Orsu Metals Corporation Berkeley Square House Berkeley Square
London
W1J 6BD [email protected]
United Kingdom www.orsumetals.com
TSX: OSU PRESS RELEASE
September 21, 2016
Orsu Metals Corporation announces Exclusive and Binding Heads of Agreement
for the Proposed Acquisition of the Sergeevskoe Gold Project in Russia
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Highlights of the Sergeevskoe Gold Project
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Transaction: Orsu Metals Corporation ("Orsu" or the "Company") has agreed to acquire, subject to the conditions as described in this release, the Sergeevskoe Gold Project located in the Mogocha District of the Zabaikal'skiy Region of the Russian Federation.
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The Russian style P1 to P3 categories: The most recent study conducted in July 2016, prior to discussions with Orsu, estimated a total of 29.736 million tonnes of mineralization in several prospects within the Sergeevskoe license area with a total of 59.31 tonnes (approximately 1.91 million ounces) of gold to a depth of 100 metres.
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A long-established gold-mining province: the area around the Sergeevskoe Project is a known host to a cluster of producing gold deposits. The Sergeevskoe Gold Project has a common license border with the Klyuchevskoe gold mine immediately to the east of Sergeevskoe, which contains 4 million ounces in Russian-style A+B+C1 and C2 categories. To the west, it neighbours the recently commissioned Alexandrovskoe open-pit operating mine with Russian- style resources in excess of 2 million ounces of gold.
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Excellent infrastructure: the Project is located in an economically developed area of Russia with ready access to all significant infrastructure: (1) federal highway M58 is approximately 8 kilometres away, (2) the Trans-Siberian railway is approximately 35 kilometres away; and (3) access to the national electricity grid. Water is readily available in the area, as is a local skilled labour force.
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Analogous deposit nearby: the Klyuchevskoe mine has produced over 1.3 million ounces of gold in its history. The Klyuchevskoe mine hosts an analogous mineralization and historical information published about that mine greatly helps to evaluate the geological and metallurgical risks of the Sergeevskoe Gold Project. According to the Russian Federal Antimonopoly Agency, the Klyuchevskoe mine is in the advanced stages of being sold to China National Gold Group. (See footnote 4.)
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The Sergeevskoe Gold Project has extensive historical exploration data: In Soviet times the project was extensively explored with, inter alia, approximately 8 500 meters of drilling performed and 16 200 meters of trenches excavated. Historical exploration works at the 7.6 km2 license area of the Sergeevskoe Gold Project identified intrusion-hosted gold mineralization over an area of 5x2.2 km (including a 1.1 km2 license area of the Klyuchevskoe gold deposit). In its eastern part, the historically identified mineralization forms a western continuation of the orebodies extending from the Klyuchevskoe deposit, with most prospective mineralization identified at the Zone 23 and Kozie occurrences.
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At the Zone 23 occurrence, Soviet era drilling intercepted wide intervals of gold mineralization.
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Historical hole C-222 intercepted mineralized intervals (at a cut-off of 0.5 grammes per tonne of gold) of:
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Historical hole C-215 intercepted five mineralized intervals (at a cut-off of 0.5 grammes of gold per tonne) of:
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At the Kozie occurrence, historical drillholes intercepted (at a cut-off of 0.5 grammes of gold per tonne):
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At the Karamaevskoe occurrence, historical hole C-197 intercepted a mineralized interval (at a cut-off of 0.5 grammes of gold per tonne) of:
All potential quantities and grades referred to in this announcement are conceptual in nature; there has been insufficient exploration to define a mineral resource and it is uncertain if further exploration will result in the target being delineated as a mineral resource.
The results referred to are primarily based on historical data prepared between 40 and 60 years ago, and as such their relevance and reliability may be uncertain. Further analysis will be required, including confirmatory drilling and/or trenching and assays of the core plus updated analysis and assessment of the historical data in order to verify the historical estimates as current mineral resources or reserves.
A qualified person has not done sufficient work to classify the historical estimate as current mineral resources or reserves. The Company is not treating the historical estimate as current mineral resources or reserves.
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Orsu, the London-based TSX listed company (TSX: OSU), today announces that it has entered into Exclusive and Binding Heads of Agreement ("Heads of Agreement") for the potential acquisition of 100% of Sibzoloto Investments Limited ("Sibzoloto"), a Cyprus registered company which is the sole owner of LLC GK Alexandrovskoe ("LLC GK Alexandrovskoe"), which in turn is the sole holder of the Sergeevskoe licence area in the Russian Federation ("Sergeevskoe Project"), from two arm's length parties, (1) Metalsib Group (BVI) ("Metalsib") and (2) OC Management Group (BVI) ("Olympia Capital"); (Metalsib and Olympia Capital, together defined as the "Sellers").
Summary of the Heads of Agreement
The following sets out the key terms of the Heads of Agreement, which will be filed on the Company's SEDAR profile:
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Orsu has agreed to acquire:
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100% of the Sergeevskoe Gold Project via the acquisition of Sibzoloto, and
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100% of a nearby work camp via the acquisition of LLC Davenda, a company under effective control of the Sellers,
(the "Proposed Transaction") conditional upon good faith negotiation of formal definitive sale and purchase documentation (including a formal sale and purchase agreement), and completion of due diligence, for the consideration set out below. The exclusivity period runs until January 31, 2017 ("Exclusivity Period") and may be extended by mutual agreement of the parties.
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The consideration for Sibzoloto will be the issue of new common shares of Orsu as follows:
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The Company will issue 146,605,683 new common shares in Orsu to the Sellers for the acquisition of 30% of the outstanding shares of Sibzoloto at closing such that, post-closing, the Sellers will own approximately 44.5% of the enlarged share capital of Orsu (or 42.5% of the total enlarged and fully diluted share capital of Orsu, assuming exercise of all issued and outstanding options). The Sellers shall transfer the remaining 70% of the outstanding shares of Sibzoloto at the time the Company completes the sale of its Karchiga Project (as announced on April 11, 2016).
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In the event that the proceeds from the sale of the Karchiga Project are not received by June 30, 2017, the Company will issue a further 378,731,348 common shares of Orsu (the "Top-up Shares") to the Sellers such that the Sellers will own in aggregate a combined total of