Following a meeting of the Board of Directors of Orsu Metals Corporation, the company has suspended its involvement in the joint exploration of the Balkhash Project with Asem Tas-N LLC.
After extensive assessment of the results of the exploration program funded by Orsu, the directors resolved not to exercise the option to purchase an interest in the project on the terms set out in the Exclusivity Agreement announced on March 11 2014, which expired earlier this month following the extension announced on July 3, 2014.
Further, based on the geological results and the geopolitical situation in the region, the directors were also unwilling to commit further funds towards the next stage of exploration in order to secure a further exclusivity period.
The company has no residual funding obligation as a result of this decision.
Orsu’s executive chairman Dr Sergey V Kurzin says, “Although the initial results for the Balkhash project were encouraging, resulting in the previous extensions of the exclusivity period, the subsequent results targeted at the most promising prospects were insufficient to justify the exercise of the option to acquire the project and committing Orsu to finance the minimum funding requirements.
“Although this is disappointing, the Board believes that it is in the best interests of Orsu’s shareholders in what remain very challenging times for small exploration and development companies.”
Orsu also recently entered into a new conditional exclusivity agreement with David-Invest LLP, a Kyrgyz Republic registered company, and a related company, David Way Ltd, a Hong Kong registered company after the receipt of a non-refundable deposit of US$100,000 from the potential buyers with a view to the potential sale of its Akdjol and Tokhtazan gold exploration licences in the Kyrgyz Republic.
The key terms of the agreement are:
- As a result of Orsu receiving the Deposit, the Potential Buyers have been granted an exclusive right to purchase the Akdjol-Tokhtazan project until February 4, 2015 conditional upon the potential buyers making four further non-refundable deposit payments in the amount of US$100,000 on or before each of October 4, November 4, December 4, 2014 and January 4, 2015;
- The potential buyers will fund the exploration program for the Akdjol-Tokhtazan project, which are due to expire on December 31, 2015, on a non-refundable basis for the Exclusivity Period;
- The potential buyers have the right to terminate the agreement at any time and Orsu has the right to terminate the new exclusivity agreement in the event of non-fulfilment of the obligation to fund the exploration program; and
- The potential buyers have the option to purchase the Akdjol-Tokhtazan project at any time on or before the expiry of the exclusivity period for a consideration of US$4.5 million.
The company will apply any proceeds from a sale to working capital and identification of other early stage exploration opportunities consistent with the company’s strategy.