Orsu Metals Corporation
TSX: OSU PRESS RELEASE
November 11, 2016
Results for the nine-month period ended September 30, 2016 (Unaudited)
Orsu Metals Corporation ("Orsu" or the "Company") a London-based base and precious metals exploration and development company, listed on TSX (TSX: OSU), today reports its unaudited results for the nine months ended September 30, 2016 ("Q3 2016"). A full Management's Discussion and Analysis of the results ("MD&A") and Consolidated Financial Statements (Unaudited) for Q3 2016 (the "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 also be obtained upon request from the Company Secretary.
The Financials have been prepared in accordance with applicable International Financial Reporting Standards ("IFRS").
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 UPDATE
The Company is currently in the process of disposing its two most advanced projects in the Republic of Kazakhstan (or "Kazakhstan"), as described below. In addition, in September 2016, the Company completed the disposal of its Akdjol and Tokhtazan exploration licenses (the "Akdjol-Tokhtazan Project") within the Kyrgyz Republic (or "Kyrgyzstan"), as described below.
The Company plans to utilise the sale proceeds from the successful disposal of its Kazakh projects for the potential acquisition of an exploration license situated in the Mogocha District of the Zabaikal'skiy region of the Russian Federation (the "Sergeevskoe Project").
In April 2016, the Company entered into two separate agreements with Karasat Trading FZE ("Karasat"), a company registered in the United Arab Emirates, for the sale of the Company's two projects in Kazakhstan consisting of the Karchiga Project and the Kogodai Project (both defined below).
Karchiga Project
The Company's principal and most advanced project comprises a license area in eastern Kazakhstan containing the copper bearing Karchiga volcanogenic massive sulphide ("VMS") deposit which is part of the Rudny Altai polymetallic belt (the "Karchiga Project"). Since 2012, the Company has been seeking to secure the funding required for the construction of a mine and processing facilities at the project. However, due to the continuing adverse economic environment during this period the Company was unable to secure the necessary funding required. As a result, the Company considered alternative solutions which resulted in the Company entering an agreement to sell its 94.75% interest in GRK MLD ("MLD"), which owns the Karchiga Project, to Karasat for a consideration of $7.75 million (the "Karchiga Transaction") subject to various conditions (as set out in the MD&A).
Kogodai Project
The Kogodai Project comprises the exploration project for a prospect 70 km north west of the Karchiga Project identified as a VMS copper mineralization within the Kurchum-Kalzhir metamorphic terrain, the same tectonic unit that hosts the Karchiga deposit (the "Kogodai Project"). The Company entered a separate agreement with Karasat to sell its effective 51% interest in the Kogodai Project for $10,000 (the "Kogodai Transaction") subject to certain conditions (as set out in the MD&A).
THIRD QUARTER 2016 HIGHLIGHTS
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A year on year reduction of $1.3 million in net losses from $2.6 million for the nine months ended September 30, 2015 to $1.3 million for the nine months ended September 30, 2016, along with a year on year reduction of $0.6 million in net cash outflows.
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As at September 30, 2016 the Company had cash and cash equivalents of $3.1 million and expects to have sufficient working capital to fund its exploration and administration obligations for the next 12 months.
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In August 2016, the Company announced that its wholly owned subsidiary, Lero Gold Corp., had entered an agreement with three arm's length individuals (the "Purchasers") for the sale of its 100%
interest in Tournon Finance Limited which owns 100% of Oriel in Kyrgyzstan LLC which is the owner of the Akdjol-Tokhtazan Project (details of which are set out in the MD&A).
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In August 2016, the Company announced that it had received the consent from the Ministry for Investments and Development, the relevant Kazakh authority, to the sale of MLD as required under Kazakh law.
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In September 2016, the Company announced that it had entered an exclusive and binding heads of agreement for the potential acquisition of 100% of Sibzoloto Investments Limited ("Sibzoloto"), a Cypriot registered company, which is the sole owner of LLC GK Alexandrovskoe ("LLC GK Alexandrovskoe") which in turn is the sole owner of the license for the Sergeevskoe Project (the "Sergeevskoe Agreement"), from four arm's length parties who are the 100% owners of Sibzoloto (together the "Sellers"). The acquisition (the "Sergeevskoe Acquisition") is subject to the conditions and terms details of which are set out in the MD&A.
POST QUARTER HIGHLIGHTS
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In November 2016, the Company announced that the long stop date for the Karchiga Transaction by which the Company and Karasat would be required to obtain the all the necessary approvals and consents in Kazakhstan had been extended to January 31, 2017 (previously October 11, 2016) by mutual agreement. In addition, both Orsu and Karasat agreed to amendments to the terms of the Karchiga Transaction by which Orsu would no longer be entitled to any deferred consideration and in return Orsu would no longer be required to maintain at least $2 million of the proceeds in liquid assets in relation to the tax indemnity, so releasing the Company from the restriction on use of a substantial portion of the proceeds.
FINANCIAL RESULTS FOR Q3 2016
For Q3 2016 the Company reported a net comprehensive loss of $1.3 million, compared to a net loss of $2.6 million for the nine months ended September 30, 2015.
In April, the Company announced the sale of both the Karchiga Project and the Kogodai Project and thus the net assets and liabilities in relation to both projects as at September 30, 2016 have been classified as "Assets held for sale" and separately the combined net losses of the Karchiga Project and Kogodai Project disclosed as "Disposal group assets held for sale" for the nine months ended September 30, 2016 and 2015 (see below).
In August, the Company completed the disposal of the Akdjol-Tokhtazan Project and recorded a net gain on disposal of $0.5 million for the nine months ended September 30, 2016.
In September 2016, the Company entered the Sergeevskoe Agreement for the potential acquisition of the Sergeevskoe Project and incurred initial exploration expenditures of $26,000 for Q3 2016.
As at September 30, 2016 the Company had net assets of $10.9 million ($12.2 million as at December 31, 2015) of which $3.1 million was held in cash and cash equivalents ($4.7 million as at December 31, 2015).
LIQUIDITY AND CAPITAL RESOURCES
As at September 30, 2016 the Company's main source of liquidity was unrestricted cash and cash equivalents of $3.1 million, compared with $4.7 million as at December 31, 2015.
During the nine months ended September 30, 2016 the net cash used by the Company's operating expenditures was $1.5 million, compared to $2.1 million for the nine months ended September 30, 2015.
The minimum working capital the Company estimates for 2016 is set out below:
Estimate for the full
year
$000
Estimated corporate and administrative expenditure (1) 2,136 Sergeevskoe Project exploration 355 Total 2,491
Note:
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In estimating the forecast expenditures, the Company has applied an assumed average 2016 exchange rate of GBP£/ $ of 1.4882 for its UK corporate expenditures. The estimated expenditure excludes significant exploration expenditures at the Karchiga Project and Kogodai Project, but does include estimates of continuing administrative costs for those projects during the completion period.
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The above does not include any potential cash consideration for the acquisition of the Sergeevskoe Project.
Consolidated statements of net loss and comprehensive loss (Unaudited)
(Prepared in accordance with IFRS)
Three months ended September 30,
Nine months ended September 30,
Operating expenses
2016
$000
2015
$000
2016
$000
2015
$000
Administration (374) (484) (707) (1,264)
Legal and professional (41) (115) (182) (326)
Exploration (26) - (26) - Stock based compensation charge - (100) - (100)
Foreign exchange losses (10) (9) (30) (15)
Loss from disposal group assets held for sale (585) (469) (810) (867)
(1,036) (1,177) (1,755) (2,572)
Unrealized gain on share warrant liability - (4) 5 36
Net of finance (expense) less finance income 5 14 (22) 58
5 10 (17) 94
|
Net loss and comprehensive loss for the period from continuing operations
|
(1,031)
|
(1,167)
|
(1,772)
|
(2,478)
|
|
Loss from discontinued operation
|
(9)
|
(72)
|
(72)
|
(148)
|
|
Net gain from disposal of discontinued operation
|
553
|
-
|
553
|
-
|
|
544
|
(72)
|
481
|
(148)
|
|
Net loss and comprehensive loss for the period
|
(487)
|
(1,239)
|
(1,291)
|
(2,626)
|
|
Net loss attributable to owners of the parent:
|
|
Loss from continuing operations
|
(1,011)
|
(1,115)
|
(1,709)
|
(2,347)
|
|
Net gain/ (loss) from discontinued operations
|
544
|
(72)
|
481
|
(148)
|
|
Loss and comprehensive loss for the period attributable to parent
|
(467)
|
(1,187)
|
(1,228)
|
(2,495)
|
|
Net loss attributable to non-controlling interests:
|
|
Loss from continuing operations
|
(20)
|
(52)
|
(63)
|
(131)
|
|
Loss from discontinued operations
|
-
|
-
|
-
|
-
|
|
Loss and comprehensive loss for the period attributable to non-controlling interests
|
(20)
|
(52)
|
(63)
|
(131)
|
|
Loss per share (US dollar per share) from continuing operations:
Basic
|
$(0.00)
|
$(0.01)
|
$(0.01)
|
$(0.01)
|
|
Diluted
|
$(0.00)
|
$(0.01)
|
$(0.01)
|
$(0.01)
|
|
Net gain/ (loss) per share (US dollar per share) from discontinued operation:
Basic
|
$(0.00)
|
$(0.00)
|
$(0.00)
|
$(0.00)
|
|
Diluted
|
$(0.00)
|
$(0.00)
|
$(0.00)
|
$(0.00)
|
|
Weighted average number of common shares (in thousands)
|
182,696
|
182,696
|
182,696
|
182,696
|