13th May 2015 10:14
LONDON (Alliance News) - Orsu Metal Corp shares rose Tuesday after it said its net loss narrowed in the first quarter of 2015 due to reduced exploration spend and a smaller foreign exchange loss, as it focuses on securing financing and progressing its projects in Kazakhstan.
Orsu shares were up 24.4% to 1.40 pence per share on Wednesday morning, making it one the best-performing stocks in the AIM All-Share index.
The precious metals explorer, which does not generate any revenue, reported a USD822,000 net loss in the first quarter of 2015, narrower than the USD1.0 million loss reported a year earlier. Exploration costs fell to USD30,000 from GBP132,000 and it booked a smaller foreign exchange loss of USD28,000 compared with a USD198,000 loss.
The loss per share narrowed to USD0.0045 per share, from USD0.0055 per share in the first quarter of 2014.
At the end of March, Orsu had a cash balance of USD6.7 million, down by around USD900,000 from a year earlier due primarily to corporate and exploration expenditure of USD850,000.
In the quarter, Orsu spent USD22,000 in capitalised development expenditure on the Karchiga project in Kazakhstan, almost half what was spent a year earlier.
The company?s working capital needs as at the end of March include the funding for its exploration and development activities, future expenditure obligations of the Kogodai project, its corporate and administrative expenditures requirements and potential contributions towards project finance, if and when arranged, in relation to the Karchiga project, it said in a statement.
In 2015, the company is expecting administrative expenses to total just over USD3.0 million, which includes expenditure on the Karchiga project, and Orsu will spend an additional USD875,000 on exploration at the Kogadai project, also in Kazakhstan.
"In the company?s view, the consolidated working capital as at the end of the first quarter 2015 is sufficient to satisfy its working capital needs... In relation to the Karchiga project, for at least the next twelve months," it said in a statement.
However, Orsu highlighted that it will need initial capital expenditure of USD115 million for the planned construction of mining facilities at Karchiga, meaning it will need to raise further funds in the future.
The company appointed UniCredit and Barclays in April to arrange a project finance facility of up to USD90 million to finance the company?s Karchiga project. Orsu said UniCredit has "expressed a willingness" to participate in the funding without any formal commitment on UniCredit's part. This would all be dependent on securing commercial terms and the necessary approvals.
"If the company secures the required debt financing on acceptable commercial terms then it may also apply a proportion of its available unrestricted cash and if any, from the sale of the Akdjol-Tokhtazan project, towards the project financing requirements as the company determines necessary," said Orsu.
The company entered into a conditional exclusivity agreement with David-Invest LLP, a Kyrgyz registered company, and Hong Kong registered David Way Ltd, to sell the Akdjol-Tokhtazan project. Both parties have exclusivity to make a deal happen until December 31.
"Whilst the company has been successful in raising debt and other financing in the past, the company?s ability to raise additional debt and other 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," it added.
By Joshua Warner; [email protected]; @JoshAlliance
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