Finally, in November 2012 as part the Company's continued commitment to acquire new exploration mineral properties it entered into the Balkhash Agreement to jointly explore the East Balkhash 2 licence area of approximately 6,000km2, in eastern Kazakhstan, which is host to a 30km long Dzharyk-Taisogan cluster of copper-polymetallic occurrences. Under the terms of the Balkhash Agreement, the Company agreed to fund exploration work for 175 days ending in April 2013 (subject to extension by mutual agreement) for an approximate total of $0.9 million which the Company achieved during the first quarter of 2013.
In relation to the financial results for the year ended December 31, 2012 the Company reported a net loss of $2.4 million and net assets of $29.8 million of which $9.8 million comprised of cash.
The Board of Directors and I believe that in 2012 Orsu made significant progress on work in relation to new exploration opportunities in Kazakhstan with the potential to develop into major projects as well continuing to develop the Karchiga Project. I would like to thank the Orsu staff, management, consultants and advisors for their hard work, dedication and drive in a challenging economic environment, and believe Orsu is now well positioned to fully develop new exploration projects which will realise their full potential and drive future growth of the Company.
Dr Sergey V KurzinExecutive ChairmanMarch 27, 2013
-- February 2012 - the Company announced the positive results of a definitive feasibility study for the Karchiga Project (the "Karchiga DFS") for the Karchiga Project completed by SRK Consulting (UK) Limited ("SRK"), which reported for the Karchiga Project a total production of 149kt (328 Mlb) of copper over a mine life of 11.5 years, and post tax NPV of $150 million and IRR of 30% based on 100% equity financing and a copper price of $3.25/lb Cu. In addition, the Company announced a probable mineral reserve estimate of 8.5 million tonnes of sulphide ore in the central and north east pits containing 145,227t (320 Mlb) of copper at an average grade of 1.71% Cu to be amenable to flotation ("FL") and additional 1.5 million tonnes of ore in the central pit containing 21,399t (47.2 Mlb) of copper at an average grade of 1.43% Cu to be amenable to heap leaching ("HL") (the "2012 Mineral Reserve Estimates"). Please see "Operational Review - Karchiga Copper Project, Kazakhstan" for further information.-- March 2012 - in relation to the Karchiga DFS the Company announced the filing of the NI 43-101 compliant Karchiga Definitive Feasibility Study Report (the "Karchiga DFS Report") on www.sedar.com.-- May 2012 - the Company announced the appointment of Mr Kevin Denham as Chief Financial Officer effective May 1, 2012 replacing Mr Petro Mychalkiw who stepped down to pursue other business interests.-- May 2012 - the Company announced the expiry of 62.7 million share purchase warrants (originally issued in April 2010).-- May 2012 - the Company announced that in relation to the Talas Project it had agreed a 6,000 meter drilling programme with Gold Fields.-- June 2012 - the Company announced the extension of its financial advisory services agreement with Endeavour Financial Limited ("Endeavour") with the aim of securing debt finance for the Karchiga Project.-- July 2012 - the Company announced that it had agreed to sell its 40% interest in the Talas Project to Gold Fields Limited ("Gold Fields" or collectively with certain of its subsidiaries, the "Gold Fields Group") for cash consideration of $10 million (the "Sale") and that the Gold Fields Group had also agreed to subscribe for 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 of the Company (a "Common Share") and one half of one common share purchase warrant (each whole warrant, a "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. Completion of the Subscription is conditional on the Company obtaining a 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"), the application for which was submitted in September 2012. In addition, the Company announced that it was in advanced negotiations with major banks to provide project finance for the Karchiga Project, principally in the form of secured debt.-- July 2012 - the Company announced the completion of the Sale and receipt of $10 million cash consideration. In addition, the Gold Fields Group 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 and the gross proceeds of the Subscription will remain in escrow pending the Company's receipt of the Kazakh Formal Waiver or Gold Fields waiver of such 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 4 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 was 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 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 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.-- November 2012 - the Company announced that it had entered into an exclusivity agreement with David-Invest with a view to the potential sale of the Company's interest in the Akdjol-Tokhtazan Project (the "Akdjol-Tokhtazan Exclusivity Agreement"). Pursuant to the Akdjol- Tokhtazan Exclusivity Agreement, David-Invest was granted the exclusive right until September 1, 2013 (the "Exclusivity Period") to acquire, subject to the renewal of the relevant exploration licenses expiring on December 31, 2012 (which have been renewed to December 31, 2015), the Akdjol-Tokhtazan Project for consideration of $4.5 million through the acquisition of Orsu's wholly-owned subsidiary, Tournon Finance Limited ("Tournon"), which indirectly owns the gold exploration licenses for the Akdjol-Tokhtazan Project through its 100% ownership interest in Oriel in Kyrgyzstan LLC ("OiK LLC"). In return for being granted such exclusivity right, David-Invest agreed to fund exploration work on a non-refundable basis for the remainder of 2012 and, following the renewal of the licenses, for the remainder of the Exclusivity Period. (See "Operational Review - Akdjol-Tokhtazan Project, Kyrgyzstan").-- November 2012 - the Company announced that it had entered into an exclusivity agreement (the "Balkhash Agreement") with Asem Tas to jointly explore the East Balkhash 2 license area at 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) totalling approximately $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 license for the East Balkhash 2 license 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 license 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 license is not received due to a breach by Asem Tas, or the Kazakh Government exercises its pre-emptive right to acquire the license 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 license for the East Balkhash 2 license area 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.-- November 2012 - the Company announced that it signed a non-binding term sheet with RK Mine Finance (Master) Fund II LP ("RK Mine Finance"), a part of the Red Kite Group. The principal terms of which include, subject to certain conditions, the provision of sub-ordinated secured debt finance facilities of up to $25 million for the Karchiga Project comprising a $15 million sub-ordinated loan and a sub-ordinated standby facility of up to $10 million, as well as an off-take agreement for 100% of any future annual production of copper concentrate at the Karchiga Project, for the life of the mine. However, in the first quarter of 2013, the Company and RK Mine Finance by mutual agreement decided not to progress this non-binding term sheet for the sub-ordinated debt loan and sub-ordinated standby facility and off take agreement.