TIDMOSU
Orsu Metals Corporation Annual Results for the Year Ended December 31, 2011
ORSU METALS CORPORATION
TSX, AIM SYMBOL: OSU
March 30, 2012
Orsu Metals Corporation Annual Results for the Year Ended December 31, 2011
LONDON, UNITED KINGDOM--(Marketwire - March 30, 2012) - Orsu Metals Corporation ("Orsu" or the "Company" or the
"Group"), the dual listed (TSX:OSU)(AIM:OSU) London-based precious and base metals exploration and development
company today reports its audited annual results for the year ended December 31, 2011.
A full Management's Discussion and Analysis of the results for the year ended December 31, 2011 ("MD&A") and
Consolidated Financial Statements ("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 be also
be obtained upon request to the Company Secretary.
The Financials for the year ended December 31, 2011 have been prepared in accordance with 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.
2011 BUSINESS REVIEW
During 2011 the Company achieved key milestones in relation to the completion of the Karchiga Project
Definitive Feasibility Study, continued to develop the Talas Project, and took proactive steps to improve its
liquidity.
In 2011 the Company undertook an extended drilling program for the Karchiga Project with the aim of increasing
the indicated mineral resource tonnage and indicated copper metal contained estimates, for the sulphide and
oxide mineralization, from the amounts previously reported in the Karchiga Technical Report. In December 2011
the Company announced the successful results of the drilling program in the SRK December 2011 Pit-Constrained
Mineral Resource Estimates which reported a 39% increase in the indicated mineral resource tonnage and a 30%
increase of contained copper metal in the oxide and sulphide mineralization in comparison with the amounts
previously reported in the Karchiga Technical Report.
Using only the indicated mineral resource estimates in the SRK December 2011 Pit-Constrained Mineral Resource
Estimates, in February 2012 the Company announced the successful completion of the Karchiga Definitive
Feasibility Study, a key milestone in the development of Orsu as a Company. The Karchiga Definitive Feasibility
Study supports a total probable mineral reserve estimate of 10 million tonnes of sulphide and oxide ore
containing a total 166.6Kt copper at an overall average grade of 1.67% copper, of which 145.2Kt is amenable to
flotation and 21.4Kt amenable to heap leaching. The key economic indicators of the Karchiga Project show that
with an initial capital expenditure requirement of $115 million based on 100% equity financing and on a copper
price of $3.25/lb, a post tax net present value (or "NPV") of $150 million, an internal rate of return (or
"IRR") of 30% and payback of less than 3 years.
The Company's other major exploration project is the Talas Project, its 60:40 joint venture with Gold Fields.
Work on the Talas Project in 2011 focused on local communities and environmental studies. In addition, an
internal geological and technical review of the Talas Project identified and prioritized several new
exploration targets in the immediate vicinity of the deposit which the Company believes could, subject to
further testing, potentially result in improvements of the metal grades, via in-fill drilling, of the existing
mineral resources at the Taldybulak deposit.
During 2011 the Company took proactive steps to improve its liquidity. The Company received $5.5 million from
Polymetal in final settlement of its outstanding Varvarinskoye Project deferred consideration entitlement.
Furthermore, the Company received $1.3 million in final settlement of its Tasbulat oil royalty interests.
Including the aforementioned receipts, the Company's net cash outflows for the year ended December 31, 2011
were $9.3 million reflecting corporate and exploration expenditures, the Karchiga Acquisition and Orsu's 40%
funding of the Talas Project.
For the year ended December 31, 2011 the Company reported a net loss of $1.8 million, compared with net income
of $5.1 million for 2010. The 2011 loss of $1.8 million was due primarily to a $2.1 million year on year
increase in exploration costs relating to the Karchiga Definitive Feasibility Study and a $0.9 million year on
year increase in administrative expenditure reflecting increased office costs at the Karchiga Project.
In 2011 the Company decided to focus its resources into the development of its remaining exploration
properties, the Karchiga Project and the Talas Project, and as such considered the Akdjol-Tokhtazan Project a
non-core asset which would be made available for sale.
2011 HIGHLIGHTS
=- January 2011 - the Company confirmed that in relation to the
Varvarinskoye Project pursuant to the terms of a sale and purchase
agreement dated June 13, 2009 between the Company and Open Joint Stock
Company Polymetal ("Polymetal") (or the "SPA"), it had earned deferred
consideration for 2010 of $2.7 million and, of this amount, had received
$1.5 million, with the balance of $1.2 million being rolled over and
added (with interest accruing at a rate of 2.8% per annum) to any future
deferred consideration earnings, subject to a maximum total entitlement
of $12 million and a maximum annual payment of $1.5 million.
=- February 2011 - the Company announced the assay results for its 2010
infill drilling programme in the North East lode at its Karchiga
Project. Please see "Operational Review - Karchiga Copper Project,
Kazakhstan" of the Company's MD&A for further information.
=- April 2011 - the Company announced that, pursuant to a sale and purchase
agreement entered into on May 20, 2010 (the "Karchiga SPA"), it had
increased its interest in the Karchiga Project to 94.75% by completing
the acquisition of the remaining 26.1% interest in its indirect
subsidiary, Eildon Enterprises Limited ("Eildon"), which owns 94.75 per
cent of GRK MLD LLC ("GRK"), for cash consideration of $6,187,500 (the
"Karchiga Acquisition").
=- April 2011 - the Company announced that it had received permission from
the Ministry of Industry and New Technologies of the Republic of
Kazakhstan ("MINT") to commence mineral extraction for copper at the
Karchiga Project.
=- April 2011 - the Company announced the results of final metallurgical
test work, which was carried out by the Eastern Research Institute for
Base Metals ("VNIITsvetMet") based in Ust-Kamenogorsk, Kazakhstan, under
the direction of SRK Consulting (UK) Limited ("SRK") as part of the
ongoing definitive feasibility study for the Karchiga Project (the
"Karchiga Definitive Feasibility Study"). Please see "Operational Review
- Karchiga Copper Project, Kazakhstan" of the Company's MD&A for further
information.
=- May 2011 - the Company announced updated pit-constrained mineral
resource estimates for its Karchiga Project, prepared by SRK as part of
the ongoing Karchiga Definitive Feasibility Study (the "SRK May 2011
Pit-Constrained Mineral Resource Estimates"). Please see "Operational
Review - Karchiga Copper Project, Kazakhstan" of the Company's MD&A for
further information.
=- July 2011 - the Company announced the commencement of 1,700m infill
drilling of the central oxide ("Karchiga Central Oxide") and an
additional 2,000m infill drilling of the North East sulphide ("Karchiga
North East Sulphide") as part of the ongoing Karchiga Definitive
Feasibility Study. Please see "Operational Review - Karchiga Copper
Project, Kazakhstan" of the Company's MD&A for further information.
=- July 2011 - the Company announced that it had reached an agreement (the
"Deferred Consideration Agreement") with Polymetal to receive $5.5
million in cash by the end of September 2011 as early and final
settlement of its outstanding deferred consideration entitlement
pursuant to the SPA (see "Derivative Financial Instruments - Deferred
Consideration Income" under Financial Review for further information).
=- September 2011 - the Company announced the on-schedule completion of
1,786m (46 holes) infill drilling of the Karchiga Central Oxide and an
additional 2,278m (26 holes) infill drilling of the Karchiga North East
Sulphide.
=- September 2011 - the Company announced that it had received an aggregate
of $6.83 million in cash, consisting of $5.5 million in cash from
Polymetal pursuant to the Deferred Consideration Agreement and $1.33
million in cash following an agreement between its fifty five per cent
owned subsidiary Lisburne Holdings Limited ("Lisburne") and the Tasbulat
Oil Corporation LLP ("Tasbulat"), Kazakhstan, for the early and final
settlement of Lisburne's oil royalty entitlement pursuant to the oil
royalty agreement dated September 2, 1999 between Lisburne and Tasbulat
(the "Tasbulat Oil Royalty Agreement").
=- September 2011 - the Company announced that it had received all final
assay results from its 2011 infill drilling programme in the Karchiga
Central Oxide and Karchiga North East Sulphide at its Karchiga Project.
Please see "Operational Review - Karchiga Copper Project, Kazakhstan" of
the Company's MD&A for further information.
=- December 2011 - the Company announced an increase in its pit constrained
mineral resource (effective December 8, 2011) for the Karchiga Project
comprising an indicated mineral resource of 10.8Mt of combined sulphide
and oxide mineralisation grading 1.73% Cu for 187,200t (412.7 Mlb) of
contained Cu and an inferred mineral resource of 0.02Mt of sulphide
mineralisation grading 1.28% Cu for 300t (0.7 Mlb) of contained Cu (the
"SRK December 2011 Pit-Constrained Mineral Resource Estimates"). Please
see "Operational Review - Karchiga Copper Project, Kazakhstan" of the
Company's MD&A for further information.
POST YEAR END HIGHLIGHTS
=- February 2012 - the Company announced the positive results of the
Karchiga Definitive Feasibility Study completed by SRK which reported
for the Karchiga Project a total production of 149kt (328 Mlb) of copper
over a mine life of 11.5 years, a post tax NPV of $150 million and an
IRR of 30% based on a 100% equity financing and a copper price of
$3.25/lb Cu. In addition, the Company announced a probable mineral
reserve estimate of 8.5 million tonnes of sulphide ore in the central
and north east pits containing 145,227t (320 Mlb) of copper at an
average grade of 1.71% Cu to be amenable to flotation and additional 1.5
million tonnes of ore in the central pit containing 21,399t (47.2 Mlb)
of copper at an average grade of 1.43% Cu to be amenable to heap
leaching (the "2012 Mineral Reserve Estimates"). Please see "Operational
Review - Karchiga Copper Project, Kazakhstan" for further information.
=- March 2012 - the Company announced the filing of the Karchiga Definitive
Feasibility Study Report.
OPERATIONAL REVIEW
The Company's principal and most advanced exploration project is the property comprising a 47.3km2 licence area
in eastern Kazakhstan containing the Karchiga volcanogenic massive sulphide ("VMS") deposit (the "Karchiga
Project"), which is part of the Rudny Altai polymetallic belt. The Company's other principal exploration asset
is its property in northwest Kyrgyzstan, which is comprised of four licence areas within the Tien Shan gold
belt: the Taldybulak, Barkol, Korgontash and Kentash licences (collectively, the "Talas Project").
The Company's other exploration project is located approximately 100km to the south west of the Talas Project
and is the Akdjol-Tokhtazan licence area comprising the Akdjol and Tokhtazan licences (the "Akdjol-Tokhtazan
Project"). In 2011 the Company decided to focus its resources on the development of its principle exploration
properties, the Karchiga Project and the Talas Project, and as such considered the Akdjol-Tokhtazan Project a
non core asset which would be made available for sale.
KARCHIGA COPPER PROJECT, KAZAKHSTAN
Karchiga Definitive Feasibility Study
In September 2010, the Company commenced the Karchiga Definitive Feasibility Study with a view to potentially
starting construction in the third quarter of 2012. During the process of completing and fulfilling the
requirements of the Karchiga Definitive Feasibility Study the Company undertook associated exploration and test
work programmes which include:
=- In-fill resource drilling program 2010 (details can be viewed in the
Company's MD&A);
=- Metallurgical test work April 2011 (details can be viewed in the
Company's MD&A);
=- SRK May 2011 Pit-Constrained Mineral Resource Estimates (details can be
viewed in the Company's MD&A);
=- SRK December 2011 Pit-Constrained Mineral Resource Estimates (as
described below); and
=- Karchiga Definitive Feasibility Study and the 2012 Mineral Reserve
Estimates (as described below).
In February 2012, SRK completed the Karchiga Definitive Feasibility Study and, in connection therewith, a
complete technical report entitled "Karchiga Feasibility Study, NI43-101 Technical Report", and dated March 28,
2012 was prepared by Michael Beare, Dr Michael Armitage and ms Tracey Laight of SRK (each of whom is a
"qualified person" within the meaning of NI 43-101 and independent of Orsu, (the "Karchiga Definitive
Feasibility Study Report"). A copy of the Karchiga Definitive Feasibility Study Report can be viewed under the
Company's profile on SEDAR at www.sedar.com.
SRK December 2011 Pit-Constrained Mineral Resource Estimates
The SRK December 2011 Pit-Constrained Mineral Resource Estimates have been prepared by SRK in relation to oxide
and sulphide mineralization in both the Central and North East lodes of the Karchiga deposit.
Table 1 presents the SRK December 2011 Pit-Constrained Mineral Resource Estimates which comprise an indicated
mineral resource of 10.8Mt of combined sulphide and oxide mineralization with a mean grade of 1.73% Cu for
187,200t of contained Cu and inferred mineral resources of 0.02Mt of sulphide mineralization grading 1.28% Cu
for 300t of contained Cu. These mineral resources have been constrained by two optimized pits and are reported
at a cut-off grade of 0.3% copper for mineralization considered to be amenable to flotation ("FL") and at a cut-
off grade of 0.7% copper for mineralization considered to be amenable to heap leaching ("HL").
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Table 1: SRK December 2011 Pit-Constrained Mineral Resource Estimate:
Indicated Mineral Resources effective December 8, 2011
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Cut-off Tonnes Grade
Lode Type Cu (%) (Mt) Cu (%)
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Central Oxide HL 0.7 1.5 1.24
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Central Transition HL 0.7 0.1 3.39
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Central Sulphide HL 0.7 0.2 1.72
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Central Total HL 0.7 1.8 1.41
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Central Oxide FL 0.3 0.3 1.15
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Central Transition FL 0.3 0.1 3.19
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Central Sulphide FL 0.3 3.8 1.87
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North East Sulphide FL 0.3 4.9 1.75
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Total FL 0.3 9.1 1.80
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Total All material 10.8 1.73
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Inferred Mineral Resources
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Cut-off Tonnes Grade
Lode Type Cu (%) (Mt) Cu (%)
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North East Sulphide 0.3 0.02 1.28
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Metal Metal Grade Metal Metal
Lode Cu (Kt) Cu (Mlb) Au (g/t) Au (t) Au (koz)
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Central 18.2 40.0 0.06 0.08 2.70
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Central 3.3 7.3 0.06 0.01 0.20
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Central 3.3 7.3 0.14 0.03 0.85
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Central 24.8 54.6 0.07 0.12 3.75
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Central 3.2 7.0 0.11 0.03 1.00
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Central 3.3 7.3 0.06 0.01 0.20
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Central 70.3 154.9 0.13 0.51 16.30
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North East 85.7 188.9 0.21 1.02 32.80
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Total 162.5 358.1 0.17 1.57 50.30
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Total 187.2 412.7 0.16 1.69 54.05
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Inferred Mineral Resources
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Metal Metal Grade Metal Metal
Lode Cu (Kt) Cu (Mlb) Au (g/t) Au (t) Au (Koz)
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North East 0.31 0.67 0.20 0.005 0.15
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(i) Some figures may not sum exactly due to rounding.
The above estimate reflects a 28% increase in the sulphide-hosted indicated mineral resource tonnage, and a 23%
increase in the copper metal contained within this, compared to the SRK May 2011 Pit-Constrained Mineral
Resource Estimates. This has been achieved not only through the upgrading of practically all previously
reported inferred mineral resources to the indicated category, but also through the addition of 0.8 Mt of
sulphide mineralization in the North East which had not previously been delineated. The most significant
difference, however, is the increase in the oxide mineral resource. Specifically SRK reported a 137% increase
in tonnage and a 109% increase in contained copper metal in comparison with the WAl 2010 Estimate.
As part of its work, SRK produced updated geological models for both the Central and North East lodes primarily
based on a geological cut-off of 0.1% Cu and capped high grades where it considered this to be appropriate
based on a statistical analysis of the available assay results.
SRK also remodeled the footwall of the oxide mineralization and in addition to this has modeled a transition
zone between the sulphide and oxide mineralization based on an updated drill hole database and acid solubility
data. Notwithstanding this, the resulting mineral resource estimate has been reported using a 40% acid
solubility threshold which assumes that material which has an acid solubility greater than 40% will be
processed using heap leaching and that which has an acid solubility of less than 40% will be processed in the
flotation concentrator.
A total of four domains have been modeled in the Central lode, and two in the North East lode. 3D wireframes
were created from 2D sections which were spaced at a 25m interval in the Central and North East lodes. No more
than 2m of waste was included in the 2D sections used to produce the 3D wireframes. SRK and Orsu previously
interpreted four post-mineralization faults which strike across the deposit but only one of these is now
thought to have an effect on the mineralization, offsetting it in the northern portion of the Central lode by
some 120m. Further, drilling information does not suggest that the mineralization is terminated by these faults
as previously thought.
All other methodologies behind the SRK December 2011 Pit-Constrained Mineral Resource Estimates remained
generally the same as in May 2011, except that 2011 drilling data was also used to enable separate density
regression plots to be established for the sulphide mineralization in the Central and North East lodes.
Table 2 shows the pit optimization parameters that were used to define a pit outline which was then used to
constrain the SRK December 2011 Pit-Constrained Mineral Resource Estimates to material with reasonable
prospects for economic extraction. The slope angle parameters are the result of the geotechnical study
undertaken by SRK. The Mining, Processing, and Operating Cost and the NSR parameters were derived based on the
then on-going technical work as part of the Karchiga Definitive Feasibility Study by SRK. A long term price of
$3.25/lb Cu was assumed based on market consensus forecasts, previously a price of $3.00/lb Cu had been used by
SRK in May 2011 and in the Karchiga Scoping Study.
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Table 2: Pit Optimization Parameters Value
Parameter
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Overall slope angle
Central Pit:
Hanging Wall
Footwall 49 degrees
North East Pit: 47 degrees
Hanging Wall 51 degrees
Footwall 45 degrees
Northern Wall 47 degrees
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Mining & Processing
Mining Recovery 95.0%
Mining Dilution 5.0%
Fresh Cu Processing Recovery 94.00%
Oxide Cu Processing Recovery 55.00%
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Costs
Mining Cost
Ore $1.80/t
Oxide $1.30/t
Waste $1.60/t
Fresh Processing Cost $9.00/t ore
Oxide Processing Cost $22.57/t ore
General & Administrative Cost $5.00/t ore
Royalty 5.7% of RoM Metal Value (above 0.7%
Cu head grade)
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Price
Cu Selling Price 7,163 $/t Cu (3.25 $/lb)
NSR 83%
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Quality Assurance / Quality Control
The above mineral resource estimates were based on historical drilling performed in Soviet times as well as
drilling undertaken by Orsu since 2007, including in-fill drilling completed in 2011 as disclosed above. Assays
for the 2011 in-fill drilling program were completed for Cu, Zn, Pb, and Au in the laboratory of the Eastern
Institute for Base Metals, based in Ust-Kamenogorsk, Eastern Kazakhstan, which is independent from Orsu and
SRK. Standard, blank, and duplicate samples were inserted after approximately every twenty ordinary core
samples. The ordinary half core samples were taken from visually mineralized intervals and 5 m of visually
unmineralised material below and above the mineralized intervals. The remaining half core samples are stored at
the Orsu facility in Ust-Kamenogorsk, Kazakhstan. The SRK December 2011 Pit-Constrained Mineral Resource
Estimates used all data available at the end October 2011.
Comparison with Previous Estimates
Table 3 shows a comparison between the SRK December 2011 Pit-Constrained Mineral Resource Estimates and the SRK
May 2011 Pit-Constrained Mineral Resource Estimates and the WAI 2010 Estimate.
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Table 3: Comparison of Pit-Constrained Mineral Resource Estimates for
Karchiga Project Indicated Mineral Resources
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Estimate Cut-off Lode Type Tonnes Grade Metal Metal
Cu (%) (Mt) Cu (%) Cu (Kt) Cu (Mlb)
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SRK May 2011 0.3 Central & Sulphide 7.1 1.85 131.86 290.69
North East
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SRK December 0.3 Central & FL 9.1 1.80 162.5 358.1
2011 North East
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Variance, % 28.17 -2.70 23.24 23.24
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WAI 2010 0.7 Central Oxide 0.76 1.57 11.89 29.9
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SRK December 0.7 Central HL 1.8 1.41 24.8 54.6
2011
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Variance, % 136.84 -10.19 108.58 108.58
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Inferred Mineral Resources
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Estimate Cut-off Lode Type Tonnes Grade Metal Metal
Cu (%) (Mt) Cu (%) Cu (t) Cu (Mlb)
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SRK May 2011 0.3 North East Sulphide 1.2 1.68 19,849 43.8
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SRK December 0.3 North East Sulphide 0.02 1.28 300 0.7
2011
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Variance, % -98.33 -23.81 -98.45 -98.40
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(i) Some figures may not sum exactly due to rounding. All HL and FL
recoverable material is reported here with oxide and sulphide resources,
respectively, for comparison purposes.
Karchiga Definitive Feasibility Study
Using only the indicated mineral resource estimates forming part of the SRK December 2011 Pit-Constrained
Mineral Resource Estimates, the Karchiga Definitive Feasibility Study Report supports a probable mineral
reserve estimate of 8.5 million tonnes of sulphide ore in the Central and North East pits containing 145,227t
(320 Mlb) of copper at an average grade of 1.71% Cu to be amenable to FL and additional 1.5 million tonnes of
ore in the Central pit containing 21,399t (47.2 Mlb) of copper at an average grade of 1.43% Cu to be amenable
to HL.
Table 4. Probable Mineral Reserves Estimates as of February 18, 2012
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Orebody Ore Type Tonnes Cu % Au g/t Cu Metal Cu Metal Au Metal
(Mt) (kt) (Mlb) (Koz)
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Central HL 1.5 1.43 0.06 21.4 47.2 3.0
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Central FL 3.8 1.78 0.12 68.2 150.2 15.2
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North East FL 4.7 1.64 0.18 77.0 169.8 27.4
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Total 10.0 1.67 0.14 166.6 367.2 45.6
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All figures are on a 100% ownership basis
Pit designs and the final National Instrument 43-101 mineral reserve estimates dated February 18, 2012 were
completed using two types of software; Whittle 4X optimisation software was used to generate optimal pit shells
which were designed in detail using Vulcan software.
Key optimisation parameters are presented in Table 5 below.
Table 5. Whittle Input Parameters
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OVERALL SLOPE ANGLES PARAMETER
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CENTRAL PIT
HANGING WALL 49 degrees
FOOTWALL 47 degrees
NORTH-EASTERN PIT
HANGING WALL 51 degrees
FOOTWALL 45 degrees
NORTHERN WALL 47 degrees
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MINING & PROCESSING
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MINING RECOVERY 95%
MINING DILUTION 5%
FRESH CU PROCESSING RECOVERY 94.0%
OXIDE CU PROCESSING RECOVERY 55.0%
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COSTS
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MINING COST
ORE 1.80 $/t
OXIDE 1.30 $/t
WASTE 1.60 $/t
FRESH PROCESSING COST 9.00 $/t ore
OXIDE PROCESSING COST 22.57 $/t ore
GENERAL & ADMINISTRATIVE COST 5.00 $/t ore
ROYALTY 5.7% of RoM Metal Value (above 0.7%
Cu head grade)
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PRICE
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CU SELLING PRICE 6,600 $/t Cu
NSR 83% (For Fresh Rock only)
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Capital Expenditure
The estimated total project capital expenditure ("CAPEX") over the mine life of $147 million, including the
solvent extraction with electro winning ("SXEW") plant to treat the oxide ores, is made up as follows:
=- $21.5 million for mining equipment
=- $40.1 million for copper in concentrate processing plant and equipment
=- $26.3 million for SXEW plant
=- $21.7 million for mine site facilities and infrastructure
=- $26.3 million for sustaining capital & closure costs
=- $11.3 million for contingency
The estimated initial CAPEX is $115 million, which excludes the SXEW plant, sustaining capital & closure costs
but includes pre-production development costs.
The initial Capital Expenditure estimate is comparable to the initial capital cost estimate of $100 million
contained in the Karchiga Scoping Study. The Company estimates that a 12 to 15 month period is sufficient for
the construction of the processing facilities and pre-production development at the Karchiga Project.
Mine Plan
The open pit mining schedule produced by SRK calculated a producing mine life of 11.5 years. The mining
schedule envisages the mining of 10 Mt of sulphide and oxide ore and 124 Mt of waste with a stripping ratio of
1:12.4 over the mine life. The average mining rate of the operation is 750kt per annum.
For the first 2.25 years of the mine life, the mining schedule includes open pit mining of the Central sulphide
ore body alone in order to maximise the sulphide copper grade and hence sulphide copper recovery. The optimised
mine schedule has been developed to minimise the stripping ratio in the initial three years of the mine life.
In addition, the use of stockpiling has enabled the Company to increase the processed ore grade. From Year 4
until Year 7, sulphide ore will be mined from both the Central and North East open pits. From Year 8 until the
end of mine life in Year 12, all mining will continue in the North East pit.
The average mining cost over the mine life is $1.7 per tonne of material moved.
Processing Plan and Economic Model
The plant is designed to process approximately 750,000 tonnes per annum of sulphide ore. A conventional
processing route was chosen using relatively fine grinding and selective sulphide flotation to produce a 27.9%
bulk concentrate. The first production has been scheduled for the fourth quarter of 2013 through to final
production in 2025.
Copper from the oxide ore will be extracted using SXEW process. The oxides will be treated over a period of 4.5
years starting in 2018 at an annual production rate of 360,000 tonnes and is expected to produce an average of
2.8kt (6.22Mlb) of copper cathode per annum over that period. Production of cathode copper will continue until
2022.
In order to reduce the initial Capital Expenditure, the SXEW plant construction has been delayed until after
the initial Capital Expenditure payback period (which is anticipated to be 2.75 years). The plant has been
designed to treat an average of 30,000 tonnes of leachable oxide ore per month.
The results of the Karchiga Definitive Feasibility Study demonstrate that economically the best option is to
delay the SXEW construction until 2017, allowing the cost of construction to be financed from the revenue
generated by the sulphide ore treatment.
The project key performance indicators are shown in Table 6 below.
Table 6. Key Performance Indicators
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Parameter Units Key Performance Indicator
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Average annual mining rate Tonnes 750,000
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Average mining cost $/t of ore 22.99
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Annual processing rate (FL) Tonnes 750,000
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Mine life (FL) Years 11.5
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Processing cost (FL) $/t of ore 8.91
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Metallurgical recovery (FL) % 93.4
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Average annual copper production,
over 11.5 years (FL) '000 tonnes 11.82
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Average annual copper production
(FL) Mlb 26.1
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Annual processing rate (HL) Tonnes 360,000
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Mine life (HL) Years 4.5
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Processing cost (HL) $/t of ore 18.7
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Metallurgical recovery (HL) % 61.1
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Average annual copper production,
over 4.5 years (HL) '000 tonnes 2.8
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Average annual copper production
(HL) Mlb 6.2
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Cash operating cost over the mine
life (pre tax) $/lb Cu 1.47
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The mine is expected to produce a total of 149kt (328 Mlb) of payable copper, with an average of 12,957t (28.57
Mlb) of copper production per annum.
The Karchiga Project site is located 10 km from the main road and a 110 kV national power grid and is expected
to be connected to the same as part of construction. An adequate supply of water can be sourced from the River
Kalzhir as well as from aquifers in the immediate vicinity of the designed project facilities.
The project key economic indicators are shown in Table 7 below.
Table 7. Key Economic Indicators
=---------------------------------------------------------------------------
Parameter Units Key Economic Indicator
=---------------------------------------------------------------------------
Total project CAPEX $m 147
=---------------------------------------------------------------------------
Initial CAPEX $m 115
=---------------------------------------------------------------------------
Total Net Smelter Revenue $m 971
=---------------------------------------------------------------------------
Sulphide and Oxide Case @ $3.25/lb Cu:
- Post-Tax NPV7.5 $m 150
- Post-Tax IRR % 30
- Payback period Years 2.75
=---------------------------------------------------------------------------
Sulphide and Oxide Case @ $3.00/lb Cu:
- Post-Tax NPV7.5 $m 113
- Post-Tax IRR % 25
- Payback period Years 3.0
=---------------------------------------------------------------------------
All figures are on a 100% ownership basis
The ESIA for the Karchiga Project was successfully completed by WAI on January 31, 2012. The Company expects to
receive the necessary construction permitting approvals from the Kazakh authorities by the end of the second
quarter of 2012.
Karchiga Definitive Feasibility Study Expenditure
The Company originally estimated expenditure on the Karchiga Definitive Feasibility Study of $6.6 million, but
due to increased resource drilling work covering the additional oxide and sulphide drilling programme mentioned
above, the Company now expects to incur expenditure of $9.2 million, which it expects to fund from its
available cash. As at December 31, 2011, the Company had incurred expenditure of $8.0 million relating to the
Karchiga Definitive Feasibility Study since August 2010.
Other matters
Two key issues which the Company is currently reviewing separately to the Karchiga Definitive Feasibility Study
are the use of high quality equipment sourced from the People's Republic of China (or "China") in order to
minimise the project capital costs and identify potential off-takers for the copper concentrate in both China
and Kazakhstan. The Karchiga Project is favourably located approximately 220 km south east of the regional
centre, Ust-Kamenogorsk, and approximately 40 km from the Chinese border to the east. The nearest copper mining
operation in China at the Ashele VMS deposit, containing 1Mt of copper, is located approximately 85 km east-
southeast from the Karchiga deposit.
TALAS COPPER-GOLD-MOLYBDENUM PROJECT, KYRGYZSTAN
2011 Exploration Programme
In January 2011, the Kyrgyz Government reviewed all exploration licences in the country to improve transparency
and accountability in natural resource exploration, which led to a temporary suspension of all exploration
activities in the country. The Ministry of Natural Resources of the Kyrgyz Republic reviewed the Talas Project
on 24 April 2011 and recognised that TCG had fully complied with all licence requirements and approved the
TCG's request for a three month suspension of the 2011 exploration requirements to allow TCG time to win
support from the local communities for the Talas Joint Venture's long term exploration goals and undertake
environmental studies.
In May 2011, Gold Fields and Orsu completed an internal geological and technical review of the Talas Project,
which identified and prioritized several new exploration targets in the immediate vicinity of the deposit
(falling within a three kilometre radius as well as at deeper levels of the deposit itself). The Company
believes that the testing of these targets could potentially further enlarge the mineral endowment of the
Taldybulak mineral resources and that there could be further improvements in metal grades via in-fill drilling
of the existing resources at the Taldybulak deposit.
From August to September 2011, TCG renewed its exploration activity and collected 864 Mobile Metal Ion ("MMI")
samples and completed 54km of a high resolution ground magnetic survey programme. The samples were sent to SGS
Australia Pty Limited in Perth, Australia (which is independent of Orsu) for analysis and conceptual targets
were outlined. The previously planned infill drilling programme of 6,000m for 2011 has been postponed until the
second quarter of 2012.
In October 2011, Orsu and Gold Fields decided to undertake a complete review of the previously reported mineral
resource estimates for Taldybulak. This included partial reclogging of the Taldybulak drill core. In total,
approximately 11,000 m of core out of total 30,000 m core drilled since 2005 was reclogged by Orsu and TCG in
November 2011. The principal goal of this study was to identify additional geological controls of copper,
molybdenum and gold mineralization. Primary attention was paid to the identification of porphyry phases and
alteration, particularly potassic alteration, which usually controls higher grades of copper.
By the end of December 2011, Orsu had produced all necessary geological data in order to proceed with an
updated mineral resource estimate for Taldybulak. It is expected that Gold Fields will complete a study in the
second quarter of 2012 and which will result in updated mineral resource estimates for Taldybulak.
For the Talas Project, the Company contributed $838,000 of its 40% share of expenditure in 2011 ($951,000 for
2010). The majority of the 2011 licence expenditures were incurred in connection with environmental, social,
metallurgical and resource studies, as well as a ground magnetic survey at the Taldybulak licence. For 2012
Orsu and Gold Fields have agreed a budget of $0.6 million of which Orsu's 40% share will be $0.2 million.
AKDJOL-TOKHTAZAN PROJECT, KYRGYZSTAN
2011 update
In July 2011, the Company initiated a ground magnetic survey programme at the Akdjol-Tokhtazan Project. The
programme is designed to complete mapping of the magnetic anomalies in both the Akdjol and Tokhtazan licenses.
In September 2011, the Company received preliminary results of the ground magnetic survey, which are currently
being processed. The results are expected to help in interpretation of structural controls of gold
mineralisation in the project area.
In 2011 the Company decided to focus its resources on the development of its principle exploration properties,
the Karchiga Project and the Talas Project, and as such considered the Akdjol-Tokhtazan Project a non core
asset which would be made available for sale.
FINANCIAL RESULTS FOR THE YEAR ENDED DECEMBER 31, 2011
For the year ended December 31, 2011 the Company reported an IFRS net loss of $1.8 million.
The 2011 net loss of $1.8 million consisted of: administrative costs of $3.8 million, legal and professional
costs of $1.3 million, exploration costs of $5.0 million, a stock-based compensation charge of $0.7 million,
the Company's share of the Talas Joint Venture losses of $0.9 and impairment losses of $0.3 million for an
asset held for sale. These losses were partially offset by unrealized derivative gains of $6.2 million, a net
gain on the settlement of the Company's oil interests of $2.0 million, deferred consideration income of $1.9
million and interest income of $0.1 million.
As at December 31, 2011 the Company had net assets of $32.1 million ($40.4 million as at December 31, 2010) of
which $10.3 million was cash and cash equivalents compared to $19.6 million as at December 31, 2010
representing a decrease of $9.3 million in cash can cash equivalents. The decrease in cash and cash equivalents
was due primarily to corporate and exploration expenditure of $10.8 million, the Karchiga Acquisition of $6.2
million and Orsu's 40% funding of the Talas Joint Venture of $0.8 million partially offset by deferred
consideration receipts of $7.0 million (see note "Derivative financial instruments - Deferred consideration
income" below) and royalty income from the Company's oil interest of $1.6 million (see "Net investment in oil
interests" below).
In 2011 the Company decided to make its Akdjol-Tokhtazan Project available for sale, subject to standard
conditions of sale (see note on "Asset held for sale" below) and recognised an impairment loss of $0.3 million
for the year ended December 31, 2011 for the fair value of the assets held for sale. Under IFRS 5, "Non-current
assets held for sale and discontinued operations", the Company has disclosed the assets and liabilities,
measured at fair value less costs to sell, on the balance sheet and in the notes net losses of the Akdjol-
Tokhtazan Project as "Asset Held for Sale".
FINANCIAL POSITION AS AT DECEMBER 31, 2011 AND DECEMBER 31, 2010
As at December 31, 2011, the Company's net assets were $32.1 million, compared with $40.4 million as at
December 31, 2010, of which $10.3 million consisted of cash and cash equivalents ($19.6 million as at December
31, 2010).
The decrease of $8.3 million was due to the payment of $6.2 million for the Karchiga Acquisition, the Company's
40% share of losses in the Talas Joint Venture of $0.9 million and corporate and exploration expenditure of
$10.6 million partially offset by a $6.2 million decrease in derivative warrant liabilities, deferred
consideration income of $1.9 million and income relating to the Tasbulat Oil Royalty Agreement of $1.3 million.
In accordance with IAS 27, the Company has accounted for the Karchiga Acquisition as a change in a non-
controlling interest and as such has attributed the cost, $6,187,500, to the shareholders of the Company (see
"Consolidated Statements of Changes in Equity" of the Company's audited financial statements as at December 31,
2011).
A summary of the carrying value of the Company's equity investment in the Talas Joint Venture as at December
31, 2011 is set out below:
$000
Fair value of equity investment as at January 1, 2011 10,221
Funding provided by the Company during year 838
Less: Company's 40% share of operating losses for the year (948)
------------
Fair value of equity investment as at December 31, 2011 10,111
------------
------------
ASSET HELD FOR SALE
The exploration license area for the Akdjol-Tokhtazan Project is located in the Jalal-Abad Oblast, western
Kyrgyzstan and comprises the Akdjol license and Tokhtazan license. During 2010, the company identified the
Akdjol license area as a gold-silver epithermal prospect and the Tokhtazan license area as a gold prospect. The
Akdjol and Tokhtazan licenses expire on December 31, 2012.
In 2011 the Company decided to focus its resources on the development of its principal exploration and
development projects, the Karchiga Project and the Talas Project and as such considered the Akdjol-Tokhtazan
Project a non core asset which would be made available for sale.
Under IFRS 5, "Non-current assets held for sale and discontinued operations", the Company classified the assets
and liabilities related to the Akdjol-Tokhtazan Project (the disposal group) as held for sale on the balance
sheet as at December 31, 2011 and anticipates that after negotiations with potential buyers, a disposal of the
Akdjol-Tokhtazan Project will be completed before the expiry of the licences.
The Company derived a fair value, less costs to sell, for the Akdjol-Tokhtazan Project and as a result, an
impairment loss of $331,000 was recognized on initial classification of the disposal group as held for sale in
the consolidated statement of net loss and comprehensive loss for the year ended December 31, 2011. The amount
of comprehensive loss attributable to non controlling interests in relation to the losses incurred by the
disposal group in the period ended December 31, 2011 is nil.
NET INVESTMENT IN OIL INTERESTS
Pursuant to the terms of the Tasbulat Oil Royalty Agreement the Company had an entitlement to a 1% gross
overriding royalty (based on gross sales proceeds less certain sales related costs and taxes) which would be
payable to the Company from all oil produced from Tasbulat exceeding 2.0 million barrels of oil equivalent. As
at December 31, 2010 the Company had a net outstanding oil interest in Tasbulat of $392,000 recorded as a long
term other asset. In the first quarter of 2011, the Company received net income of $0.3 million in relation to
its 2010 oil interest entitlement. Thereafter, in September 2011, the Company received a total of $2.4 million
cash in early and final settlement of all its outstanding oil interests in the Tasbulat Oil Royalty Agreement.
The Company netted off the $2.4 million against the $392,000 long term other asset, as mentioned above, and as
a result recognised a gain on settlement as other income of $2.0 million for the year ended December 31, 2011.
The $2.4 million total cash received by the Company was reduced to $1.3 million after the payment of $1.1
million to the non controlling interests of Tasbulat (see Consolidated statements of changes in equity of the
Company's financial statements).
LIQUIDITY AND CAPITAL RESOURCES
As at December 31, 2011 the Company's main source of liquidity was unrestricted cash of $10.3 million, compared
with $19.6 million as at December 31, 2010.
The Company measures its consolidated working capital as comprising free cash, accounts receivable, prepayments
and other receivables, less accounts payable and accrued liabilities. As at December 31, 2011, the Company's
consolidated working capital was $11.5 million (compared with a consolidated working capital of $21.5 million
as at December 31, 2010).
The Company's working capital needs as at December 31, 2011 included the maintenance of the Company's interests
in, and the further exploration and development of, the Company's mineral properties in Kyrgyzstan, the
completion of the Karchiga Definitive Feasibility Study and the funding of general corporate, legal and
professional expenses. The Company expects to fund its working capital requirements for 2012, other than as set
out below, and be able to contribute towards the pursuit of future growth opportunities (which may include
acquiring one or more additional assets), if and when such opportunities arise, from its unrestricted cash of
$10.3 million as at December 31, 2011. In the Company's view, the consolidated working capital as at December
31, 2011 is sufficient to satisfy its working capital needs, other than as described below, for at least the
next twelve months.
The construction of mining facilities and commencement of mining operations at the Karchiga Project, if any,
will require an estimated initial capital expenditure of $115 million (see "Operational review - Karchiga
copper project, Kazakhstan" of the Company's MD&A) for which the Company will be required to raise additional
financing in the future. The Company is currently in discussions with potential lenders to raise debt financing
but will also need to raise financing from other sources, which may include equity financing and/ or the sale
of the Akdjol-Tokhtazan Project. Whilst the Company has been successful in raising debt and equity financing in
the past, the Company's ability to raise additional debt and equity financing may be affected by numerous
factors beyond the Company's control, including, but not limited to, adverse market conditions and/or commodity
price changes and economic downturn and those other factors that are listed under "Risks and Uncertainties"
section of the Company's MD&A.
CONVERSION TO IFRS FROM CANADIAN GAAP
Effective January 1, 2011, the Canadian Accounting Standards Board required all publicly listed companies to
prepare their financial statements in accordance with IFRS from the previous Canadian Generally Accepted
Accounting Principles ("Canadian GAAP"). The Company has prepared in the financial statements as at December
31, 2011 a restated consolidated balance sheet as at December 31, 2010, and statements of net income and
comprehensive income for the year ended December 31, 2010 (details can be found in note 6. "Transition to IFRS"
of the Company's consolidated financial statements as at December 31, 2011).
Impact on the consolidated balance sheet and equity
The following table summarises the impact of conversion to IFRS on the Company's consolidated equity, as
previously reported under Canadian GAAP for the year ended December 31, 2010:
2010
$000
Equity as previously reported under Canadian GAAP as at
January 1, 2010 24,833
-------------
Reclassification of share purchase warrants to derivative
liabilities (42,041)
Expense of share issue costs prior to January 1, 2009 (4,598)
Re-measurement of fair value of derivative warrant
liabilities 35,411
-------------
Re-stated Equity under IFRS as at January 1, 2010 13,605
-------------
Share issue (net of share issue and broker warrant issue
costs) 18,705
Share purchase warrants issued 1,131
Share based payments 1,817
Net loss as previously reported under Canadian GAAP for the
period (4,622)
Re-measurement of fair value of derivative warrant
liabilities in period 11,184
Expense of share issue costs from 2010 (793)
Reversal of future income tax adjustments (639)
-------------
Equity under IFRS 40,388
-------------
-------------
Details and further discussion of the impact of the significant accounting policy changes on transition to IFRS
can be found both in the Company's MD&A under "Financial Review - Conversion to IFRS from Canadian GAAP"" and
the Company's consolidated financial statements note 6. "Transition to IFRS" as at December 31, 2011.
DERIVATIVE FINANCIAL INSTRUMENTS
The Company's derivative instruments as at December 31, 2011 consist of derivative assets in the form of
deferred consideration relating to the sale of the Varvarinskoye Project and derivative warrant liabilities in
relation to its share purchase warrants.
Deferred consideration income
On October 30, 2009, the Company completed the sale of its Varvarinskoye Project to Polymetal for an initial
consideration of $8 million with deferred consideration of up to $12 million and, as a result, the Company was
released from all of its financial and guarantor obligations relating to the Varvarinskoye Project.
As at December 31, 2010, the Company recognized a deferred consideration receivable asset of $5.1 million,
representing the net present value of the Company's estimated future deferred consideration earnings, based
upon the Company's forecast of future gold and copper metal prices and adjusted for counterparty credit risk.
For the year ended December 31, 2011 the Company received total cash of $7.0 million relating to deferred
consideration for the Varvarinskoye Project. In January 2011 the Company received, pursuant to the terms of the
SPA, $1.5 million of deferred consideration entitlement in relation to earnings for 2010. Thereafter in July
2011, the Company entered into the Deferred Consideration Agreement with Polymetal to receive $5.5 million as
early and final settlement of its outstanding deferred consideration entitlement pursuant to the SPA relating
to the sale of the Varvarinskoye Project. The Company received $5.5 million in September 2011, and as a result
recorded net deferred consideration income of $1.9 million for the year ended December 31, 2011.
Derivative warrant liabilities
In prior years the Company has issued listed share purchase warrants in conjunction with public offerings for
the purchase of common shares of the Company. These share purchase warrants were issued with an exercise price
in Canadian dollars, rather than U.S. dollars (the Presentational and Functional Currency (as defined in
"Critical accounting policies and estimates" in the Company's MD&A) of the Company), were only issued to
participants in these public share offerings, are not able to be tracked by the Company and are transferable by
the warrant holder. Such share purchase warrants are considered to be derivative instruments and the Company is
required to re-measure the fair value of these at the reporting date. The fair value of these listed share
purchase warrants are re-measured at each balance sheet date using the Black Scholes model using the exchange
rates at the balance sheet date and measured over their remaining life. Adjustments to the fair value of the
share purchase warrants as at the balance sheet date are recorded to the income statement. Share purchase
warrants that have expired or have been forfeited are adjusted to the net income statement. As at December 31,
2011 the Company calculated a fair value for its warrant derivative liabilities of nil ($6.2 million as at
December 31, 2010).
Consolidated Statements of Net (loss)/ income, and Comprehensive (loss)/
income
For the years ended December 31, 2011 and December 31, 2010
(Prepared in accordance with IFRS)
=---------------------------------------------------------------------------
2011 2010
$000 $000
(Expenses)/ income
Administration (3,746) (2,910)
Legal and professional (1,328) (2,429)
Exploration (4,991) (2,907)
Stock based compensation (701) (1,785)
Stock based compensation - non employees (36) (32)
Derivative gains 6,246 11,184
Foreign exchange gains/ (losses) 49 (229)
Impairment loss on asset held for sale (331) -
--------- ---------
Net (loss)/ income from continuing operations (4,838) 892
Deferred consideration income 1,908 5,092
Net gain on settlement of oil interests 2,028 -
Company's share of Talas Joint Venture losses (948) (970)
Finance income 62 116
--------- ---------
Net (loss)/ income for the year before income tax (1,788) 5,130
Income tax - -
--------- ---------
Net (loss)/ income and comprehensive (loss)/ income for
the year (1,788) 5,130
--------- ---------
--------- ---------
Net (losses)/ income attributable to:
Shareholders of the Company (2,458) 5,903
Non-controlling interest 670 (773)
--------- ---------
(1,788) 5,130
--------- ---------
--------- ---------
(Loss)/ earnings per share
Basic $(0.01) $0.04
Diluted $(0.01) $0.04
Weighted average number of common shares (in thousands) 157,696 125,170
Consolidated Balance Sheets
(Prepared in accordance with IFRS)
=---------------------------------------------------------------------------
December 31 December 31 January 1
2011 2010 2010
Assets $000 $000 $000
Current assets
Cash and cash equivalents 10,319 19,596 3,386
Current deferred consideration
receivable - 1,500 -
Prepaid and receivables 1,394 1,217 1,860
Assets classified as held for sale 6,116 - -
------------------------------------
17,829 22,313 5,246
Non-current assets
Deferred consideration receivable - 3,592 -
Exploration properties 4,404 10,458 20,321
Property, plant and equipment 353 449 1,078
Equity investment in Talas Joint
Venture 10,111 10,221 -
Other assets - 392 643
------------------------------------
14,868 25,112 22,042
------------------------------------
Total assets 32,697 47,425 27,288
------------------------------------
------------------------------------
Liabilities
Current liabilities
Accounts payable and accrued
liabilities 448 672 1,941
Current portion of derivative warrant
liabilities - - 2,676
Liabilities classified as held for sale 66 - -
------------------------------------
514 672 4,617
Non-current liabilities
Derivative warrant liabilities - 6,245 8,552
Other liabilities 120 120 514
------------------------------------
634 7,037 13,683
Equity
Share capital 380,145 380,145 361,440
Share purchase warrants 1,131 4,897 6,609
Share purchase options 6,062 5,904 12,550
Contributed surplus 26,828 22,483 11,177
Non-controlling interest (254) (773) -
Deficit (381,849) (372,268) (378,171)
------------------------------------
32,063 40,388 13,605
------------------------------------
Total equity and liabilities 32,697 47,425 27,288
------------------------------------
------------------------------------
Consolidated Statements of Cash Flows
For the years ended December 31, 2011 and December 31, 2010
(Prepared in accordance with IFRS)
=---------------------------------------------------------------------------
2011 2010
$000 $000
Cash flows from operating activities
Net (loss)/ income for the year (1,788) 5,130
Items not affecting cash:
Company share of Talas Joint Venture losses 948 970
Gain on settlement of oil interests (2,028) -
Depreciation and amortization 123 148
Deferred consideration (1,908) (5,092)
Impairment of mineral properties 331 -
Share-based payments 737 1,817
Foreign exchange losses/ (gains) 23 47
Derivative gains (6,246) (11,184)
----------------------
(9,808) (8,164)
Changes in non-cash working capital
Accounts receivable and other assets (758) (119)
Accounts payable and accrued liabilities (171) (784)
----------------------
Net cash used by the operating activities (10,737) (9,067)
Cash flows from/ (used by) investing activities
Expenditures on property, plant and equipment (74) (50)
Proceeds from settlement of oil interests 2,668 241
Deferred consideration received 7,000 -
Funding of investment in Talas Joint Venture (838) (951)
Acquisition of Eildon minority interest (6,188) -
----------------------
Net cash generated from/ (used by) investing 2,568 (760)
activities
Cash flows (used by)/ from financing activities
Gross proceeds of share issue - 27,646
Share issue costs - (1,609)
Distribution to non-controlling interest (1,086) -
----------------------
Cash flows (used by)/ from financing activities (1,086) 26,037
----------------------
Net (decrease)/ increase in cash and cash equivalents (9,255) 16,210
----------------------
Cash and cash equivalents - Beginning of the year 19,596 3,386
----------------------
Cash and cash equivalents - End of the year 10,341 19,596
----------------------
----------------------
Cash and cash equivalents per the consolidated 10,319 19,596
balance sheet
Included in the assets held for sale 22 -
Consolidated Statements of changes in Equity
For the years ended December 31, 2011 and December 31, 2010
(Prepared in accordance with IFRS)
=---------------------------------------------------------------------------
Consolidated statements of changes to equity as at December 31, 2010 and
December 31, 2011:
Share capital
---------------------
Share Share
Number of Share purchase purchase
shares capital warrants options
(000s') $000 $000 $000
--------------------------------------------
Balance as at January 1, 2010 45,696 361,440 6,609 12,550
Share issue 112,000 21,445 - -
Share issue costs - (1,862) - -
Broker Warrant issue costs - (878) - -
Share-based payments - - - 1,817
Share purchase warrants issued - - 1,131 -
Share purchase warrants lapsed - - (2,843) -
Share options forfeited or
lapsed - - - (8,463)
Net income/ (loss) for the year - - - -
--------------------------------------------
Balance as at December 31, 2010 157,696 380,145 4,897 5,904
--------------------------------------------
--------------------------------------------
Share-based payments - - - 737
Share options forfeited or
lapsed - - - (579)
Share purchase warrants lapsed - - (3,766) -
Eildon minority interest
acquisition - - - -
Distribution to non-controlling
interest - - - -
Net loss for the year - - - -
--------------------------------------------
Balance as at December 31, 2011 157,696 380,145 1,131 6,062
--------------------------------------------
--------------------------------------------
Consolidated Statements of changes in Equity
For the years ended December 31, 2011 and December 31, 2010
(Prepared in accordance with IFRS)
=---------------------------------------------------------------------------
Consolidated statements of changes to equity as at December 31, 2010 and
December 31, 2011:
Contri- Non-
buted controlling Total
surplus interest Deficit equity
$000 $000 $000 $000
--------------------------------------------
Balance as at January 1, 2010 11,177 - (378,171) 13,605
Share issue - - - 21,445
Share issue costs - - - (1,862)
Broker Warrant issue costs - - - (878)
Share-based payments - - - 1,817
Share purchase warrants issued - - - 1,131
Share purchase warrants lapsed 2,843 - - -
Share options forfeited or
lapsed 8,463 - - -
Net income/ (loss) for the year - (773) 5,903 5,130
--------------------------------------------
Balance as at December 31, 2010 22,483 (773) (372,268) 40,388
--------------------------------------------
--------------------------------------------
Share-based payments - - - 737
Share options forfeited or
lapsed 579 - - -
Share purchase warrants lapsed 3,766 - - -
Eildon minority interest
acquisition - 935 (7,123) (6,188)
Distribution to non-controlling
interest - (1,086) - (1,086)
Net loss for the year - 670 (2,458) (1,788)
--------------------------------------------
Balance as at December 31, 2011 26,828 (254) (381,849) 32,063
--------------------------------------------
--------------------------------------------
FORWARD-LOOKING INFORMATION
This press release and along with the Company's MD&A contains or refers to forward-looking information. All
information, other than information regarding historical fact that addresses activities, events or developments
that the Company believes, expects or anticipates will or may occur in the future is forward-looking
information. Such forward-looking information includes, without limitation, statements relating to: the
continued and future maintenance, exploration and development of the Company's properties, including the
proposed work programs, and the timing related thereto; development and operational plans and objectives,
including the Company's expectations relating to the development of the Karchiga Project;
the Company's ability to realize the future potential of, and satisfy certain future expenditure obligations
with respect to, the mineral properties in which it has an interest; mineral resource and mineral reserve
estimates; upgrades and updates relating to mineral resource estimates as well as to metal grades and the
timing thereof; estimated project economics, cash flow, costs, expenditures, revenue, capital payback,
performance and economic indicators and sources of funding; the use and sufficiency of the Company's working
capital for the next twelve months; the estimated mine life, net present value and rate of return for, and
forecasts relating to tonnages and amounts to be mined from, and processing and expected recoveries and grades
at, the Karchiga Project and/or Taldybulak as well as the other forecasts, estimates and expectations relating
to the Karchiga Definitive Feasibility Study Report, the Karchiga Scoping Study, the SRK May 2011 Pit-
Constrained Mineral Resource Estimates, the SRK December 2011 Pit-Constrained Mineral Resource Estimates, the
NI 43-101 Taldybulak Scoping Study Report and the Taldybulak Scoping Study; future prices and trends relating
to copper, gold and molybdenum; the mine plan for the Karchiga Project, including the potential start of
construction at, and production from, the Karchiga Project as well as the expected timing of same and the
Company's ability to receive the necessary permits and approvals in connection therewith; the potential for
further enlarging the mineral endowment and improving metal grades at, and completion of a pre-feasibility
study for, the Taldybulak deposit; the anticipated sale of the Akdjol-Tokhtazan Project and the timing with
respect thereto; the Company's belief that the results from the mineralogical study relating to the Akdjol-
Tokhtazan Project suggest that gold should be metallurgically accessible; the future political and legal
regimes and regulatory environments relating to the mining industry in Kyrgyzstan and/or Kazakhstan; the
Company's expectations and beliefs with respect to the waiver of the State's pre-emptive right with respect to
the Karchiga Project and the past placements of the common shares being covered thereby; the significance of
any individual claims by non-Ontario residents with respect to the Claim; and the Company's future growth
(including new opportunities and acquisitions) and its ability to raise or secure new funding (including for
construction at the Karchiga Project).
The forward-looking information in this press release and the Company's MD&A reflects the current expectations,
assumptions or beliefs of the Company based on information currently available to the Company. With respect to
forward-looking information contained in this press release and the Company's MD&A, the Company has made
assumptions regarding, among other things, the Company's ability to generate sufficient funds from capital
markets and/or debt sources to meet its future expected obligations and planned activities, the Company's
business (including the continued exploration and development of its properties and the timing and methods to
be employed with respect to same), the estimation of mineral resources and mineral reserves (as set out above
under "Operational Review" of the Company's MD&A), the parameters and assumptions employed in the Karchiga
Definitive Feasibility Study Report, the Karchiga Scoping Study, the SRK May 2011 Pit-Constrained Mineral
Resource Estimates, the SRK December 2011 Pit-Constrained Mineral Resource Estimates, the NI 43-101 Taldybulak
Scoping Study Report and the Taldybulak Scoping Study, the economy and the mineral exploration and extraction
industry in general, the political environments and the regulatory frameworks in Kazakhstan and Kyrgyzstan with
respect to, among other things, the mining industry generally, royalties/MPTs, taxes, environmental matters and
the Company's ability to obtain, maintain, renew and/or extend required permits, licences, authorisations
and/or approvals from the appropriate regulatory authorities, including the necessary construction and
development permits and approvals required to develop the Karchiga Project as anticipated, that the waiver
granted by the Competent Authority covers any pre-emptive right that the Competent Authority or State has in
respect of any past placements, future capital, operating and production costs and cash flow discounts,
anticipated mining and processing rates, the Company's ability to continue to obtain qualified staff and
equipment in a timely and cost-efficient manner and to engage international and Kazakh companies to carry out
additional studies for the Karchiga Definitive Feasibility Study and to obtain Kazakh Feasibility Study
approval, the treatment of the Varvarinskoye Project as discontinued operations, assumptions relating to the
Company's critical accounting policies, that the Company has identified all of the key issues to be
investigated in connection with the Karchiga Definitive Feasibility Study, and has also assumed that no unusual
geological or technical problems occur, and that equipment works as anticipated, no material adverse change in
the price of copper, gold or molybdenum occurs and no significant events occur outside of the Company's normal
course of business.
Forward-looking information is subject to a number of risks and uncertainties that may cause the actual results
of the Company to differ materially from those discussed in the forward-looking information, and even if such
actual results are realised or substantially realised, there can be no assurance that they will have the
expected consequences to, or effects on, the Company. Factors that could cause actual results or events to
differ materially from current expectations include, but are not limited to: risks normally incidental to
exploration and development of mineral properties and operating hazards; uncertainties in the interpretation of
results from drilling and metallurgical test work; the possibility that future exploration, development or
mining results will not be consistent with expectations; uncertainty of mineral resource and mineral reserve
estimates; technical and design factors; uncertainty of capital and operating costs, production and economic
returns;
uncertainties relating to the estimates and assumptions used, and risks in the methodologies employed, in the
Karchiga Definitive Feasibility Study Report, the Karchiga Scoping Study, the SRK May 2011 Pit-Constrained
Mineral Resource Estimates, the SRK December 2011 Pit-Constrained Mineral Resource Estimates, the NI 43-101
Taldybulak Scoping Study Report and/or the Taldybulak Scoping Study and that the completion of additional work
on the Karchiga Project and/or Taldybulak, as the case may be, could result in changes to the estimates
relating to the Karchiga Definitive Feasibility Study Report, the Karchiga Scoping Study, the SRK May 2011 Pit-
Constrained Mineral Resource Estimates, the SRK December 2011 Pit-Constrained Mineral Resource Estimates, the
NI 43-101 Taldybulak Scoping Study Report and/or the Taldybulak Scoping Study as applicable; the Company's
inability to obtain, maintain, renew 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) the necessary construction and development permits and approvals for the Karchiga
Project, and other risks relating to the regulatory frameworks in Kazakhstan and Kyrgyzstan; adverse changes in
the political environments in Kazakhstan and Kyrgyzstan and the laws governing the Company, its subsidiaries
and their respective business activities; inflation; changes in exchange and interest rates; adverse changes in
commodity prices; the inability of the Company to obtain required financing on favourable terms or at all or to
complete the disposition of the Akdjol-Tokhtazan Project; adverse changes with respect to the Talas Joint
Venture; adverse general market conditions; lack of availability at a reasonable cost or at all, of equipment
or labour; inability to attract and retain key management and personnel; the possibility of non-resident class
members commencing individual claims in connection with the Claim; the Company's inability to delineate
additional mineral resources and mineral reserves; and future unforeseen liabilities and other factors
including, but not limited to, those listed under "Risk and Uncertainties" in the Company's MD&A.
Any mineral resource and mineral reserve figures referred to in this press release and the Company's MD&A are
estimates and no assurances can be given that the indicated levels of minerals will be produced. Such estimates
are expressions of judgment based on knowledge, mining experience, analysis of drilling results and industry
practices. Valid estimates made at a given time may significantly change when new information becomes
available. While the Company believes that the mineral resource and mineral reserve estimates in respect of its
properties are well established, by their nature mineral resource and mineral reserve estimates are imprecise
and depend, to a certain extent, upon statistical inferences which may ultimately prove unreliable. If such
mineral resource and mineral reserve estimates are inaccurate or are reduced in the future, this could have a
material adverse impact on the Company. Due to the uncertainty that may be attached to inferred mineral
resources, it cannot be assumed that all or any part of an inferred mineral resource will be upgraded to an
indicated or measured mineral resource as a result of continued exploration. Mineral resources that are not
mineral reserves do not have demonstrated economic viability. The Karchiga Scoping Study, the NI 43-101
Taldybulak Scoping Study Report and the Taldybulak Scoping Study are preliminary in nature, and include
inferred mineral resources that are considered too speculative geologically to have the economic considerations
applied to them that would enable them to be categorized as mineral reserves. There is no certainty that the
conclusions of the Karchiga Scoping Study, the NI 43-101 Taldybulak Scoping Study Report and/or the Taldybulak
Scoping Study will be realized.
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. 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.
FOR FURTHER INFORMATION PLEASE CONTACT:
Orsu Metals Corporation
Petro Mychalkiw
CFO
+44 (0) 20 7518 3999
OR
Orsu Metals Corporation
Tania Tchedaeva
Company Secretary
+44 (0) 20 7518 3999
www.orsumetals.com
OR
Canaccord Genuity Limited
Andrew Chubb
+44 (0) 20 7050 6500
OR
Vanguard Shareholder Solutions
+1 604 608 0824
Orsu Metals Corporation
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