Orsu Metals Share Discussion Threads

[yaniktoo] 11/4/2016 09:02

So it looks that when the dust is settled down by the end of the year Orsu will be a shell company, listed on TSX with $10 m or so of cash(if they manage to get all of the permissions etc).

No promise to return money to shareholders.

They will look for opportunities to invest in other projects. Hopefully, they will have more success than they have in the last 8 years.

Complete value destruction from $ 450m to $ 4m. All because of the then CFO not understanding gold hedging!

[knicol46] 11/4/2016 08:47

Cancellation of AIM admission 11 May 2016 (Meeting to dispose of the Karchiga asset happening after AIM cancellation.)

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.

[yaniktoo] 11/4/2016 08:38

As predicted - winding up!

[yaniktoo] 09/4/2016 10:13

A long boring post coming up.

It seems that the latest story to try to ramp this share is that it has large tax losses. The rampers have given up on the gold story (Akdjol-Tokhtazan written off by Orsu who were not even prepared to pay for the license to be renewed, (paid for by David Invest)).

It is clear that Orsu is winding down the day to day operations of the Karchiga project office given the inability to finance the project. So the story is now that the value in Orsu is that someone could be interested in the tax losses (which are large and proof of the value destruction of the existing management team!).

Here they are from the latest accounts.
(all figures in US $ ‘000)
UK operating losses with no expiry 33 360
UK non trading losses 166 766
Kazakhstan operating losses 22 683
Canada operating losses 22

UK tax rate is 20%. So in cash terms the amount that could be saved is 20 % of the tax loss, i.e. I can reduce my UK tax bill by $ 33.36m * 20% = $ 6.672m.

So the value to anyone of the UK tax losses is 20% of 33.360 + 166.766 = $ 40 m. Much bigger than the mcap!

HOWEVER…. It is clear that the largest component of the tax losses is capital gains tax losses of $ 166.7m.

In order to benefit from this, the UK tax entity, Orsu Metals will have to make a capital gain of $ 167m that is domiciled in the UK.

So, for example, if one of the offshore subsidiaries sold an asset and made such a gain, this wouldn’t count, as the profit would be in a non-taxable jurisdiction and there is no benefit to try and bring the “profit” back to the UK.

So there are two ways for Orsu to use these tax losses:

a. Purchase and sell assets directly from the UK that make whopping $167m gain(s) in total.
b. Some third party reverses into Orsu and in due course makes capital gains.

For CURRENT Orsu shareholders, the problem is that for option a. Orsu will need to raise cash to buy assets. So imagine Orsu invested $10m and made a profit multiple of 16 x, where do the funds come from?? If profits were a lower multiple, i.e. more cash needs to be raised ……. So essentially this would be a large dilution for existing shareholders.



Option b. A reverse takeover of Orsu. (which works as follows, new shares are issued by Orsu to pay for the purchase of a company to the shareholders of Company B and the shareholders of Company B end up with at least 51% the shares of Orsu). The final ratio can be anything up to 99:1, i.e. the pre-reversal shareholders end up with only 1% of the total of the new shares. (I have been involved in a deal which was 90:10, and another which was 80:20, so the high numbers are not unrealistic in practice) ……. Dilution of existing shareholders.

Given the existing market cap of Orsu $3.2m, it is clear from large value of the tax losses, the numbers involved mean that existing shareholders cannot benefit as either option suggests large dilution.

This is BEFORE we get into assessing the likelihood of the HMRC disallowing the tax losses. Essentially, if the only economic reason for a transaction is for a tax benefit, the HMRC can simply disallow the use of the tax losses. This is a high barrier to pass.


So people, in my line of work, always try to structure deals so that any capital gains are made offshore to avoid any risk of taxation.


Would I be interested in combining Orsu with any of the companies I am involved with for its tax losses? Nope, way too fiddly and likelihood of success is very low.

So in short, forget about these tax losses. Value = $ ZERO.

Anyway, isn’t it pathetic that the only case for investing in a company is for its tax losses?

[phil1969] 07/4/2016 07:39

Still underwater with 1.3m shares. Need another 80% from here!!!Take a look at HWC, £2m mcap. 3 new directors including head of Bucharest stock market as new Chairman. Talk of HWC being involved in some way in a dual listing or IPOMain London listing, not AIMBB talk of the Polish Post Office IPO possibly going for a dual listing. http://www.posteurop.org/showNews?selectedEventId=27623

[maytrees] 06/4/2016 13:45

Over 31% up at present though no news.
Hopefully no RNS saying "no reason..."

[knicol46] 06/4/2016 12:18

Coming alive last traded +17% - leak??

[maytrees] 06/4/2016 12:17

Interesting share price gains yesterday and today. I hold a few so dyor.

[knicol46] 05/4/2016 13:37

SP +8% usually dormant!

[yaniktoo] 31/3/2016 18:45

This company is in its death throes.

Akdjol-Tokhtazan Project written off to $0 as previously predicted.
$8m of assets in relation to Karchiga are worthless as they are just capitalised development costs.
So cash is the only real asset.

So mcap is £ 1.7m
Cash about £ 2.7m

No Technical Director, no prospect of financing for the Karchiga project.
Some guys keep wittering on about tax losses being valuable! But, in the UK, these are very hard to use.

The question is how long before they formally wind the company up!

[bean02] 23/3/2016 13:36

Yes seems to be coming back from the dip

[knicol46] 23/3/2016 12:50

£5000 worth buy trades, last one above offer, tick up expected

[knicol46] 22/3/2016 14:29

buys returning, results possibly due Thu 24 March 2016

£2m mcap
$5.5m cash at last report
$18.6m net assets

only 183m shares in issue

[bean02] 17/3/2016 13:21

1.5 to pay now clear 1.6 and it really is zoom territory. Wondering if there is still a short squeeze to be played out here?

[bean02] 17/3/2016 12:44

Well that's a slice through and a half! Next resistance @ 1.6! Liking this

[bean02] 17/3/2016 11:34

Had a look at the chart last time and in my amateur opinion it looks primed. Resistance 1.36 which it bounced off lAst time hoping we Slice through this time but need more volume

[someuwin] 17/3/2016 10:51

Moving up again.

[bean02] 16/3/2016 11:27

Higher lows, higher highs coming from this wave following pull back

[knicol46] 16/3/2016 10:43

Results Friday 25 March 2016.. not many stocks have cash greater than mcap

£2m mcap
$5.5m cash (at last report)
$18m net assets

[knicol46] 16/3/2016 10:29

SP +12% rising!!

[phil1969] 16/3/2016 10:28

Morning volume before TSX opens. Interesting.

[phil1969] 10/3/2016 09:00

Volume petered out pretty quick this morning. Look like eyes will be on TSX again this afternoon.