Orsu Metals Corporation ("Orsu" or the "Company"), the dual listed London-based base and precious metals exploration and development company, today announces that it has entered into a new exclusivity agreement (the "Agreement") with Asem Tas-N LLC ("Asem Tas") to continue joint exploration of the Balkhash Project and has agreed a work programme in accordance with the terms of the Balkhash licence for 2014 ("2014 Contract Work Programme").
The Agreement replaces the exclusivity agreement announced on September 16, 2013 ("September 2013 Agreement"), which in turn replaced earlier exclusivity agreements announced in April 2013 and November 2012 (all previous agreements together being the "Predecessor Agreements").
The key terms of the Agreement are summarised below:
- Orsu is granted a further exclusive right for a period of 120 days, ending in July 2014, subject to extension by mutual agreement of the parties (the "Exclusivity Period"), to explore and participate in the Balkhash Project.
- During the Exclusivity Period:
- Orsu and Asem Tas will continue to jointly explore the Balkhash Project, including geophysical works and verification drilling of exploration targets,
- Orsu will initially provide funding for exploration works at the Balkhash Project in the amount of up to $0.5 million under an initial work programme agreed between the Parties ("Initial 2014 Work Programme"), and
- Asem Tas will apply to transfer the exploration licence for the Balkhash Project (the "Licence") to a newly formed Kazakh legal entity jointly owned by Orsu and Asem Tas (the "Joint Venture Company"), in which Orsu will hold an effective interest of 55%. A transfer of the Licence to the Joint Venture Company will be conditional upon obtaining a formal waiver of the Kazakh Government's pre-emptive right.
- The Exclusivity Agreement includes the same terms as the previous agreements. In particular, Orsu has agreed to pay to Asem Tas:
- up to $1.5 million to compensate Asem Tas for historical exploration costs incurred prior to 2012 (excluding any costs funded by Orsu) on effective transfer of the Licence,
- $20 per tonne of economically extractable copper equivalent, up to a maximum of $10 million, less any amount paid under a. above, on or before completion of a positive preliminary economic assessment study, and
- $20 per additional tonne of economically extractable copper equivalent, up to a maximum of $15 million, less any amounts paid under a. and b. above, on completion of a positive definitive feasibility study.
- Should Orsu decide to continue its participation in the joint exploration of the Balkhash area, the minimum expenditure required under the 2014 Contract Work Programme is $2.165 million (including the amounts expended on the Initial Work Programme).
- Following the effective transfer of the Licence Orsu will finance the works until completion of the definitive feasibility study, subject to any earlier termination of funding, and Orsu will be responsible for arranging project finance for any the future development of the Balkhash Project.
- Orsu may terminate its funding at any point before the earlier of the effective transfer of the Licence or the end of the Exclusivity Period. Where the approval of the relevant authorities for the transfer of the Licence is not received due to a breach by Asem Tas, or the Kazakh Government exercises its pre-emptive right to acquire the Licence during the transfer process, Asem Tas is required to refund Orsu for its expenditure in connection with the Predecessor Agreements.
- Under the terms of the Agreement, Orsu will have the right to buy-out all or part of the interest of Asem Tas in the Joint Venture Company, for cash or shares, at a price determined by an independent expert.
Further details on the Balkhash Project are available in the Company's announcement dated November 12, 2012.
Notes to Editors:
1. All $ figures are United States Dollars unless otherwise indicated.
Source: http://www.orsumetals.com/