Orsu Metals, a London-based precious and base metals explorer and developer has entered into a joint venture (JV) with Asem Tas-N LLC to explore the Balkhash project through 2013. The agreement replaces an exclusivity agreement announced on April 22, which replaced the original exclusivity agreement of November 2012.
Within the agreement both companies will explore geophysical works and verification drilling of exploration targets, with Orsu providing exploration funding totalling $1.4 million, representing an increase of about $500,000 over the original work program for 2013, while Asem Tas will apply to transfer the exploration licence for the project to a newly formed Kazakh legal entity jointly owned by Orsu and Asem Tas, in which Orsu will hold 55%. A licence transfer to the JV will be conditional on obtaining a formal waiver of the Kazakh Government’s pre-emptive right.
Orsu will also pay Asem Tas up to $1.5 million in compensation for exploration costs prior to 2012, excluding any Orsu-funded costs, upon the licence transfer. This includes $20 per tonne of economically extractable copper equivalent, to a maximum of $10 million.
It also includes any amount paid further under on or before completion of a positive preliminary economic assessment study, and $20 per additional tonne of economically extractable copper equivalent, up to $15 million on completion of a positive definitive feasibility study (DFS).
Following the licence transfer, Orsu will finance the works until the DFS completion, pending earlier funding termination, while Orsu will be responsible for arranging project finance for any the future development of Balkhash.
Where the approval of relevant authorities for the licence transfer is not received due to a breach by Asem Tas, or the Kazakh Government exercises its pre-emptive right to acquire the licence during transfer, Asem Tas is required to refund Orsu in connection with the original November 2012 agreement and the amended 2013 work program.
Orsu may also buy-out all or part of the interest of Asem Tas in the JV, for cash or shares, at a price determined by an independent expert.