Orsu Metals Corporation ("Orsu" or the "Company" or the "Group"),
the dual listed (TSX:OSU)(AIM:OSU) London-based base and precious
metals exploration and development company today reports its
unaudited results for the period ended September 30, 2012. A full
Management's Discussion and Analysis of the results for the period
ended September 30, 2012 ("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 period ended September 30, 2012 have been
prepared in accordance with International Financial Reporting
Standards ("IFRS") and their applicable International Accounting
Standards (or "IAS").
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 GBP.
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 FROM JULY 1, 2012
Since the start of the third quarter the Company made
significant progress in two key areas in relation to its Karchiga
Project; its efforts to secure finance for the construction of a
mine and processing facility at the Karchinga Project and obtaining
the necessary approvals required for the construction of a mine and
processing facility. At the same time, in order to raise working
capital to fund future exploration activities the Company entered
into an agreement to potentially sell its Akdjol-Tokhtazan Project
in Kyrgyzstan. In relation to aforementioned objectives the Company
achieved the following significant milestones:
-- The Company completed the sale of its 40% interest in the gold-copper-
molybdenum project in Kyrgyzstan (the "Talas Project") to a wholly owned
subsidiary of Gold Fields Limited ("Gold Fields") for cash consideration
of $10 million (the "Sale") and additionally for the subscription of 25
million units of the Company (each a "Unit") at a price of CAD$0.40 per
Unit for gross proceeds of CAD$10 million (the "Subscription"), with
each Unit consisting of one common share (a "Common Share") and one half
of one common share purchase warrant (each whole warrant, a "Warrant").
Completion of the Subscription is conditional on the Company obtaining
formal waiver of the Kazakh Government's pre-emptive right and
requirement for consent for the issuance of Common Shares pursuant to
the Subscription (the "Kazakh Formal Waiver") which is expected in H2
2012. The Company intends to apply a substantial proportion of the Sale
and Subscription proceeds towards the construction and development of
the mine and related processing facilities for the Karchiga Project.
-- The Company appointed Barclays Bank plc ("Barclays") and UniCredit Bank
Austria AG ("UniCredit") (collectively the "Mandated Lead Arrangers") to
use commercially reasonable efforts to secure a project debt finance
facility of up to $90 million to finance the Karchiga Project, subject
to commercially acceptable terms for the facility being agreed and the
Mandated Lead Arrangers obtaining all necessary internal approvals. The
Company also announced that it is continuing discussions with a number
of potential debt providers to participate in the debt financing
alongside the Mandated Lead Arrangers.
-- The Company announced that it had received from the relevant Kazakh
authorities an approval (the "Approval") for the Karchiga technical
project ("Karchiga Technical Project") relating to the development of a
mining and processing complex at the Karchiga Project. The Approval was
granted by the Central Commission for Exploration and Mining of Mineral
Resources at the Ministry of Industry and New Technologies of Kazakhstan
(the "MINT") and is the principal document which confirms the compliance
of the Karchiga Technical Project with technical, economic and
environmental standards of Kazakhstan. The grant of the Approval allows
for an amendment to the Karchiga Project Contract (as defined below) to
permit the Company to commence construction and mining at the Karchiga
Project.
-- The Company announced that it had entered into an exclusivity agreement
with David-Invest LLP ("David Invest"), a Kyrgyz registered company, to
fund exploration work on a non-refundable basis for a period up to
September 1, 2013 (the "Exclusivity Period"), subject to the Company
successfully renewing the exploration licenses expiring on December 31,
2012, in return for which the Company would grant David Invest the
exclusive right during the Exclusivity Period to acquire the Akdjol-
Tokhtazan Project for consideration of $4.5 million through the
acquisition of its wholly owned subsidiary, Tournon Finance Limited,
("Tournon"), the 100% owner of Oriel In Kyrgyzstan LLC ("OiK LLC") which
is the holder of the gold exploration licenses for the Akdjol-Tokhtazan
Project (the "Exclusivity Agreement") (see "Operational Review - Akdjol-
Tokhtazan Project, Kyrgyzstan").
2012 THIRD QUARTER HIGHLIGHTS
-- July 2012 - as described above, the Company announced that it had agreed
to the Sale of its 40% interest in the Talas Project for a cash
consideration of $10 million and additionally Gold Fields had agreed to
the Subscription of 25 million Units of the Company at a price of
CAD$0.40 per Unit for gross proceeds of CAD$10 million, with each Unit
consisting of a Common Share and one half of one Warrant.
-- July 2012 - the Company announced the completion of the Sale and receipt
of $10 million cash consideration. In addition, the Gold Fields Group
had advanced into escrow the gross proceeds of the Subscription of
CAD$10 million cash. Completion of the Subscription remains conditional
upon the Company obtaining the Kazakh Formal Waiver. The gross proceeds
of the Subscription will remain in escrow pending the satisfaction or
waiver of these conditions. Upon completion of the Subscription, the
Gold Fields Group will own 26,134,919 Common Shares and 12,500,000
Warrants. All shares issued pursuant to the Subscription or any
subsequent exercise of the Warrants within 4 months of the Unit issuance
date will be subject to a hold restriction for four months after the
date the Units are issued.
-- July 2012 - the Company announced that it appointed the Mandated Lead
Arrangers to use commercially reasonable efforts to secure a project
debt finance facility of up to $90 million to finance the Karchiga
Project, subject to commercially acceptable terms for the facility being
agreed and the Mandated Lead Arrangers obtaining all necessary internal
approvals. The Company also announced that it is continuing discussions
with a number of potential debt providers to participate in the debt
financing alongside the Mandated Lead Arrangers.
-- August 2012 - the Company announced that it had received the Approval
for the Karchiga Technical Project relating to the development of a
mining and processing complex at the Karchiga Project. The Approval was
granted by the Central Commission for Exploration and Mining of Mineral
Resources at the MINT and is the principal document which confirms the
compliance of the Karchiga Technical Project with technical, economic
and environmental standards of Kazakhstan. The grant of the Approval
allows for an amendment to its existing exploration and production
contract to permit the Company to commence construction and mining at
the Karchiga Project.
POST QUARTER HIGHLIGHTS
-- November 2012 - As described above the Company announced that it had
entered into the Exclusivity Agreement with David Invest to fund
exploration work on a non-refundable basis during an Exclusivity Period,
subject to the Company successfully renewing the exploration licenses
expiring on December 31, 2012, in return for which the Company would
grant David Invest the exclusive right during the Exclusivity Period to
acquire the Akdjol-Tokhtazan Project for a consideration of $4.5
million.
-- November 2012 - the Company announced that it had entered into an
exclusivity agreement (the "Balkhash Agreement") with Asem Tas-N LLC
("Asem Tas") to jointly explore Asem Tas' licence area of approximately
6,000km2 (referred to herein as the "East Balkhash 2" licence area) in
Kazakhstan, which is host to a 30km long Dzharyk-Taisogan cluster of
copper-polymetallic occurrences (the "Balkhash Project"). Asem Tas is a
privately owned Kazakh registered company and the owner of the subsoil
use contract for the Balkhash Project. Under the terms of the Balkhash
Agreement, the Company will fund exploration work for the Balkhash
Project for 175 days ending in April 2013 (subject to extension by
mutual agreement) in an approximate total amount of $0.9 million (the
"Initial Working Programme"). In return, the Company has been granted
the exclusive right to participate in the Balkhash Project during such
time. The Balkhash Agreement provides that, subject to the completion of
satisfactory due diligence by Orsu, Asem Tas will apply to transfer the
licence for the East Balkhash 2 area to a newly formed Kazakh legal
entity jointly owned by Orsu and Asem Tas (the "Balkhash Joint Venture
Company"), with Orsu holding an effective 55% interest. A transfer of
the exploration licence to the Balkhash Joint Venture Company will be
conditional upon obtaining a formal waiver of the Kazakhstan
Government's pre-emptive right. Where the approval of the relevant
authorities for the transfer of the exploration licence is not received
due to a breach by Asem Tas, or the Kazakh Government exercises its pre-
emptive right to acquire the licence during the transfer process, Asem
Tas is required to refund Orsu for its expenditures in connection with
the Initial Working Programme. Further to the terms of the Balkhash
Agreement, upon the successful transfer of the East Balkhash 2 licence
to the Balkhash Joint Venture Company, Orsu will pay up to $1.5 million
to Asem Tas to compensate Asem Tas for historical exploration costs
incurred prior to 2012 (excluding any costs funded by Orsu). In
addition, Orsu has agreed to pay: (a) $20 per tonne of economically
extractable copper equivalent, up to a maximum of $10 million (less any
amount paid by Orsu to Asem Tas to compensate Asem Tas for historical
exploration costs), on completion of a positive preliminary economic
assessment study; and (b) $20 per additional tonne of economically
extractable copper equivalent, up to a maximum of $15 million (less any
amounts paid by Orsu to Asem Tas to compensate Asem Tas for historical
exploration costs and/ or pursuant to (a) above) on completion of a
positive definitive feasibility study. In addition, under the terms of
the Balkhash Agreement, Orsu will be responsible for funding all
exploration work for the Balkhash Project up to and including the
successful completion of a positive feasibility study. Under the terms
of the Balkhash Agreement, Orsu will have the right to buy-out all or
part of the interest of Asem Tas in the Balkhash Joint Venture Company,
for cash or shares, at a price determined by an independent expert.
OPERATIONAL REVIEW
The Company's principal and most advanced exploration project is
the property comprising a 47.3km2 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. In the first quarter of 2012, the
Company filed the results of the definitive feasibility study (or
the "Karchiga DFS") for the Karchiga Project which estimated an
initial capital expenditure requirement of $115 million. Since then
the Company has set out to secure finance, primarily in the form of
secured debt but also from other sources, for the construction of a
mine and processing facility at the Karchiga Project.
In relation to the Karchiga project in July 2012 the Company
obtained approval for the Karchiga Technical Project and local
Feasibility Study from the Kazakh authorities which will allow the
Company to proceed with the Karchiga Project through to
construction phase. In addition the Company is currently seeking to
secure financing to fund the construction, which the Company
estimates to secure in the fourth quarter of 2012, so that the
Company can enter into contracts to place advanced orders for
mining equipment and in order to commence construction at the
Karchiga Project in April 2013 (see "Risk and uncertainties"
section of the Company's MD&A). In order to secure finance for
the Karchiga Project the Company appointed the Mandated Lead
Arrangers to secure debt finance and also intends to use a
proportion of the proceeds from the Sale and, if completed, the
Subscription towards this.
Until the completion of the Sale on July 23, 2012 to Gold Fields
the Company's other principal exploration asset was its 40%
interest in a 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").
The Company's other exploration project is located approximately
100km to the south west of the Talas Project and is the
Akdjol-Tokhtazan licence area comprising the Akdjol and Tokhtazan
licences (the "Akdjol-Tokhtazan Project"). In the fourth quarter of
2011 the Company decided the Akdjol-Tokhtazan Project an asset
which was available for sale and in November 2012 announced the
potential sale to David Invest (see "Akdjol-Tokhtazan Project,
Kyrgyzstan - Potential disposal of the Akdjol-Tokhtazan
Project").
KARCHIGA COPPER PROJECT, KAZAKHSTAN
Karchiga DFS
In February 2012, SRK Consulting (UK) Limited ("SRK") completed
the Karchiga DFS and, in connection therewith, completed the
Karchiga DFS Report dated March 28, 2012. The complete Karchiga DFS
Report entitled "Karchiga Feasibility Study, National Instrument
43-101 ("NI 43-101") "NI 43-101 Technical Report", dated March 28,
2012 was prepared by Michael Beare, Dr Michael Armitage and Ms
Tracey Laight of SRK (each of whom is a "qualified person" within
the meaning of NI 43-101 and independent of Orsu) can be viewed
under the Company's profile on SEDAR at www.sedar.com.
The Company commenced the Karchiga DFS in September 2010; the
study was completed in February 2012, and the Company currently
estimates to start construction in April 2013. During the process
of completing and fulfilling the requirements of the Karchiga DFS
the Company undertook associated exploration and test work
programmes which include:
-- In-fill resource drilling program 2010 (full details can be viewed in
the Company's MD&A);
-- Metallurgical test work April 2011 (full details can be viewed in the
Company's MD&A);
-- SRK May 2011 Pit-Constrained Mineral Resource Estimates (full details
can be viewed in the Company's MD&A);
-- SRK December 2011 Pit-Constrained Mineral Resource Estimates (full
details can be viewed in the Company's MD&A); and
-- Karchiga DFS and the 2012 Mineral Reserve Estimates (as described
below).
Table 1 below shows the results of the 2012 Mineral Reserve
Estimates:
Table 1. Probable Mineral Reserves Estimates as of February 18,
2012
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Ore Tonnes Cu Metal Cu Metal Au Metal
Orebody Type (Mt) Cu % Au g/t (kt) (Mlb) (Koz)
----------------------------------------------------------------------------
Central HL 1.5 1.43 0.06 21.4 47.2 3.0
----------------------------------------------------------------------------
Central FL 3.8 1.78 0.12 68.2 150.2 15.2
----------------------------------------------------------------------------
North East FL 4.7 1.64 0.18 77.0 169.8 27.4
----------------------------------------------------------------------------
Total 10.0 1.67 0.14 166.6 367.2 45.6
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All figures are on a 100% ownership basis
Pit designs and the final NI 43-101 mineral reserve estimates
dated February 18, 2012 were completed using two types of software;
Whittle 4X optimisation software was used to generate optimal pit
shells which were designed in detail using Vulcan software.
Key optimisation parameters are presented in Table 2 below.
Table 2. Whittle Input Parameters
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OVERALL SLOPE ANGLES PARAMETER
CENTRAL PIT
HANGING WALL 49 degrees
FOOTWALL 47 degrees
NORTH-EASTERN PIT
HANGING WALL 51 degrees
FOOTWALL 45 degrees
NORTHERN WALL 47 degrees
MINING & PROCESSING
MINING RECOVERY 95%
MINING DILUTION 5%
FRESH CU PROCESSING RECOVERY 94.0%
OXIDE CU PROCESSING RECOVERY 55.0%
COSTS
MINING COST
ORE 1.80 $/t
OXIDE 1.30 $/t
WASTE 1.60 $/t
FRESH PROCESSING COST 9.00 $/t ore
OXIDE PROCESSING COST 22.57 $/t ore
GENERAL & ADMINISTRATIVE COST 5.00 $/t ore
ROYALTY 5.7% of RoM Metal Value (above 0.7% Cu
head grade)
PRICE
CU SELLING PRICE 6,600 $/t Cu
NSR 83% (For Fresh Rock only)
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Capital Expenditure
The estimated total project capital expenditure ("CAPEX") over
the mine life of $147 million, including the solvent extraction
with electro winning ("SXEW") plant to treat the oxide ores, is
made up as follows:
-- $21.5 million for mining equipment
-- $40.1 million for copper in concentrate processing plant and equipment
-- $26.3 million for SXEW plant
-- $21.7 million for mine site facilities and infrastructure
-- $26.3 million for sustaining capital & closure costs
-- $11.3 million for contingency
The estimated initial CAPEX is $115 million, which excludes the
SXEW plant, sustaining capital & closure costs but includes
pre-production development costs.
The initial CAPEX estimate is comparable to the initial capital
cost estimate of $100 million contained in the Karchiga Scoping
Study. The Company estimates that a 12 to 15 month period is
sufficient for the construction of the processing facilities and
pre-production development at the Karchiga Project.
Mine Plan
The open pit mining schedule produced by SRK calculated a
producing mine life of 11.5 years. The mining schedule envisages
the mining of 10 Mt of sulphide and oxide ore, and 124 Mt of waste
with a stripping ratio of 1:12.4 over the mine life, producing11.8
ktpa of 27.9% Cu concentrate and 2.8 ktpa of Cu cathode. The
average mining rate of the operation is anticipated to be 750kt per
annum.
For the first 2.25 years of the mine life, the mining schedule
includes open pit mining of the Central sulphide ore body alone in
order to maximise the sulphide copper grade and hence sulphide
copper recovery. The optimised mine schedule has been developed to
minimise the stripping ratio in the initial three years of the mine
life. In addition, the use of stockpiling has enabled the Company
to increase the processed ore grade. From Year 4 until Year 7,
sulphide ore will be mined from both the Central and North East
open pits. From Year 8 until the end of mine life in Year 12,
mining will focus on the North East pit.
The average mining cost over the mine life is $1.7 per tonne of
material moved.
Processing Plan and Economic Model
The plant is designed to process approximately 750,000 tonnes
per annum of sulphide ore. A conventional processing route was
chosen using relatively fine grinding and selective sulphide
flotation to produce a 27.9% bulk concentrate. As the Company aims
to secure finance for the project in the fourth quarter of 2012,
and the timing for the start of construction is dependent thereon
to commence in April 2013 it now estimates that first production is
planned for October 2014 through to final production in 2025.
Copper from the oxide ore will be extracted using SXEW process.
The oxides will be treated over a period of 4.5 years starting in
2019 at an annual production rate of 360,000 tonnes and is expected
to produce an average of 2.8kt (6.22Mlb) of copper cathode per
annum over that period. Production of cathode copper will continue
until 2023.
In order to reduce the initial capital expenditure, the SXEW
plant construction has been delayed until after the initial capital
expenditure payback period (which is anticipated to be 2.75 years).
The plant has been designed to treat an average of 30,000 tonnes of
leachable oxide ore per month.
The results of the Karchiga DFS demonstrate that economically
the best option is to delay the SXEW construction until 2017,
allowing the cost of construction to be financed from the revenue
generated by the sulphide ore treatment.
The project key performance indicators are shown in Table 3
below.
Table 3. Key Performance Indicators
----------------------------------------------------------------------------
Key
Performance
Parameter Units Indicator
----------------------------------------------------------------------------
Average annual mining rate Tonnes 750,000
----------------------------------------------------------------------------
Average mining cost $/t of ore 22.99
----------------------------------------------------------------------------
Annual processing rate (FL) Tonnes 750,000
----------------------------------------------------------------------------
Mine life (FL) Years 11.5
----------------------------------------------------------------------------
Processing cost (FL) $/t of ore 8.91
----------------------------------------------------------------------------
Metallurgical recovery (FL) % 93.4
----------------------------------------------------------------------------
Average annual copper production, over 11.5 years
(FL) '000 tonnes 11.82
----------------------------------------------------------------------------
Average annual copper production (FL) Mlb 26.1
----------------------------------------------------------------------------
Annual processing rate (HL) Tonnes 360,000
----------------------------------------------------------------------------
Mine life (HL) Years 4.5
----------------------------------------------------------------------------
Processing cost (HL) $/t of ore 18.7
----------------------------------------------------------------------------
Metallurgical recovery (HL) % 61.1
----------------------------------------------------------------------------
Average annual copper production, over 4.5 years
(HL) '000 tonnes 2.8
----------------------------------------------------------------------------
Average annual copper production (HL) Mlb 6.2
----------------------------------------------------------------------------
Cash operating cost over the mine life (pre tax) $/lb Cu 1.47
----------------------------------------------------------------------------
The mine is expected to produce a total of 149kt (328 Mlb) of
payable copper, with an average of 12,957t (28.57 Mlb) of copper
production per annum.
The Karchiga Project site is located 10 km from the main road
and a 110 kV national power grid and is expected to be connected to
the same as part of construction. An adequate supply of water can
be sourced from the River Kalzhir as well as from aquifers in the
immediate vicinity of the designed project facilities.
The project key economic indicators are shown in Table 4
below.
Table 4. Key Economic Indicators
----------------------------------------------------------------------------
Key
Economic
Parameter Units Indicator
----------------------------------------------------------------------------
Total project CAPEX $m 147
----------------------------------------------------------------------------
Initial CAPEX $m 115
----------------------------------------------------------------------------
Total Net Smelter Revenue $m 971
----------------------------------------------------------------------------
Sulphide and Oxide Case @ $3.25/lb Cu:
- Post-Tax NPV7.5 $m 150
- Post-Tax IRR % 30
- Payback period Years 2.75
----------------------------------------------------------------------------
Sulphide and Oxide Case @ $3.00/lb Cu:
- Post-Tax NPV7.5 $m 113
- Post-Tax IRR % 25
- Payback period Years 3.0
----------------------------------------------------------------------------
All figures are on a 100% ownership basis
The figures for NPV, IRR and payback in Table 14 assume 100%
equity financing for the Karchiga Project and a discount rate of
7.55% was used to derive the NPV. The ESIA for the Karchiga Project
was successfully completed by Wardell Armstrong International
("WAI") on January 31, 2012. In the normal course of applying for
the necessary construction permitting approvals and delays in the
timings thereof from of the Kazakh authorities, the Company now
expects to receive the necessary construction permitting approvals
from the local Kazakh authorities by the end of the fourth quarter
of 2012 having obtained the approval from the MINT in the third
quarter of 2012. As at the date of this MD&A the copper price
(as quoted on the London Metal Exchange) was $3.46/lb, which if
used in the above scenarios may be expected to improve the economic
results of the Karchiga Project.
Karchiga DFS Expenditure
The Company originally estimated expenditure on the Karchiga DFS
of $6.6 million, but due to increased resource drilling work
covering the additional oxide and sulphide drilling programme
mentioned above, the Company now expects to incur expenditure of
$9.2 million, which it expects to fund from its available cash. As
at March 31, 2012, the Company had incurred cumulative expenditure
of $8.6 million relating to the Karchiga DFS since August 2010. The
work undertaken since April 2012 relates to the future construction
of the mine at the Karchiga Project with the start of construction
expected to commence in April 2013 subject to financing.
Other matters
Following the completion of the Karchiga DFS the Company began
the process of identifying companies and contractors to complete
the detailed design work going forward into the start of
construction (expected in the April 2013). In addition the Company
continues to identify potential off-takers for the copper
concentrate in both the People's Republic of China ("China") and
Kazakhstan. The Karchiga Project is favourably located
approximately 220 km south east of the regional centre,
Ust-Kamenogorsk, and approximately 40 km from the Chinese border to
the east. The nearest copper mining operation in China at the
Ashele VMS deposit, containing 1million tonnes of copper, is
located approximately 85 km east-southeast from the Karchiga
deposit.
TALAS COPPER-GOLD-MOLYBDENUM PROJECT, KYRGYZSTAN
The Sale
On July 23, 2012, the Company completed the Sale to the Gold
Fields Group for $10 million cash. The Company was also refunded
its aggregate contributions of $240,089 to the current Talas
Project exploration programme. Following the completion of the
Sale, the Gold Fields Group now owns a 100% interest in the Talas
Project. In addition, the Company's joint venture with Gold Fields
in relation to the Talas Project terminated upon completion of the
Sale.
In addition to acquiring Orsu's 40% interest in the Talas
Project, the Gold Fields Group also agreed to the Subscription by
subscribing for 25 million Units at a price of CAD$0.40 per Unit
for gross proceeds of CAD$10 million. Each Unit is to consist of
one Common Share and one half of one Warrant. Each Warrant will be
exercisable for a period of three years from the date of issue to
acquire one Common Share at a price of CAD$0.50. The gross proceeds
of CAD$10 million cash are being held in escrow pending the
Company's receipt of the Kazakh Formal Waiver or Gold Fields waiver
of such condition which is expected in H2 2012. The Units will not
be issued to the Gold Fields Group until such condition has been
satisfied or waived by the Gold Fields Group. Upon completion of
the Subscription, the Gold Fields Group will own 26,134,919 Common
Shares and 12,500,000 Warrants. All shares issued pursuant to the
Subscription or any subsequent exercise of the Warrants (within 4
months of the Unit issuance date) will be subject to a hold
restriction for 4 months after the date the units are issued.
AKDJOL-TOKHTAZAN PROJECT, KYRGYZSTAN
Potential disposal of the Akdjol-Tokhtazan Project
On November 1, 2012 the Company announced that it had entered
into the Exclusivity Agreement with David-Invest the key terms of
which are:
-- David Invest has been granted the exclusive right to purchase Tournon
until 1 September 2013, subject to the renewal of the Licences which are
due to expire on 31 December 2012;
-- in return for being granted exclusivity David-Invest will fund the
exploration programme for the Akdjol and Tokhtazan licences on a non-
refundable basis for the remainder of 2012, and, if the licences are
renewed, during the remainder of the Exclusivity Period and,
-- David-Invest has the option to purchase the entire share capital of
Tournon at any time on or before the expiry of the Exclusivity Period
for consideration of $4.5 million.
FINANCIAL RESULTS FOR THE THREE MONTHS ENDED SEPTEMBER 30,
2012
For the three months ended September 30, 2012 the Company
reported net income of $3.8 million compared to net loss of $2.7
million for the three months ended September 30, 2011.
In July 2012, the Company completed the Sale of the Talas
Project to the Gold Fields Group for total consideration of $10
million and the Gold Fields Group entered into the agreement for
the Subscription for which the Company measured an initial fair
value of $7.6 million, being the excess of the gross proceeds from
the Subscription, CAD$10 million over the fair value of the Common
Shares and Warrants, and as a result the Company recorded a net
gain on disposal of $7.8 million for the period ended September 30,
2012 (see section "Sale of equity investment in Talas Joint
Venture" below). In relation to the Subscription the Company
considers this to be a derivative asset and subsequently
re-measured the fair value of the Subscription as at September 30,
2012 resulting in a derivative loss of $1.3 million for the period
ended September 30, 2012.
On November 1, 2012 the Company announced that it had entered
into the Exclusivity Agreement with David Invest to fund
exploration work on a non-refundable basis during the Exclusivity
Period, subject to the Company successfully renewing the
exploration licenses expiring on December 31, 2012, in return for
which the Company would grant David Invest the exclusive right
during the Exclusivity Period to acquire the Akdjol-Tokhtazan
Project for a consideration of $4.5 million. As at September 30,
2012 the Company considered that this asset continued to meet the
criteria to be classified as "held for sale" and as a result of
re-measuring the fair value less costs to sell of the disposal
group, recognized an impairment loss of $1.3 million to net income
as at September 30, 2012 (see section "Asset held for sale"
below).
As at September 30, 2012 the Company had net assets of $33.0
million ($32.1 million as at December 31, 2011) of which $13.5
million was cash and cash equivalents ($10.3 million as at December
31, 2011) and a $6.4 million receivable asset representing the fair
value of the CAD$10 million Subscription entered into by Gold
Fields which is subject to the Company obtaining the Formal Kazakh
Waiver, as described in section "Disposal of equity investment in
the Talas Joint Venture" below.
The net income of $3.8 million for the three months ended
September 30, 2012 consisted of: a net gain in relation to the Sale
to the Gold Fields Group of $7.9 million which was partially offset
by administrative costs of $0.8 million, legal and professional
costs of $0.3 million, a derivative loss of $1.3 million in
relation to the Subscription, the Company's share of the Talas
Joint Venture losses of $0.2 million up to the completion of the
Sale on July 23, 2012, an impairment loss of $1.3 million in
relation to the asset held for sale and a net foreign exchange loss
of $0.1 million.
The Company's cash flows, cash and cash equivalents as at
September 30, 2012 were $13.4 million compared to $10.3 million as
at December 31, 2011, representing an increase of $3.1 million. The
increase was due primarily to the net receipt of $9.8 million from
the completion of the Sale partially offset by corporate and
exploration expenditure of $4.7 million, capital expenditure of
$1.3 million, Orsu's 40% funding of the Talas Joint Venture of $0.3
million and deferred finance costs of $0.4 million in relation to
the Karchiga Project.
In relation to the Karchiga Project, during the nine months
ended September 30, 2012, the Company began the process of seeking
to secure financing and incurred associated costs of $0.4 million
and also incurred expenditure in preparation for the construction
of a mining and processing facility of $1.2 million. Both the
finance costs and project expenditure were capitalised in the
interim financial statements as at September 30, 2012 (see section
"Karchiga Project Pre-Production and Deferred Finance Costs"
below).
FINANCIAL POSITION AS AT SEPTEMBER 30, 2012
As at September 30, 2012 the Company's net assets were $31.7
million, compared with $32.1 million as at December 31, 2011, of
which $13.5 million consisted of cash and cash equivalents ($10.3
million as at December 31, 2011).
The decrease in net assets of $0.4 million was due primarily
corporate and exploration expenditure of $4.7 million, the
derivative loss of $1.3 million, the impairment of the asset held
for sale of $1.3 million, and the Company's 40% share of the Talas
Joint Venture losses of $0.8 million. This was partially offset by
the a net gain on disposal of the Talas Joint venture of $7.8
million and a stock based compensation charge of $0.1 million.
KARCHIGA PROJECT PRE-PRODUCTION AND DEFERED FINANCE COSTS
Karchiga Pre-Production Costs
In March 2012, the Company successfully completed a Karchiga DFS
for the Karchiga Project. At the same time and subsequently the
Company incurred costs related to the construction of a mining and
processing facility at the Karchiga Project. Under IFRS, IAS 16
"Property, Plant and Equipment", costs are capitalized during the
development phase, defined as being from the date that an economic
study is completed and the date the asset is deemed to be available
for use (or the "pre-production costs") and are those that can be
directly attributable to bringing the asset to the condition
necessary for it to be capable of operating in the manner intended
by the Company. Under IAS 16, these pre-production costs are
capitalized, as they meet the criteria for the capitalization for a
basic asset.
These and future costs will be recorded as "Property Plant and
Equipment" until such time when the asset is "available for use"
(defined as when commercial levels of production are capable of
being achieved). As at September 30, 2012 the Company incurred $1.2
million of Pre-Production expenditure which it capitalised.
Karchiga Finance Costs
In relation to the Karchiga Project, following the successful
completion of the Karchiga DFS in March 2012 the Company is in the
process of seeking to secure debt financing for the construction of
a mining and processing facility. As a result under IFRS, IAS 39
Financial Instruments: Recognition and Measurement, these legal and
professional fees incurred in the process of securing the debt
finance have been capitalised. These capitalised costs along with
future financing costs capitalised, in relation to the Karchiga
Project, will be amortised over the term of any proposed debt. For
the six months ended September 30, 2012 the company incurred
$400,000 of advisory fees which are treated as transaction
costs.
ASSET HELD FOR SALE
The exploration license area for the Akdjol-Tokhtazan Project is
located in the Jalal-Abad Oblast, western Kyrgyzstan and comprises
the Akdjol license and Tokhtazan license. During 2010, the Company
identified the Akdjol license area as a gold-silver epithermal
prospect and the Tokhtazan license area as a gold prospect. The
Akdjol and Tokhtazan licenses expire on December 31, 2012.
In the fourth quarter of 2011, the Company decided to focus its
resources and activities on the development of its Karchiga
property and as such, considered the Akdjol-Tokhtazan Project a non
core asset which would be available for sale. Under IFRS 5,
"Non-current Assets Held For Sale and Discontinued Operations", the
Company classified the assets and liabilities related to the
Akdjol-Tokhtazan Project (the disposal group) as held for sale as
at September 30, 2012 and December 31, 2011.
In November 2012, the Company announced that it had entered into
the Exclusivity Agreement with David Invest to fund exploration
work on a non-refundable basis during the Exclusivity Period,
subject to the Company successfully renewing the exploration
licenses expiring on December 31, 2012, in return for which the
Company would grant David Invest the exclusive right during the
Exclusivity Period to acquire the Akdjol-Tokhtazan Project for a
consideration of $4.5 million. As at September 30, 2012 the Company
considers that this asset continued to meet the criteria to be
classified as "held for sale" and as a result of re-measuring the
fair value less costs to sell of the disposal group, recognized an
impairment loss of $1.3 million to net income in the period ended
September 30, 2012.
The amount of comprehensive loss attributable to non-controlling
interests in relation to the losses incurred by the disposal group
in the period ended September 30, 2012 and December 31, 2011 is
nil.
SALE OF EQUITY INVESTMENT IN THE TALAS JOINT VENTURE
The Talas exploration license area comprises the Taldybulak,
Kentash, Barkol and Korgontash licenses in Kyrgyzstan. The primary
exploration property within the Talas exploration license area is
the Taldybulak gold-copper-molybdenum porphyry deposit.
Under the terms of the JV Agreement with Gold Fields in which
Gold Fields became the project operator for the Talas Project and
the Gold Fields Group earned a 60% interest in the Talas JV Company
in the first quarter of 2010. In doing so the Gold Fields Group
earned the ability to unilaterally control the operational,
financial and investment decisions of the Talas Joint Venture
Company. For this reason the Company's 40% minority interest in the
Talas Joint Venture Company was accounted for as an associate under
the equity method until its Sale in an agreement dated July 13,
2012 with Gold Fields.
In July 2012, the Company received $10 million following the
completion of the Sale to the Gold Fields Group. The Company also
received $240,089 cash, being the Company's aggregate contribution
in 2012 to an exploration programme previously agreed with the Gold
Fields Group. The $240,089 received for Orsu's 40% pro rata funding
contribution to the Talas Joint Venture was recorded against Orsu's
equity investment in the Talas Joint Venture up to July 13, 2012.
As the Sale resulted in the Gold Fields Group owning a 100%
interest in the Talas Project, the Company's joint venture in
relation to the Talas Project was terminated upon completion of the
Sale.
In addition the Gold Fields Group agreed to the Subscription for
25 million Units at a price of CAD$0.40 per Unit for gross proceeds
of CAD$10 million, with each Unit consisting of a Common Share and
one half of one Warrant. Each Warrant will be exercisable for a
period of three years from the date of issue to acquire one Common
Share at a price of CAD$0.50. The gross proceeds of CAD$10 million
cash are being held in escrow pending the Company obtaining the
Formal Kazakh Waiver or Gold Fields waiver of such condition. The
Units will not be issued to the Gold Fields Group until such
condition has been satisfied or waived by Gold Fields Group. In the
financial statements as at September 30, 2012 the Company measured
the fair value of this receivable as at July 13, 2012 and recorded
net income of $7,638,000, being the expected gross value of the
Subscription, $9,862,000 (CAD $10 million), net of the fair value
of the Common Shares ($1,972,000) and Warrants ($252,000) to be
issued in connection with the Subscription. This derivative asset
is re-measured at fair value at each reporting date until the
conditions for release from escrow are met and the Subscription is
completed. See the financial statements as at September 30, 2012
for further details.
The net gain on the Sale of the Talas Joint Venture is shown
below:
July 13,
2012
$000
Cash proceeds received 10,000
Fair value of Subscription proceeds held in escrow 7,638
---------
Total sale consideration 17,638
Less:
Equity investment in Talas Project as at January 1, 2012 10,111
Funding provided by the Company during the period, net of
recovery of $240,089 288
Less: Company's 40% share of operating losses to date of
disposal (812)
-------
Equity investment in Talas Project written off (9,587)
Legal and professional fees (184)
---------
Net gain on disposal of Talas Project as at July 13, 2012 7,867
---------
---------
The change in the fair value of the derivative receivable from
the date of the sale to September 30, 2012, is as follows:
September 30,
2012
$000
Derivative receivable as at July 13, 2012 7,638
Derivative loss on fair value measurement (1,254)
---------------
Derivative receivable as at September 30, 2012 6,384
---------------
---------------
LIQUIDITY AND CAPITAL RESOURCES
As at September 30, 2012 the Company's main source of liquidity
was unrestricted cash and cash equivalents of $13.5 million,
compared with $10.3 million as at December 31, 2011.
The Company measures its consolidated working capital as
comprising free cash, accounts receivable, prepayments and other
receivables, less accounts payable and accrued liabilities. As at
September 30, 2012, the Company's consolidated working capital was
$14.5 million (compared with a consolidated working capital of
$11.5 million as at December 31, 2011).
The Company's working capital needs as at September 30, 2012
included the maintenance of the Company's interests in, and the
further exploration and the development of, the Company's mineral
properties, and the funding of general corporate, legal and
professional expenses. The Company expects to fund its working
capital requirements for 2012, other than as set out below, and be
able to contribute towards the pursuit of future growth
opportunities (which may include acquiring one or more additional
assets), if and when such opportunities arise, from its
unrestricted cash of $13.5 million as at September 30, 2012 and
potential consideration of $4.5 million from the sale of the
Akdjol-Tokhtazan Project per the Exclusivity Agreement (as
discussed above). In the Company's view, the consolidated working
capital as at September 30, 2012 is sufficient to satisfy its
working capital needs including the Initial Working Programme for
the Balkhash Project, other than as described below, for at least
the next twelve months.
The construction of mining facilities and commencement of mining
operations at the Karchiga Project, if any, will require an
estimated initial capital expenditure of $115 million (see
"Operational review - Karchiga copper project, Kazakhstan") for
which the Company will be required to raise additional financing in
the future. In July 2012, the Company appointed Barclays and
UniCredit as the Mandated Lead Arrangers to use commercially
reasonable efforts to secure project debt financing. If the Company
secures the required debt financing on acceptable commercial terms,
and receives the final regulatory approvals for the Karchiga
Project, the Company intends to apply a substantial proportion of
the Sale proceeds and, if released from escrow, Subscription
proceeds towards the construction and development of the mine and
related processing facilities for the Karchiga Project. Whilst the
Company has been successful in raising debt and other financing in
the past, the Company's ability to raise additional debt and other
financing as well as receiving the Formal Kazakh Waiver for the
Subscription 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"
in the Company's MD&A.
Consolidated Statements of Net income/(loss), and Comprehensive
income/(loss) (Unaudited)
(Prepared in accordance with IFRS)
----------------------------------------------------------------------------
Three months ended Nine months ended
September 30, September 30,
2012 2011 2012 2011
$000 $000 $000 $000
Operating expenses
Administration (843) (1,074) (3,007) (2,708)
Legal and professional (326) (315) (787) (899)
Exploration (20) (1,767) (1,015) (3,446)
Stock based compensation (13) (289) (122) (481)
Stock based compensation
- non employees - (2) (7) (37)
Company's share of Talas
Joint Venture losses (216) (269) (812) (712)
Foreign exchange losses (100) (141) (68) (6)
------------------------- -----------------------
(1,518) (3,857) (5,818) (8,289)
Gain on sale of Talas
Joint Venture 7,867 - 7,867 -
Loss on derivative
receivable (1,254) - (1,254) -
Impairment loss for asset
held for sale (1,331) - (1,331) -
Derivative gains share
purchase warrants - 155 - 6,071
Deferred consideration
income - - - 1,908
Net gain on settlement of
oil interests - 942 - 942
Finance income 4 22 28 53
------------------------- -----------------------
Net income/ (loss) and
comprehensive income/
(loss) 3,768 (2,738) (508) 685
------------------------- -----------------------
------------------------- -----------------------
Net income/ (loss)
attributable to:
Shareholders of the
Company 3,764 (2,653) (438) 1,302
Non-controlling interest 4 (85) (70) (617)
------------------------- -----------------------
3,768 (2,738) (508) 685
------------------------- -----------------------
------------------------- -----------------------
Earnings/ (losses) per
share:
Basic $ 0.02 $ (0.02) $ 0.00 $ 0.01
Diluted $ 0.02 $ (0.02) $ 0.00 $ 0.01
Weighted average number
of common shares (in
thousands) 157,696 157,696 157,696 157,696
Consolidated Balance Sheets (Unaudited)
(Prepared in accordance with IFRS)
----------------------------------------------------------------------------
September 30, December 31,
2012 2011
Assets $000 $000
Current assets
Cash and cash equivalents 13,455 10,319
Prepaid and receivables 1,683 1,394
Assets of Akdjol-Tokhtazan Project held for
sale 4,534 6,116
Derivative receivable 6,384 -
-------------------------------
26,056 17,829
Non-current assets
Deferred finance costs 400 -
Property, plant and equipment 5,982 353
Exploration properties - 4,404
Equity investment in Talas Joint Venture - 10,111
-------------------------------
6,382 14,868
-------------------------------
Total assets 32,438 32,697
-------------------------------
-------------------------------
Liabilities
Current liabilities
Accounts payable and accrued liabilities 570 448
Liabilities of Akdjol-Tokhtazan Project held
for sale 64 66
-------------------------------
634 514
Non-current liabilities
Other liabilities 120 120
-------------------------------
754 634
Equity
Share capital 380,145 380,145
Share purchase warrants - 1,131
Share purchase options 6,054 6,062
Contributed surplus 28,096 26,828
Non-controlling interest (324) (254)
Deficit (382,287) (381,849)
-------------------------------
31,684 32,063
-------------------------------
Total equity and liabilities 32,438 32,697
-------------------------------
-------------------------------
Consolidated Statements of Cash Flows (Unaudited)
(Prepared in accordance with IFRS)
----------------------------------------------------------------------------
Nine months ended
September 30,
2012 2011
$000 $000
Cash flows used by operating activities
Net (loss)/ income for the period (508) 685
Items not affecting cash:
Company share of Talas Joint Venture losses 812 712
Gain on sale of investment in Talas Joint Venture (7,867) -
Depreciation and amortization 93 94
Impairment of asset held for sale 1,331 -
Loss on derivative receivable 1,254 -
Share-based payments 129 518
Foreign exchange (gains)/ losses (5) 13
Gain on settlement of oil interests - (942)
Deferred consideration - (1,908)
Derivative gains share purchase warrants - (6,071)
-------------------
(4,761) (6,899)
Changes in non-cash working capital:
Accounts receivable and other assets (57) (373)
Accounts payable and accrued liabilities 123 (15)
-------------------
Net cash used by operating activities (4,695) (7,287)
Cash flows from/ (used by) investing activities
Expenditures on property, plant and equipment (1,315) (61)
Funding of investment in Talas Joint Venture (288) (611)
Cash proceeds from sale of Talas Joint Venture, net of
legal and professional fees 9,816 -
Deferred consideration received - 7,000
Proceeds from net investment in residual oil and gas
interests - 1,582
Acquisition of Eildon minority interest - (6,188)
-------------------
Net cash from investing activities 8,213 1,722
Cash flows used for financing activities
Deferred finance costs (400) -
-------------------
Net cash used for financing activities (400) -
-------------------
Net increase/ (decrease) in cash and cash equivalents 3,118 (5,565)
-------------------
Cash and cash equivalents - Beginning of the period 10,341 19,596
-------------------
Cash and cash equivalents - End of the period 13,459 14,031
-------------------
-------------------
Cash and cash equivalents per the consolidated balance
sheets 13,455 14,031
Included in the Akdjol-Tokhtazan Project classified held
for sale 4 -
FORWARD-LOOKING INFORMATION
This press release and the Company's MD&A 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, as applicable, of the
Company's properties and the timing related thereto; development
and operational plans and objectives, including the Company's
expectations relating to the development of the Karchiga Project;
the Company's ability to satisfy certain future expenditure
obligations; mineral resource and mineral reserve estimates;
estimated project economics, cash flow, costs, expenditures,
revenue, capital payback, performance and economic indicators and
sources of funding; the use and sufficiency of the Company's
working capital for the next twelve months; the anticipated
arranging of a debt facility by the Mandated Lead Arrangers and the
potential participation by other debt providers; the anticipated
receipt by the Company of the proceeds of the Subscription and the
value attributed thereto and the Company's expected uses thereof
and the proceeds from the Sale; the estimated mine life, NPV and
IRR for, and forecasts relating to tonnages and amounts to be mined
from, and processing and expected recoveries and grades at, the
Karchiga Project as well as the other forecasts, estimates and
expectations relating to the Karchiga DFS Report, the Karchiga
Scoping Study, the SRK May 2011 Pit-Constrained Mineral Resource
Estimates and the SRK December 2011 Pit-Constrained Mineral
Resource Estimates;
future prices and trends relating to copper, gold and molybdenum
and the expected effect thereof on the economic results of the
Karchiga Project; the mine design and plan for the Karchiga
Project, including the potential start of construction at, and
production from, the Karchiga Project as well as the expected
timing of same and the Company's ability to receive the necessary
permits and approvals in connection therewith; the estimated
holdings of the Gold Fields Group in the Common Shares and Warrants
following the completion of the Subscription; the anticipated sale
of the Akdjol-Tokhtazan Project and the timing and potential
proceeds (including the uses thereof and valuation attributed
thereto) with respect thereto; 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 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; receipt of the Formal Kazakh
Waiver or the waiver thereof by Gold Fields as a condition to the
completion of the Subscription; 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 or secure new funding
(including for construction at the Karchiga Project).
The forward-looking information in this press release and the
Company's MD&A 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 and the Company's MD&A, the
Company has made assumptions regarding, among other things, the
Company's ability to generate sufficient funds from capital markets
and/or debt sources to meet its future expected obligations and
planned activities (including the ability of the Mandated Lead
Arrangers to secure a project debt finance facility on terms
acceptable to the Company), the Company's business (including the
continued development of the Karchiga Project and the timing and
methods to be employed with respect to same), the estimation of
mineral resources and mineral reserves (as set out above under
"Operational Review"), the parameters and assumptions employed in
the Karchiga DFS Report, the Karchiga Scoping Study, the SRK May
2011 Pit-Constrained Mineral Resource Estimates and the SRK
December 2011 Pit-Constrained Mineral Resource Estimates, the
economy and the mineral exploration and extraction 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 local regulatory authorities, including the
receipt of the necessary construction and development permits and
approvals required to develop the Karchiga Project as anticipated
as well as the Kazakh Formal Waiver and the renewal of the
Akdjol-Tokhtazan exploration licenses, that the previously 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, operating and production costs and cash
flow discounts, anticipated mining and processing rates, the
Company's ability to continue to obtain qualified staff and
equipment in a timely and cost-efficient manner, assumptions
relating to the Company's critical accounting policies, 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 and operating hazards; 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 resource and mineral reserve estimates;
technical and design factors; 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 DFS
Report, the Karchiga Scoping Study, the SRK May 2011
Pit-Constrained Mineral Resource Estimates and the SRK December
2011 Pit-Constrained Mineral Resource Estimates, and that the
completion of additional work on the Karchiga Project could result
in changes to the estimates relating to the Karchiga DFS Report,
the Karchiga Scoping Study, the SRK May 2011 Pit-Constrained
Mineral Resource Estimates and the SRK December 2011
Pit-Constrained Mineral Resource Estimates, the Company's inability
to obtain, maintain, renew and/or extend required licences,
permits, authorizations and/or approvals from the appropriate
regulatory authorities, including (without limitation) the
Company's inability to obtain (or a delay in obtaining) the
necessary construction and development permits and local regulatory
approvals for the Karchiga Project or the Formal Kazakh Waiver and/
or the renewal of the Akdjol-Tokhtazan exploration licenses, 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 on favourable terms or at all (including with respect to
the debt financing expected to be secured by the Mandated Lead
Arrangers) or to complete the Subscription or the disposition of
the Akdjol-Tokhtazan Project; adverse general market conditions;
lack of availability, at a reasonable cost or at all, of equipment
or labour; the 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 mineral
reserves; and future unforeseen liabilities and other factors
including, but not limited to, those listed under "Risk and
Uncertainties" in this MD&A.
Any mineral resource and mineral reserve figures referred to in
this press release and the Company's MD&A 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 and mineral reserve
estimates in respect of its properties are well established, by
their nature mineral resource and mineral reserve estimates are
imprecise and depend, to a certain extent, upon statistical
inferences which may ultimately prove unreliable. If such mineral
resource and mineral reserve 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 is
preliminary in nature, and includes 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 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.
Contacts: Orsu Metals Corporation Kevin Denham Chief Financial
Officer and Company Secretary +44 (0) 20 7518 3999
www.orsumetals.com Canaccord Genuity Limited Andrew Chubb/Ryan
Gaffney +44 (0) 20 7523 8000 Vanguard Shareholder Solutions +1 604
608 0824