Balkhash Project, Kazakhstan
In April 2013, the Company announced that it had entered into the Balkhash Agreement to jointly explore the Balkhash Project with Asem Tas. The Balkhash Agreement replaces the initial agreement which the Company announced in its press release on November 12, 2012.
The Balkhash Agreement
The key terms of the Balkhash Agreement with Asem Tas to jointly explore the Balkhash Project include:
1) Orsu has been granted the exclusive right during the Exclusivity Period to explore and participate in the Balkhash Project.2) During the Exclusivity Period: a. Orsu and Asem Tas will continue to jointly explore the Balkhash Project, including geophysical works and verification drilling of exploration targets; b. Orsu will provide funding for exploration works at the Balkhash Project in the amount of approximately $0.9 million (including $0.3 million already funded in the six months ended June 30, 2013 pursuant to the predecessor agreement announced on November 12, 2012) in accordance with a contractual working programme agreed by both parties (the "Working Programme"), and c. Asem Tas will apply to transfer the exploration licence for the Balkhash Project to a newly formed Kazakh legal entity jointly owned by Orsu and Asem Tas (the "Joint Venture Company"), which will be a subsidiary of Orsu, with Orsu holding an effective interest of 55%. A transfer of the exploration license to the Joint Venture Company will be conditional upon obtaining a formal waiver of the Kazakh Government's pre-emptive right.3) Upon the effective transfer of the exploration license to the Joint Venture Company Orsu has agreed to pay Asem Tas: a. up to $1.5 million to compensate Asem Tas for historical exploration costs incurred prior to 2012 (excluding any costs funded by Orsu), b. $20 per tonne of economically extractable copper equivalent, up to a maximum of $10 million, less any amount paid under item 3) a. above, on or before completion of a positive preliminary economic assessment study, and c. $20 per additional tonne of economically extractable copper equivalent, up to a maximum of $15 million, less any amounts paid under 3) a. and 3) b. above, on completion of a positive definitive feasibility study.4) Orsu may terminate its funding at any point before the earlier of the effective transfer of the exploration licence or the end of the Exclusivity Period. Where the approval of the relevant authorities for the transfer of the 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 expenditure in connection with the Working Programme.5) Orsu will finance the works until completion of the definitive feasibility study and Orsu will be responsible for securing debt and financing for the project.6) 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 Joint Venture Company, for cash or shares, at a price determined by an independent expert.
FINANCIAL RESULTS FOR THE THREE MONTHS ENDED JUNE 30, 2013
The Company is pleased to announce that losses continued to narrow in the quarter with a net loss on continuing operations of $0.8 million for the three months ended June 30, 2013, compared to a net loss on continuing operations of $1.7 million for the three months ended June 30, 2012, and a net loss on continuing operations of $1.2 million for the prior quarter.