TIDMOSU
Orsu Metals Corporation Interim Results for the Period Ended September 30, 2010 (Unaudited)
FOR: ORSU METALS CORPORATION
TSX, AIM SYMBOL: OSU
November 10, 2010
Orsu Metals Corporation Interim Results for the Period Ended September 30, 2010 (Unaudited)
LONDON, UNITED KINGDOM--(Marketwire - Nov. 10, 2010) - 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 September 30, 2010.
A full Management's Discussion and Analysis of the results for the period ended September 30, 2010 ("MD&A") and
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.
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.
QUARTER HIGHLIGHTS
=- July 2010 - the Company announced the results of metallurgical test work
for the Taldybulak deposit in the Republic of Kyrgyzstan. The Company
believes the results of the tests indicate that a potentially sellable
gold(Au)-copper(Cu)-molybdenum(Mo) concentrate grading 102g/t Au, 19%Cu
and 1.30%Mo with respective recoveries of 85%, 88% and 89% can be
produced from the Taldybulak sulphide ore material.
=- July 2010 - the Company received results of cyanide leach test work for
samples collected from the Tokhtazan deposit in Kyrgyzstan. Two samples,
representing the Northern and Southern mineralised areas of the
Tokhtazan deposit were analyzed using the cyanide bottle roll leaching
and percolation column tests. The NaCN bottle roll test resulted in an
83.7% recovery from a -2mm fraction over 72 hours. Column tests
representing the Northern and Southern mineralised areas of the
Tokhtazan deposit revealed recovery ranging from 85.2 to 90% over 32
days. The Company believes that these results confirm the principal
amenability of the Tokhtazan ores to heap leaching extraction of gold.
=- September 2010 - the Company commenced a definitive feasibility study
for its Karchiga Project (the "Karchiga Feasibility Study") with a view
to starting construction in early 2012. This was following the
appointment of SRK Consulting (UK) Ltd ("SRK)", to act as the lead
consultant for the Karchiga Feasibility Study and to prepare a
feasibility study report in accordance with National Instrument 43-101
("NI 43-101") standards. In respect of the Karchiga Feasibility Study
report Wardell Armstrong International Limited, ("WAI") was also engaged
by the Company to prepare a Baseline Study and an Environmental and
Social Impact Assessment study as part of the Karchiga Feasibility
Study.
=- September 2010 - The Company appointed Mr. Raymond Oates as Technical
Director. His responsibilities include the supervision of the Karchiga
Feasibility Study and, thereafter, the construction of a mine through to
the commencement of production expected in 2013.
=- September 2010 - the Company reported an exploration update and assay
results on five initial diamond drill holes at the Akdjol Prospect,
within the Akdjol license area of the Akdjol-Tokhtazan Project. The
Akdjol Prospect has been identified by Orsu as the first ever Kyrgyz
gold-silver epithermal prospect and has yielded very encouraging assay
results including a vertical intercept of 14.2m @ 5.32 g/t Au and 59.51
g/t Ag, including 6.7m @ 8.69 g/t Au and 86.96 g/t Ag from diamond
drilling (average grades of 3.84 g/t Au and 49.4 g/t Ag from the four
reported drill holes).
=- September 2010 - Following a 22,013 meter drilling program in 2008 and
2009, Gold Fields Limited, the Company's joint venture partner for the
Talas Project ("Gold Fields"), reported an updated mineral resource
estimate relating to the Taldybulak deposit, part of the Talas Project,
effective June 30, 2010 in its 2010 Annual Report (the "Taldybulak
Mineral Resource") in accordance with the 2007 South African Code for
the Reporting of Mineral Resources and Mineral Reserves (the "SAMREC
Code"). The Taldybulak Mineral Resource consists of an indicated
resource of 127 Mt, comprising 2.6 Moz gold at 0.64 g/t, 477 Mlb copper
at 0.17%, and 29.4 Mlb molybdenum at 0.01%, and an inferred resource of
296 Mt, comprised of 3.71 Moz gold at 0.4 g/t, 1,098 Mlb copper at
0.17%, and 69.2 Mlb molybdenum at 0.01%. Orsu's attributable resource
based on this constrained calculation is 1.04 Moz gold at 0.64 g/t, 191
Mlb copper at 0.17%, and 11.8 Mlb molybdenum at 0.01% in the indicated
category and 1.48 Moz gold at 0.4 g/t, 439 Mlb copper at 0.17%, and 27.7
Mlb molybdenum at 0.01% in the inferred category. The foregoing and
other information contained in this press release relating to the
Taldybulak Mineral Resource is derived from the Gold Fields' 2010 Annual
Report (see "Operational Review - Taldybulak Licence, Kyrgyzstan - 2010
Mineral Resource Estimates" of the Company's MD&A).
FINANCIAL UPDATE
QUARTERLY FINANCIAL RESULTS
For the three months ended September 30, 2010 the Company incurred a loss from continuing operations of
approximately $2.4 million consisting of administrative costs of $1.3 million, exploration costs of $1.0
million, stock-based compensation charges of $0.6 million and a net foreign exchange gain of $0.5 million.
The Company's administrative costs of $1.3 million for the three months ended September 30, 2010 consisted of
head office non-operational charges and salaries, as well as legal and professional charges.
Exploration costs for the three months to September 30, 2010 of $1.0 million consisted of exploration
expenditure of $0.5 million for the Karchiga Project, $0.3 million relating to the Company's 40% pro rata share
of the Talas Project joint venture operating losses and $0.2 million in relation to the Akdjol-Tokhtazan
Project in relation to activities that resulted in the recognition of the gold-silver epithermal prospect.
The share based compensation charge of $0.6 million for the three months to September 30, 2010 relates to
13,950,000 options that were granted between April and August 2010, and will vest between October 2010 and July
2012.
The net foreign exchange gain during the three months to September 30, 2010 was $0.5 million of which a $0.4
million exchange gain arose due to the re-translation of the Company's Canadian Dollar and British Pound
Sterling cash assets into US$ as at September 30, 2010. A further $0.1 million exchange gain resulted from
converting $1.5 million into GBP 1.0 million during September 2010.
FINANCIAL POSITION AS AT SEPTEMBER 30, 2010
As at September 30, 2010 the Company held net assets of $44.4 million, compared with $24.8 million as at
December 31, 2009 representing an increase of $19.6 million. The increase of $19.6 million was due mainly to
the receipt of net proceeds of $25.2 million (CAD$25.7 million) following the completion of the public offering
and sale of 112 million units of securities in April 2010 (the "Offering") and royalty income in respect of the
Company's investment in the Tasbulat Oil Corporation of $0.2 million. This was partially offset by the
Company's corporate expenses, legal and professional costs and funding of its exploration projects totalling
$5.8 million.
LIQUIDITY AND CAPITAL RESOURCES AS AT SEPTEMBER 30, 2010
In respect of the Company's cash flows, there was an increase in cash and cash equivalents during the nine
months to September 30, 2010 of $19.4 million due primarily to the receipt of the net proceeds of the Offering
and royalty income of $0.2 million, partially offset by funding for the Talas Project of $0.6 million and
corporate expenditure of $5.4 million.
The net proceeds of the Offering are being used towards the maintenance of the Company's interests in, and for
the further exploration and the development of, the Company's mineral properties in the Republic of Kazakhstan
and the Republic of Kyrgyzstan, the advancement of the Karchiga Feasibility Study, the proposed acquisition of
the remaining 26.1% interest in Eildon Enterprises Limited ("Eildon") at a cash purchase price of $6,187,500
(see "Agreement to increase stake in Karchiga Project") and to pursue future growth opportunities (which may
include acquiring one or more additional assets), if and when such opportunities arise, and for general
corporate and working capital purposes.
OPERATIONAL UPDATE
KARCHIGA PROJECT, KAZAKHSTAN
Karchiga Feasibility Study and Exploration Programme
In September 2010 SRK were commissioned to undertake the Karchiga Feasibility Study with an expected date for
completion of September 2011. As part of the Karchiga Feasibility Study, WAI have been commissioned to prepare
a Baseline Study and Environmental and Social Impact Assessment study, ("ESIA"). In addition, other
international and Kazakh companies are being engaged to carry out additional necessary studies which will form
part of the Karchiga Feasibility Study. To satisfy Kazakh requirements the following additional studies,
running in parallel with SRK, will also be performed:
=- a locally commissioned Kazakh Feasibility Study for submission and
approval with the Kazakh authorities (local institute);
=- local Environmental Baseline Study leading to preparation of a full OVOS
(Kazakh equivalent to an ESIA) and,
=- additional metallurgical test work to be carried out by a local
authority.
In order to satisfy the requirements for the Karchiga Feasibility Study it has been necessary to perform
resource in-fill drilling (aiming to convert Inferred mineral resources into Indicated mineral resources in the
North East lode of the Karchiga deposit), geotechnical drilling for open pit design, metallurgical sample
drilling and hydrological drilling for monitoring holes and pumping wells. The drilling programme consists of
72 holes totalling 6,900 meters to be completed by December 2010.
Two key issues to be investigated by SRK as part of the Karchiga 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 40 km from the Chinese border to the east and approximately 220 km south
east of the regional centre, Ust-Kamenogorsk, where Glencore International AG is currently commissioning its
new smelter.
The milestones for the Karchiga Project are expected to be:
=- completion of data collection from drilling programme and finalisation
of the metallurgical flow sheet by February 2011;
=- start of detailed mine design by March 2011;
=- completion of the locally commissioned Kazakh Feasibility Study and
submission for approval by Q3 2011;
=- review of the Karchiga Project financing options by Q4 2011;
=- completion of the Karchiga Feasibility Study by October 2011;
=- approval of the Kazakh Feasibility Study by Q1 2012 and;
=- start of construction in early 2012.
Agreement to increase stake in Karchiga Project
On May 20, 2010 the Company entered into an agreement to acquire a further 24.73% interest in the Karchiga
Project by purchasing the remaining 26.1% interest in Eildon, which is the owner of a 94.75% interest (the
"Karchiga Acquisition") in GRK MLD, the holder of the Karchiga Project. The Karchiga Acquisition is subject to
certain conditions, such as receipt of all necessary regulatory consents, including from the required
authorities in Kazakhstan. Due to an ongoing reorganization within the government of Kazakhstan, the Company
now anticipates completing the Karchiga Acquisition during the fourth quarter of 2010. The purchase price is
$6,187,500 and will be satisfied entirely in cash at the closing of the Karchiga Acquisition. Following the
Karchiga Acquisition, the Company will indirectly own a 94.75% interest in the Karchiga Project.
Additional information regarding the Karchiga Project is contained in the MD&A.
TALAS PROJECT, KYRGYZSTAN
2010 Mineral Resource Estimates
In September 2010, the Company announced that Gold Fields had reported in its 2010 annual Report an updated
mineral resource estimated constrained by a pit shell, effective June 30, 2010, at the Taldybulak deposit
according to the SAMREC Code. The following information regarding the Taldybulak Mineral Resource is derived
from Gold Fields' 2010 Annual Report. The updated Taldybulak Mineral Resource (Table 1) consists of an
indicated resource of 127 Mt, comprising 2.6 Moz gold at 0.64 g/t, 477 Mlb copper at 0.17%, and 29.4 Mlb
molybdenum at 0.01%, and an inferred resource of 296 Mt, comprised of 3.71 Moz gold at 0.4 g/t, 1,098 Mlb
copper at 0.17%, and 69.2 Mlb molybdenum at 0.01%. Orsu's attributable resource based on this constrained
calculation is 1.04 Moz gold at 0.64 g/t, 191 Mlb copper at 0.17%, and 11.8 Mlb molybdenum at 0.01% in the
indicated category and 1.48 Moz gold at 0.4 g/t, 439 Mlb copper at 0.17%, and 27.7 Mlb molybdenum at 0.01% in
the inferred category.
Table 1. Taldybulak Mineral Resource according to SAMREC Code (effective
June 30, 2010)
=---------------------------------------------------------------------
Confidence Quantity Equivalent Equivalent Gold
classification (Mt) grade (AuEq metal (AuEq grade
g/t) Moz) (g/t)
=---------------------------------------------------------------------
Mineral Resource total for deposit (100%)
Indicated 127 1.04 4.23 0.64
Inferred 296 0.79 7.48 0.40
=---------------------------------------------------------------------
Mineral Resource attributable to Gold Fields (60%)
Indicated 76 1.04 2.54 0.64
Inferred 178 0.79 4.49 0.40
=---------------------------------------------------------------------
Mineral Resource attributable to Orsu (40%)
Indicated 51 1.04 1.69 0.64
Inferred 118 0.79 2.99 0.40
=---------------------------------------------------------------------
Table notes:
The Taldybulak Mineral Resource is constrained within an optimized
open pit shell parameters including: mining, processing and
administration cost estimates; mining parameters; and process
recoveries for gold, copper and molybdenum.
The Taldybulak Mineral Resource estimate is reported without dilution,
ore loss or process recovery factors, assuming 100% metallurgical
recoveries for all metals. Commodity prices used in the Taldybulak
Mineral Resource are US$1,150/oz gold, US$3.00/lb copper and US$15/lb
molybdenum. Gold equivalent is calculated using commodity price
weightings for gold, copper and molybdenum. AuEq Moz = Au
Moz+(US3.00/lb(i)Cu Mlb+US$15(i)Mo Mlb)/US$1,150
Some figures may not sum exactly due to rounding.
=---------------------------------------------------------------------
=--------------------------------------------------------------------------
Confidence Gold Copper Copper Molybdenum Molybdenum
classification metal grade metal grade metal
(Moz) (%) (Mlb) (%) (Mlb)
=--------------------------------------------------------------------------
Mineral Resource total for deposit (100%)
Indicated 2.60 0.17 477 0.01 29.4
Inferred 3.71 0.17 1,098 0.01 69.2
=--------------------------------------------------------------------------
Mineral Resource attributable to Gold Fields (60%)
Indicated 1.56 0.17 286 0.01 17.6
Inferred 2.23 0.17 659 0.01 41.5
=--------------------------------------------------------------------------
Mineral Resource attributable to Orsu (40%)
Indicated 1.04 0.17 191 0.01 11.8
Inferred 1.48 0.17 439 0.01 27.7
=--------------------------------------------------------------------------
Table notes:
The Taldybulak Mineral Resource is constrained within an optimized open pit
shell parameters including: mining, processing and administration cost
estimates; mining parameters; and process recoveries for gold, copper and
molybdenum.
The Taldybulak Mineral Resource estimate is reported without dilution, ore
loss or process recovery factors, assuming 100% metallurgical recoveries
for all metals. Commodity prices used in the Taldybulak Mineral Resource
are US$1,150/oz gold, US$3.00/lb copper and US$15/lb molybdenum. Gold
equivalent is calculated using commodity price weightings for gold, copper
and molybdenum. AuEq Moz = Au Moz+(US3.00/lb(i)Cu Mlb+US$15(i)Mo
Mlb)/US$1,150
Some figures may not sum exactly due to rounding.
=--------------------------------------------------------------------------
The Taldybulak Mineral Resource is based on exploration activities and geological and mineral resource modeling
completed on the Taldybulak deposit. The indicated and inferred mineral resource estimate according to the
SAMREC Code for Taldybulak is based on the same methods as described in the Taldybulak Technical Report. The
Taldybulak Mineral Resource according to the SAMREC Code is also based on reasonable prospects for eventual
economic extraction of the mineral resource supported by a life-of-mine pit-shell based on mining and mineral
processing assumptions.
The dataset used in the Taldybulak Mineral Resource is identical to the database used in the mineral resource
estimate contained in the Taldybulak Technical Report. The Taldybulak Mineral Resource according to the SAMREC
Code is reported using an optimised pit shell while the mineral resource estimated in the Taldybulak Technical
Report is reported at a 0.3 g/t gold cut-off grade without any pit shell constraint. As a result, the mineral
resource estimate in the Taldybulak Technical Report does not include substantial mineral resources with low
gold grade (less than 0.3 g/t gold) but having elevated copper grade. Table 2 is included for comparison
purposes and shows the effect of including the mineralised material outside the 0.3 g/t gold cut-off grade
shell to produce the open pit constrained SAMREC Code mineral resource.
Table 2. Comparison of SAMREC Code and NI 43-101 mineral resources for
Taldybulak
------------------------------------------------------------------------
Mineral Code Confidence Quantity Gold grade Gold metal
classification (Mt) (g/t) (Moz)
------------------------------------------------------------------------
NI 43-101 Indicated 141 0.66 2.99
Inferred 153 0.66 3.24
------------------------------------------------------------------------
SAMREC Indicated 127 0.64 2.6
Code Inferred 296 0.4 3.71
------------------------------------------------------------------------
Table notes:
NI 43-101 mineral resource figures are from the Company's March 22, 2010
press release, reported within the 0.3 g/t gold shell. Molybdenum
grades have been converted to percentage units from parts per million.
The SAMREC Code figures are reported inclusive both inside and outside
the 0.3 g/t gold shell, constrained by 0.1% Cu and open pit shells.
------------------------------------------------------------------------
------------------------------------------------------------------------
Mineral Code Copper Copper Molybdenum Molybdenum
grade (%) metal (Mlb) grade (%) metal (Mlb)
------------------------------------------------------------------------
NI 43-101 0.17 527 0.01 30
0.15 506 0.01 40
------------------------------------------------------------------------
SAMREC 0.17 477 0.01 29.4
Code 0.17 1,098 0.01 69.2
------------------------------------------------------------------------
Table notes:
NI 43-101 mineral resource figures are from the Company's March 22, 2010
press release, reported within the 0.3 g/t gold shell. Molybdenum
grades have been converted to percentage units from parts per million.
The SAMREC Code figures are reported inclusive both inside and outside
the 0.3 g/t gold shell, constrained by 0.1% Cu and open pit shells.
------------------------------------------------------------------------
Aside from minor technical differences in the approach to estimation and confidence classification the major
difference between the NI 43-101 and SAMREC Code mineral resource disclosure is the inclusion of substantial
copper mineral resources outside of a 0.3 g/t gold shell.
Exploration Update
For the Talas Project (comprised of the Taldybulak, Barkol, Korgontash and Kentash licenses within the Tien
Shan gold belt of north western Kyrgyzstan), Orsu and Gold Fields agreed on a 2010 exploration programme and an
expenditure budget of $2.45 million. As per the terms of the JV Agreement, the Company's 40% pro rata share is
approximately $979,000. For the nine months ended September 30, 2010 the Company incurred expenditure of
$592,000 for the Talas Project. The majority of the license expenditures are incurred in connection with
environmental, social, metallurgical and resource studies, as well as ongoing ground magnetic survey.
Orsu and Gold Fields planned an infill drilling in the western area of the Taldybulak deposit with 5,500m of HQ
size diamond drilling to start in Q1 2011. The objective of the proposed infill programme was to better
delineate the known extents on the mineralisation and to gain a more detailed understanding of the spatial
variability of the Au and Cu grades by closing the overall spacing of the drill holes down to 40m by 40m. Due
to the current political uncertainties in Kyrgyzstan (see "Risks Relating to the Republic of Kyrgyzstan" of the
MD&A) the proposed drilling work has been temporarily suspended. Resumption of drilling activity on the
Taldybulak licence is scheduled for March or April 2011, subject to weather conditions (see "Risks Relating to
the Republic of Kyrgyzstan" of the MD&A). The budget also includes the funds necessary to complete the ongoing
scoping study works by Coffey Mining Pty Ltd, Perth, Australia, plus further metallurgical test work and a
detailed geotechnical study of the hanging wall and footwall rock material immediately adjacent to the deposit.
The Talas Project joint venture is proceeding with metallurgical optimisation studies to investigate the
possibility of increasing recoveries and extracting metals from the oxidised ores.
Additional information regarding the Talas Project is contained in the MD&A.
AKDOL-TOKHTAZAN PROJECT, KYRGYZSTAN
Exploration Update
In September 2010, the Company announced an update on its ongoing exploration work at the Akdjol-Tokhtazan
Project.
During the Company's 2009 and 2010 scout exploration activity on the Akdjol Prospect included grab samples, 14
trenches, and five diamond drill holes at the Akdjol Prospect. The Akdjol Prospect has been identified by the
Company as the first ever Kyrgyz gold-silver epithermal prospect and had yielded very encouraging assay results
including:
=- a vertical intercept of 14.2m @ 5.32 g/t Au and 59.51 g/t Ag, including
6.7m @ 8.69 g/t Au and
=- 86.96 g/t Ag from diamond drilling (average grades of 3.84 g/t Au and
49.4 g/t Ag from the four reported drill holes);
=- 784m of trenching revealing up to 36m of mineralised intercepts above
0.5g/t cut off, and
=- confirming a strike length of at least 700m (14 trenches); and
=- Grab sample assays ranging between 1g/t and 119g/t Au and 7.7 g/t and
500g/t Ag.
Additional information regarding the Akdjol-Tokhtazan Project is contained in the MD&A.
QUALFIED PERSON
Except for the technical information derived from the technical reports referred to in this press release, Dr.
Alexander Yakubchuk, a "qualified person" (as such term is defined in NI 43-101), reviewed and approved the
technical information in this press release. Dr. Yakubchuk verified the data disclosed in this press release in
respect of exploration results, including sampling, analytical and test data, underlying such information,
dated after July 31, 2010. Dr. Yakubchuk is a Director of Exploration and the Chief Operating Officer for Orsu.
Technical information in this press release before July 31, 2010 had been reviewed and approved by Mr. Matthew
Boyes (a "qualified person" as defined in NI 43-101) who was the Mineral Resource Manager for Orsu. Mr. Boyes
is no longer employed by the Company.
For The Periods Ended September 30, 2010 (unaudited) and September 30, 2009
(unaudited)
Consolidated Statements of Operations
(Prepared in accordance with Canadian GAAP)
=---------------------------------------------------------------------------
3 months ended 9 months ended
September 30, September 30,
2010 2009 2010 2009
$ $ $ $
(Expenses) / income
General and administrative (1,337) (1,694) (3,633) (5,768)
Exploration (1,035) (639) (1,684) (1,012)
Stock-based compensation (600) (411) (1,440) (1,973)
Interest expense (1) (227) (1) (268)
Interest income 23 197 31 235
Foreign exchange (losses)/ gains 498 113 (378) 45
-------------------- --------------------
Loss from operating activities (2,452) (2,661) (7,105) (8,741)
-------------------- --------------------
Net loss from discontinued - (21,076) - (40,576)
operations
-------------------- --------------------
Net loss and comprehensive loss for (2,452) (23,737) (7,105) (49,317)
the period
Deficit - Beginning of period (413,637) (533,604) (408,984) (508,024)
-------------------- --------------------
Deficit - End of period (416,089) (557,341) (416,089) (557,341)
-----------------------------------------
-----------------------------------------
Loss per common share
Loss per common share from $(0.02) $(0.06) $(0.06) $(0.19)
continuing operations
Loss per common share from - $(0.46) - $(0.89)
discontinued operations
Net loss per common share $(0.02) $(0.52) $(0.06) $(1.08)
Weighted average number of common
shares
Basic and diluted (in thousands) 157,696 45,696 114,209 45,696
For The Periods Ended September 30, 2010 (unaudited) and December 31, 2009
(audited)
Consolidated Balance Sheets
(Prepared in accordance with Canadian GAAP)
=---------------------------------------------------------------------------
September 30, 2010 December 31, 2009
$000 $000
Assets
Current assets
Cash and cash equivalents 22,774 3,386
Prepaid and receivables 967 1,860
------------------- --------------------
23,741 5,246
Exploration properties 14,191 27,198
Office, furniture and equipment 474 1,078
Net investment in oil and gas
residual interests 643 643
Equity investment in Talas Joint
Venture 13,320 -
------------------- --------------------
52,369 34,165
------------------- --------------------
------------------- --------------------
Liabilities
Current liabilities
Accounts payable and accrued
liabilities 1,080 2,455
------------------- --------------------
1,080 2,455
Future income tax 6,877 6,877
------------------- --------------------
7,957 9,332
------------------- --------------------
Shareholder Equity
Share capital 380,145 361,440
Share purchase warrants 25,041 48,650
Share purchase options 11,499 12,550
Contributed surplus 43,816 11,177
Deficit (416,089) (408,984)
------------------- --------------------
44,412 24,833
------------------- --------------------
52,369 34,165
------------------- --------------------
------------------- --------------------
For The Periods Ended September 30, 2010 (unaudited) and September 30, 2009
(unaudited)
Consolidated Statements of Cash Flows
(Prepared in accordance with Canadian GAAP)
=---------------------------------------------------------------------------
3 months ended 9 months ended
September 30, September 30,
2010 2009 2010 2009
Cash flows from operating
activities $000 $000 $000 $000
Net loss for the period from
operating activities (2,452) (2,661) (7,105) (8,741)
Items not affecting cash:
Company share of Talas Joint
Venture loss 271 - 656 -
Depreciation and amortization
charges 37 70 112 173
Stock-based compensation 600 412 1,440 1,973
Unrealized foreign exchange
gain (94) - (124) -
---------------------- ----------------------
(1,638) (2,179) (5,021) (6,595)
Change in non-cash working
capital
Decrease/ (increase) in
accounts receivable and
other assets (180) (120) (125) (395)
(Decrease)/ increase in
accounts payable and accrued
liabilities (50) 919 (317) 1,970
---------------------- ----------------------
Cash flows used by the
operating activities of the
continuing operations (1,868) (1,380) (5,463) (5,020)
Cash flows from the operating
activities of the discontinued
operations - 1,417 - 5,735
---------------------- ----------------------
(1,868) 37 (5,463) 715
---------------------- ----------------------
Cash flows from investing
activities
Expenditures on property,
plant and equipment (39) (175) (42) (435)
Proceeds from net investment
in residual oil and gas
interests - - 241 -
Company funding of Talas
Joint Venture (254) - (592) -
---------------------- ----------------------
Cash flows used by the
investing activities of the
continuing operations (293) (175) (393) (435)
Cash flows used by the
investing activities of the
discontinued operations - (3,415) - (4,614)
---------------------- ----------------------
(2,161) (3,553) (5,856) (4,334)
---------------------- ----------------------
Cash flows from financing
activities
Gross proceeds of share issue - - 27,646 -
Share issue costs - - (2,402) -
Cash flows used in the
financing activities of
discontinued operations - 1,998 - (1,121)
---------------------- ----------------------
- (1,998) 25,244 (1,121)
---------------------- ----------------------
Increase/ (decrease) in cash
and cash equivalents (2,161) (1,555) 19,388 (5,455)
Cash and cash equivalents -
Beginning of period 24,935 2,300 3,386 6,200
---------------------- ----------------------
Cash and cash equivalents - End
of period 22,774 745 22,774 745
---------------------- ----------------------
---------------------- ----------------------
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: the Company's expectations with respect to obtaining a waiver of the State's pre-
emptive right with respect to the Karchiga Project, the continued maintenance and exploration of the Company's
properties, including the proposed work programs, anticipated milestones and the timing related thereto;
development and operational plans and objectives; mineral resource estimates; estimated project economics, cash
flow, costs and sources of funding; the completion of the Karchiga Acquisition and the timing related thereto;
the estimated LOM, NPV and IRR for the Karchiga Project; forecasts relating to amounts to be mined from, and
average recoveries and grades at, the Karchiga Project; the future price of copper; the schedule and nature of
the work and studies required to be completed and approved in connection with the Karchiga Feasibility Study,
including (without limitation) optimization studies, the Baseline Study, the ESIA and the Kazakh Feasibility
Study; the Company's expectations regarding the completion of the Karchiga Feasibility Study and the timing of
same; the Company's expectations regarding the start and completion of construction and production at the
Karchiga Project and the timing related to same; the Company's beliefs relating to the production of sellable
gold-copper-molybdenum concentrate (having the grading and recovery estimates set out above in "Quarter
Highlights") from the Taldybulak sulphide ore materials and that the results from the test and assay work
conducted at the Tokhtazan Project confirm, respectively, the principal amenability of the Tokhtazan ores to
heap leaching extraction of gold and encouraging results generally; estimates relating to critical accounting
policies; the Company's plans with respect to the conversion to IFRS and the adoption and/or implementation of
changes to accounting policies and the impact of same on the Company's financial statements; the future
political and legal regime in the republic of Kyrgyzstan; the regulatory environment in Kazakhstan relating to
the mining industry; the expected use of the net proceeds from the Offering; the transfer of the Dormant
Subsidiaries to the Company; the amount and receipt of deferred consideration that may be payable to the
Company by Polymetal pursuant to the sale of the Varvarinskoye Project; the significance of any individual
claims by non-resident members with respect to the Class Action Claim; and the Company's future growth 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 obligations and
planned activities, the Company's business (including the continued exploration of its properties), the economy
and the mineral exploration industry in general, the political environments and the regulatory frameworks in
Kazakhstan and the Republic of Kyrgyzstan with respect to, among other things, the mining industry generally,
royalties, 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
(including (i) the Company's ability to obtain an extension of the Taldybulak and Barkol licences beyond
December 31, 2010,
(ii) the Company's ability to obtain a waiver of the State's pre-emptive right relating to the Karchiga
Project, (iii) that the Company and or/the counterparties to the sale and purchase agreement governing the
Karchiga Acquisition (the "Karchiga SPA") will satisfy or obtain a waiver of any conditions imposed by
applicable regulatory authorities necessary in order to complete the Karchiga Acquisition), that the waiver
granted by the Competent Authority covers any pre-emptive right that the Competent Authority has in respect of
any previous placements, the satisfaction or waiver, as applicable, of the conditions precedent to the
completion of the Karchiga Acquisition by the Company or the counterparties to the Karchiga SPA, 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 completion of the Karchiga Acquisition, 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 Feasibility Study and to
obtain Kazakh Feasibility Study approval, that the Company has identified all of the key issues to be
investigated in connection with the Karchiga Feasibility Study, the Company's interpretation of the intrusives
of the Akdjol Prospect and the reinterpretation of the Akdjol Prospect as an epithermal gold-silver system, the
treatment of the Varvarinskoye Project as discontinued operations, 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 silver occurs
and no significant events occur outside of the Company's normal course of business. In addition, the
assumptions set out above in the section "Operational Review - Talas Project, Kyrgyzstan - Taldybulak Licence,
Kyrgyzstan - 2010 Mineral Resource Estimates" of the Company's MD&A were made in connection with the Taldybulak
Mineral Resource. 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.
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 in the
Karchiga Scoping Study and/or the Taldybulak Mineral Resource; 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 the Republic of Kyrgyzstan
(including the failure to obtain the State's waiver of its pre-emptive right relating to the Karchiga Project,
or the Company's inability to obtain the necessary extensions relating to its Taldybulak and Barkol licences);
adverse changes in the political environments in Kazakhstan and the Republic of Kyrgyzstan and the laws
governing the Company, its subsidiaries and their respective business activities; a failure or delay in the
satisfaction, or receipt of a waiver, as applicable, of any conditions imposed by applicable regulatory
authorities in order to proceed with the completion of the Karchiga Acquisition and/or under the Karchiga SPA
or the failure to complete the Karchiga Acquisition for any other reason; capital and operating costs varying
significantly from estimates; 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 Project 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
Class Action Claim; the Company's inability to delineate additional mineral resources and delineate mineral
reserves; and future unforeseen liabilities and other factors including, but not limited to, those listed under
"Risk and Uncertainties" in the Company's MD&A and in the Company's other disclosure materials, including the
Company's Annual Information Form for the year ended December 31, 2009 (the "Annual Information Form")
available under the Company's profile on SEDAR at www.sedar.com.
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.
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.
-30-
FOR FURTHER INFORMATION PLEASE CONTACT:
Orsu Metals Corporation
Petro Mychalkiw
CFO
+44 (0) 20 7518 3999
OR
Orsu Metals Corporation
Tania Tchedaeva
Company Secretary
+44 (0) 20 7518 3999
www.orsumetals.com
OR
Canaccord Genuity Limited
Ryan Cohen
+44 (0) 20 7050 6500
OR
Vanguard Shareholder Solutions
+1 604 608 0824
Orsu Metals Corporation
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