NEWS:
Orsu Metals Corporation - OSU
Conditional Sale of Karchiga and Kogodai Projects and Cancellation of Admission to Trading on AIM
Released 08:09 11-Apr-2016
FOR: ORSU METALS CORPORATION
AIM, TSX SYMBOL: OSU
April 11, 2016
Conditional Sale of Karchiga and Kogodai Projects and Cancellation of Admission to Trading on AIM
LONDON, UNITED KINGDOM--(Marketwired - April 11, 2016) - Orsu Metals Corporation (AIM:OSU) (TSX:OSU) -
Highlights
-- Orsu has conditionally agreed to sell its 94.75% interest in its
Karchiga Project
-- an initial consideration of US$7.75 million, plus
-- deferred consideration of up to US$2 million based on recovery of
VAT and relief obtained from accumulated tax losses
-- The sale of Karchiga will be conditional upon, among other things,
approval of a resolution to dispose of the Karchiga Project by
shareholders at an annual and special meeting and obtaining the formal
consent from the Kazakh authorities for the change in ownership.
-- It is expected that the shareholder meeting to approve the disposal of
Karchiga will take place during the second half of June 2016
-- The Company has also conditionally agreed to sell its effective 51%
interest in its Kogodai Project to the same party for $10,000,
conditional on the formal consent from the Kazakh authorities for the
change in ownership.
-- In addition, with a view to saving costs, the Company will apply for
cancellation of admission of its common shares to trading on AIM, with
effect from May 11, 2016. The Company will maintain its listing on the
TSX Main Board.
Conditional Sale of Karchiga Project
Orsu Metals Corporation, the London-based dual listed (TSX:OSU) (AIM:OSU) company, today announces that it has
entered into an agreement (the "Sale and Purchase Agreement") with an arm's length party, Karasat Trading FZE
(the "Purchaser"), a company registered in the United Arab Emirates with other mining interests in Kazakhstan,
to sell its 94.75% interest in GRK MLD LLP ("MLD"), which owns the Company's Karchiga Project in the Republic
of Kazakhstan ("Karchiga Project") for an initial US$7.75 million, plus deferred consideration of up to US$2
million based on recovery of VAT and losses accumulated in MLD (the "Karchiga Transaction").
The key terms of the Sale and Purchase Agreement, which will be filed on SEDAR, are as follows.
-- A deposit of $100,000, payable within 14 business days of signing the
Sale and Purchase Agreement.
-- Initial consideration of $7.75 million (less the deposit) payable on
completion.
-- The initial consideration is to be allocated as follows:
-- $4,438,268 for the purchase of intercompany debt owed by MLD to Orsu
-- $3,311,502 for the purchase of intercompany debt owed by MLD to Lero
Gold Corp. ("Lero", the intermediate holding company for the
Karchiga Project);
-- $230 for the 94.75% interest in MLD held by Eildon Enterprises
Limited ("Eildon", the immediate parent undertaking of MLD).
(Together Orsu, Lero and Eildon are referred to as the "Sellers").
-- Deferred consideration of up to US$2 million based on 67% of relief
obtained for corporate tax losses or recovery of VAT accumulated to the
completion date by MLD
-- The Transaction is subject to various significant conditions, including:
-- Approval of the Transaction by shareholders by way of a resolution
for the sale, to be proposed at an annual and special meeting.
-- The Purchaser obtaining the requisite antimonopoly approval from the
relevant Kazakh authorities (the "Antimonopoly Approval")
-- The Company obtaining the formal consent to the change in ownership
from the Ministry of Industry and Development (the "MID", the
relevant Kazakh authority) which is required under Kazakh law (the
"Consent");
-- The Company obtaining an amendment to the licences to delay
commencement of production to the first quarter of 2019 (the
"Amendment")
-- the issuance or renewal (extension) of Technical Conditions for
connection to the electricity grid and to procure the sufficient
water supply for the facilities of the Project (including Technical
Conditions for water conduit)
-- If any of the Amendment, the Consent or the Antimonopoly Approval are
outstanding and the Purchaser does not agree to extend the longstop
date, the Sellers will repay the deposit to the Purchaser.
-- The longstop date is October 8, 2016, but will automatically roll
forward by a further a further three months if the only conditions not
satisfied at that time are one or more of the Consent, the Amendment or
the Antimonopoly Approval; the longstop date may also otherwise be
extended by the mutual agreement of the parties.
-- The Company will pay a termination fee of US$400,000 plus costs of the
Purchaser up to an additional US$150,000 in the event that it terminates
the agreement before Completion.
-- The Sale and Purchase Agreement contains commercial warranties and
indemnities from the Sellers.
The Company will apply for the Consent as required under Kazakh law. Whilst the Directors are confident that
the Company will receive the Consent and has obtained these in the past for previous transactions, the timing
of the granting of such Consent is unknown and there can be no assurance that the Company will be successful in
obtaining the Consent. Consequently, the Company will seek shareholder approval for the Transaction at its
Annual and Special Shareholder Meeting to be scheduled for the second half of June 2016. Formal notice of the
shareholder meeting to approve the Transaction will be provided in due course together with related shareholder
documents including an information circular setting out the matters to be considered at the meeting.
The carrying value of net assets attributable to the Karchiga Project in the Company's audited consolidated
financial statements as at December 31, 2015 was US$7.9 million (net of the amount attributable to the non-
controlling interest). The losses attributable to the Karchiga Project (including impairments and exchange
losses) were US$1.6 million for the year ended December 31, 2015 (US$1.2 million for the year ended December
31, 2014).
Dr Sergey Kurzin, Executive Chairman of Orsu, commented: 'Although management believe in the long term
prospects for copper, it cannot ignore the current economic reality of a sustained period of depressed
commodity prices and of negative investor sentiment towards the resources sector generally and junior resource
companies in particular, which have affected the Company's ability to finance the Karchiga Project both to date
and in the foreseeable future. The sale of Karchiga, if completed, will provide the Company with a platform to
identify new potential opportunities to seek to create value for shareholders.'
Conditional sale of Kogodai Project
In addition, the Company has conditionally agreed to sell its effective 51% interest in its Kogodai Project in
the Republic of Kazakhstan to the same party for $10,000 (the "Kogodai Transaction", together with the Karchiga
Transaction, the "Transactions"). The sale will be effected by the sale of the Company's 63.75% interest in
Harssin Management B.V. which in turn owns a 100% interest in Orsu Metals Kazakhstan LLP which holds an 80%
interest in Kogodai JV LLP. Kogodai JV LLP is the holder of the Kogodai Project licences.
The Kogodai Transaction is conditional upon the Company obtaining the formal consent to the change in ownership
from the MID which is required under Kazakh law. The Kogodai Transaction is not interconditional on the
completion of the Karchiga Transaction.
Management of the Company has concluded that, in the light of the proposed sale of the Karchiga Project, and
the continuing uncertain economic environment facing the Company and the resources sector as a whole, the
Kogodai Transaction would be beneficial to the Company because, if completed, it would release the Company from
its ongoing exploration and related financial obligations for the Kogodai Project.
As an early stage project, the carrying value of the Company's interest in the Kogodai Project as at December
31, 2015 was $38,000 (net of the non-controlling interests). The losses attributable to the Kogodai Project
were US$0.3 million for the year ended December 31, 2015 (US$0.5 million for the year ended December 31, 2014)
Cancellation of AIM admission
In view of the current economic situation and the depressed levels of commodity prices, management has
considered the relative merits of maintaining the listing of its shares on both AIM and TSX, and today
announces the cancellation of the admission of its shares to trading on AIM which will be effective from May
11, 2016, subject to submission of the requisite notices prior to that date.
In deciding to effect the cancellation of the admission of the Company's shares to trading on AIM, the
following factors were considered significant in reaching this conclusion by the Board:
-- de-listing from AIM results in clearly identifiable cost savings, such
as the fees for retaining a Nominated Adviser and the annual fees
payable to the London Stock Exchange;
-- in contrast de-listing from TSX does not preclude the Company from
continuing to be a reporting issuer for Canadian securities law purposes
and so cost savings, if any, are likely to be far more limited;
-- the existing listing of the Company's shares on TSX will continue to
provide all shareholders with a comparable dealing facilities to enable
trading in the future.
FORWARD-LOOKING INFORMATION
This press release contains forward-looking information which is not comprised of historical facts. Forward-
looking information involves risks, uncertainties and other factors that could cause actual events, results,
performance and opportunities to differ materially from those expressed or implied by such forward-looking
information. Forward-looking information contained in this press release includes, but may not be limited to,
the anticipated completion of the Transactions and the terms and timing related thereto, the Company's use of
the proceeds from the Transactions, and the expected effect of the Transactions on the Company, the application
for and obtaining of the Consent, the anticipated timing of the Company's Annual and Special Meeting and the
anticipated consequences of de-listing from AIM.
Factors that could cause actual results to differ materially from those described in such forward-looking
information include, but are not limited to, the ability of the parties to satisfy any conditions to the
completion of the Transactions disclosed herein, the inability to obtain, maintain, renew, amend and/or extend
required licences, permits, authorizations and/or approvals from the appropriate regulatory authorities,
including (without limitation) the Company's inability to obtain (or a delay in obtaining), among other things,
the Amendment, and/or the Consent and/or the Purchaser's inability (or a delay in obtaining) the Antimonopoly
Approval, and other risks relating to the regulatory framework in Kazakhstan, adverse changes in the laws or
political environment in Kazakhstan, adverse changes in commodities prices, as well as certain other risks set
out in the Company's public documents, including its annual information form dated March 30, 2016, filed under
the Company's profile on SEDAR at www.sedar.com.
The forward-looking information in this press release reflects the current expectations, assumptions and/or
beliefs of the Company based on information currently available to the Company. In connection with the forward-
looking information contained in this press release, the Company has made assumptions about: the satisfaction
or waiver, as applicable, of any conditions to the completion of the Transactions disclosed herein; the
Company's business, the economy and the mineral resources development and extraction industry in general; the
Company's ability to obtain the Amendment and the Consent; and the Purchaser's ability to obtain the
Antimonopoly Approval. The Company has also assumed that no significant events occur outside of the Company's
normal course of business. Although the Company believes that the assumptions inherent in the forward-looking
information are reasonable, forward-looking information is not a guarantee of future performance and
accordingly undue reliance should not be put on such information due to the inherent uncertainty therein.
Any forward-looking information speaks only as of the date on which it is made and, except as may be required
by applicable securities laws, the Company disclaims any intent or obligation to update any forward-looking
information, whether as a result of new information, future events or results or otherwise.
FOR FURTHER INFORMATION PLEASE CONTACT:
Orsu Metals Corporation
Kevin Denham
Chief Financial Officer
+44 (0) 20 7518 3999
