------------
Balance as at March 31,
2011 157,696 380,145 4,897 6,066
--------------------------------------------------
--------------------------------------------------
Non-
Contributed controlling Total
surplus interest Deficit equity
$000 $000 $000 $000
---------------------------------------------------
Balance as at January 1,
2010 11,177 - (378,171) 13,605
Share issue - - - 21,445
Share issue costs - - - (1,862)
Broker Warrant issue
costs - - - (878)
Share-based payments - - - 1,817
Share purchase warrants
issued - - - 1,131
Share purchase warrants
lapsed 2,843 - - -
Share options forfeited
or lapsed 8,463 - - -
Net income/ (loss) for
the period - (773) 5,903 5,130
---------------------------------------------------
Balance as at December
31, 2010 22,483 (773) (372,268) 40,388
---------------------------------------------------
---------------------------------------------------
Share-based payments - - - 162
Net income/ (loss) for
the period - (193) 1,581 1,388
---------------------------------------------------
Balance as at March 31,
2011 22,483 (966) (370,687) 41,938
---------------------------------------------------
---------------------------------------------------
FORWARD-LOOKING INFORMATION
This press release contains or refers to forward-looking information. All
information, other than information regarding historical fact that addresses
activities, events or developments that the Company believes, expects or
anticipates will or may occur in the future is forward-looking information. Such
forward-looking information includes, without limitation, statements relating
to: the continued and future maintenance, exploration and development of the
Company's properties, including the proposed work programs, anticipated
milestones and the timing related thereto; development and operational plans and
objectives; the Company's ability to satisfy its future expenditure obligations
on mineral properties in which it has an interest; mineral resource estimates
and updates relating thereto; estimated project economics, cash flow, costs,
expenditures, and sources of funding; the sufficiency of the Company's current
working capital for the next twelve months and estimates relating thereto; the
estimated LOM, NPV and IRR for, and forecasts relating to tonnages and amounts
to be mined from, and average recoveries and grades at, the Karchiga Project
and/or Taldybulak as well as the other forecasts, estimates and expectations
relating to the Karchiga Scoping Study, the SRK 2011 Mineral Resource Estimates,
the NI 43-101 Taldybulak Scoping Study Report and the Taldybulak Scoping Study
set out in the "Operational Review" of the Company's MD&A; future prices and
trends relating to copper, gold and molybdenum; the completion of the Karchiga
Definitive Feasibility Study and the potential start of construction at the
Karchiga Project (including the expected timing for same); the anticipated
completion of a mineral reserves estimate for, the production of marketable
concentrates from, and a reduction in future transportation costs at, the
Karchiga Project; the potential for further enlarging the mineral endowment and
improving metal grades at, and completion of a pre-feasibility study for, the
Taldybulak deposit; the Company's belief that the results from the mineralogical
study relating to the Akdjol-Tokhtazan Project suggest that gold should be
metallurgically accessible; the future political and legal regimes and
regulatory environments relating to the mining industry in Kyrgyzstan and/ or
Kazakhstan; the expected use of the net proceeds from the Offering; the
Company's expectations and beliefs with respect to the waiver of the State's
pre-emptive right with respect to the Karchiga Project and the past placements
of the Common Shares being covered thereby; the Company's beliefs with respect
to the amount and receipt of deferred consideration that may be payable to the
Company by Polymetal in connection with the sale of Varvarinskoye; the
significance of any individual claims by non-Ontario residents with respect to
the Claim; and the Company's future growth (including new opportunities and
acquisitions) and its ability to raise new funding.
The forward-looking information in this press release reflects the current
expectations, assumptions or beliefs of the Company based on information
currently available to the Company. With respect to forward-looking information
contained in this press release, the Company has made assumptions regarding,
among other things, the Company's ability to generate sufficient funds from
capital markets to meet its future expected obligations and planned activities,
the Company's business (including the continued exploration and development of
its properties and the methods to be employed with respect to same), the
estimation of mineral resources (as set out in the "Operational Review" section
of the Company's MD&A), the parameters and assumptions employed in the Karchiga
Scoping Study, the SRK 2011 Mineral Resource Estimates, the NI 43-101 Taldybulak
Scoping Study Report and the Taldybulak Scoping Study, the economy and the
mineral exploration industry in general, the political environments and the
regulatory frameworks in Kazakhstan and Kyrgyzstan with respect to, among other
things, the mining industry generally, royalties/ MPTs, taxes, environmental
matters and the Company's ability to obtain, maintain, renew and/or extend
required permits, licences, authorisations and/or approvals from the appropriate
regulatory authorities, that the waiver granted by the Competent Authority
covers any pre-emptive right that the Competent Authority or State has in
respect of any past placements, future capital costs and cash flow discounts,
anticipated mining and processing rates, the treatment of oxide materials as
waste with respect to the Karchiga Project, the Company's ability to continue to
obtain qualified staff and equipment in a timely and cost-efficient manner and
to engage international and Kazakh companies to carry out additional studies for
the Karchiga Definitive Feasibility Study and to obtain Kazakh Feasibility Study
approval, the treatment of the Varvarinskoye Project as discontinued operations,
assumptions relating to the Company's critical accounting policies, that the
Company has identified all of the key issues to be investigated in connection
with the Karchiga Definitive Feasibility Study, and has also assumed that no
unusual geological or technical problems occur, and that equipment works as
anticipated, no material adverse change in the price of copper, gold or
molybdenum occurs and no significant events occur outside of the Company's
normal course of business.
Forward-looking information is subject to a number of risks and uncertainties
that may cause the actual results of the Company to differ materially from those
discussed in the forward-looking information, and even if such actual results
are realised or substantially realised, there can be no assurance that they will
have the expected consequences to, or effects on, the Company. Factors that
could cause actual results or events to differ materially from current
expectations include, but are not limited to: risks normally incidental to
exploration and development of mineral properties; uncertainties in the
interpretation of results from drilling and metallurgical test work; the
possibility that future exploration, development or mining results will not be
consistent with expectations; uncertainty of mineral resources estimates;
uncertainty of capital and operating costs, production and economic returns;
uncertainties relating to the estimates and assumptions used, and risks in the
methodologies employed, in the Karchiga Scoping Study, the SRK 2011 Mineral
Resource Estimates, the NI 43-101 Taldybulak Scoping Study Report and/or the
Taldybulak Scoping Study and that the completion of additional work on the
Karchiga Project and/or Taldybulak, as the case may be, could result in changes
to the estimates relating to the Karchiga Scoping Study, the SRK 2011 Mineral
Resource Estimates, the NI 43-101 Taldybulak Scoping Study Report and/or the
Taldybulak Scoping Study, as applicable; a delay in the completion of the
Karchiga Definitive Feasibility Study; the Company's inability to obtain,
maintain, renew and/or extend required licences, permits, authorizations and/or
approvals from the appropriate regulatory authorities and other risks relating
to the regulatory frameworks in Kazakhstan and Kyrgyzstan; adverse changes in
the political environments in Kazakhstan and Kyrgyzstan and the laws governing
the Company, its subsidiaries and their respective business activities;
inflation; changes in exchange and interest rates; adverse changes in commodity
prices; the inability of the Company to obtain required financing; adverse
changes with respect to the Talas Joint Venture; adverse general market
conditions; lack of availability at a reasonable cost or at all, of equipment or
labour; inability to attract and retain key management and personnel; the
possibility of non-resident class members commencing individual claims in
connection with the Claim; the Company's inability to delineate additional
mineral resources and delineate mineral reserves; reductions in, or no, future
cash flows at Varvarinskoye; and future unforeseen liabilities and other factors
including, but not limited to, those listed under the "Risk and Uncertainties"
section in the Company's MD&A.
Any mineral resource figures referred to in this press release are estimates and
no assurances can be given that the indicated levels of minerals will be
produced. Such estimates are expressions of judgment based on knowledge, mining
experience, analysis of drilling results and industry practices. Valid estimates
made at a given time may significantly change when new information becomes
available. While the Company believes that the mineral resource estimates in
respect of its properties are well established, by their nature mineral resource
estimates are imprecise and depend, to a certain extent, upon statistical
inferences which may ultimately prove unreliable. If such mineral resource
estimates are inaccurate or are reduced in the future, this could have a
material adverse impact on the Company. Due to the uncertainty that may be
attached to inferred mineral resources, it cannot be assumed that all or any
part of an inferred mineral resource will be upgraded to an indicated or
measured mineral resource as a result of continued exploration. Mineral
resources that are not mineral reserves do not have demonstrated economic
viability. The Karchiga Scoping Study, the NI 43-101 Taldybulak Scoping Study
Report and/or the Taldybulak Scoping Study are preliminary in nature, and
include inferred mineral resources that are considered too speculative
geologically to have the economic considerations applied to them that would
enable them to be categorized as mineral reserves. There is no certainty that
the conclusions of the Karchiga Scoping Study, the NI 43-101 Taldybulak Scoping
Study Report and/or the Taldybulak Scoping Study will be realized.
Any forward-looking information speaks only as of the date on which it is made
and, except as may be required by applicable securities laws, the Company
disclaims any intent or obligation to update any forward-looking information,
whether as a result of new information, future events or results or otherwise.
Although the Company believes that the assumptions inherent in the
forward-looking information are reasonable, forward-looking information is not a
guarantee of future performance and accordingly undue reliance should not be put
on such information due to the inherent uncertainty therein.
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