Thought I should start a new board on this little mining stock. Check out the I-box, where I have posted the latest outside report on the company. The key resource is the company's chairman, Dr. Sergey Kurzyn, a Russian with an impressive track record of bringing new mines into production in the old soviet states of Kyrgstan and Khazakstan.
They have three big projects, any one of which could make this a huge winner. One of the really big possibilities is their gold and copper mine, about 40 km from the Chinese border. Do you think the Chinese will be big consumer of copper going forward?
Check this out:
Orsu Metals (OSU, TSXV) Kyrgyzstan Project Updates
This week Orsu updated the market on their metallurgical studies from the Kyrgyzstan Projects.
Talas Update
The results of a recent metallurgical study conducted at the Dawson Metallurgical Laboratories in Salt Lake City concluded that a potentially sellable copper-gold-molybdenum concentrate grading 19%Cu, 1.30% Mo and 102g/t Au with respective recoveries of 88%, 89% and 85% can be produced from the Taldybulak sulphide ore material.
Additional testing will focus on leaching of the floatation tailings fraction and floatation of oxidized material is planned for Q3&4 2010.
Tohktazan Update
Orsu also conducted a smaller metallurgical testing at the Stewart Assayers Laboratory in Kyrgyzstan. The goal was to determine if the Tokhtazan ores could utilize the heap leaching method to extract gold and apparently it can.
Taldybulak-Talas Project
Orsu owns 40% of the Taldybulak-Talas gold-copper-molybdenum project in Kyrgyzstan which had an NI 43-101 update in March. Total gold resources came in at 6.2 million ounces at 0.66 grams per ton with 1,033 million pounds of copper with a grade of 0.16%. This is one of the world's largest copper-gold porphyry projects yet few people seem to know about it.
Gold Fields Ltd is the operator of the project which is expected to be a large scale, low grade open pit mine.
Karchiga Copper Deposit - Fast Tracked Toward Full Feasibility
In a separate report by New Fuel Now, Peter Cole points out that OSU's deep discount in terms of their Net Present Value will reverse once the project nears production. The Karchiga scping study base case economic analysis indicates a discounted cash flow NPV of US $138.53 million with copper at $3. Even if copper should fall to $2.40, Orsu would still have an NPV of $59 million with Karchiga.
With the copper price currently at $3.14 I would say the likelyhood of a much higher NPV is in the cards.
Currently copper stockpiles followed by the London Metal Exchange have dropped over the past few weeks to the lowest level since November 18th - already down 17% this year and headed for the first annual drop since 2004.
China of course is the big driver behind this trend. As their economy continues to grow their need for copper to build out China's infrastructure and consumer demand has also skyrocketed. Currently China consumes about one-third of the world's copper and about 40% of the base metals.
Many analysts don't see this trend changing and as such we as investors can benefit given company's like Orsu can get into production to take advantage of this strong demand.
It's estimated that Karchiga has 29 million pounds of copper which could be open pit mined for US $1.13 per pound over 10 years. At $3 copper the net revenue would be $765 million with an IRR of 40.5%.
As a further benefit, Karchiga is strategically located on the Chinese border making it reasonably easy to off-take ore to Chinese smelters.
Orsu is our bottom fishing pick for July at 16 cents.
