News

November 27, 2008

Orsu Metals May Be Down, But It Is Certainly Not Out

By Charles Wyatt

Back in June, Lero Gold acquired European Minerals through a reverse deal. This was regarded by the experts as having saved European Minerals, as it had encountered problem after problem bringing its Varvarinskoye gold-copper mine in the north of Kazakhstan into production. Lero Gold came on the scene with money and expertise, and the plant is now built and production started. But shares in what is now called Orsu Metals have not escaped the horrendous fall that has been commonplace across the mining sector. One of the reasons for Orsu’s own weakness may be that Varvarinskoye started production a year late, but there also appear to be some doubts about the ability of the company to repay some debts going forward. Varvarinskoye, however, does have tangible value to support it in the form of 2.2 million ounces of gold resources in the proven and probable JORC categories and 254 million pounds of copper. Its’ measured and indicated resources amount to 5.01 million ounces of gold and 607 million pounds of copper.

This is a real asset, not just hope surrounding a deposit, and when the plant reaches full capacity next year, up from the current rate of 80 per cent, it should be producing 147,000 ounces of gold and 30 million pounds of copper in concentrate a year. The price of gold now seems to be strengthening and the fall in the price of copper appears to have slowed down, all of which means the company expects to be generating around US$200 million in gross revenue at full capacity. At the moment...