11th Apr 2016 09:23
LONDON (Alliance News) - Orsu Metals Corp on Monday said it plans to cancel its listing on AIM later this year to reduce its corporate costs, and that it struck a deal to potentially sell its stakes in two copper projects in Kazakhstan.
Orsu shares were up 47% to 1.84 pence per share on Monday morning.
A deal was struck to sell its 94.8% stake in the Karchinga copper project in eastern Kazakhstan for an initial consideration of USD7.8 million and a deferred consideration of up to USD2.0 million.
Orsu said it has also conditionally agreed to sell its effective 51% stake in the Kogodai copper project in Kazakhstan for USD10,000.
The stakes in both projects are set to be sold to the same buyer, Karasat Trading FZE, a company registered in the United Arab Emirates with other mining interests in Kazakhstan.
Orsu said it also plans to cancel its listing on AIM in order to reduce its costs, stating it plans to maintain its listing on the Toronto Stock Exchange Main Board. Orsu said it envisages cancelling its shares from AIM as of May 11.
"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," said the company.
Orsu said it chose to cancel its AIM listing due to the "clearly identifiable cost savings," adding that those savings would be considerably less if it decided to cancel its TSX listing instead. The TSX listing will continue to provide shareholders with a "comparable dealing facilities to enable trading in the future," it said.
The sale of the Karchinga project requires shareholder approval, which the company hopes to attain at an annual and special meeting scheduled for the second half of June.
Orsu does not require shareholder approval for the sale of its stake in the Kogodai project, but both sales need approval from authorities in Kazakhstan.
Looking at the Karchinga deal in more detail, Orsu will receive a USD100,000 deposit from Karasat Trading within the next 14 days, followed by the initial consideration once the deal is formally completed.
Of the USD7.8 million initial consideration, minus the deposit, USD7.7 million is being allocated to the purchase of intercompany debt owed by the subsidiary that holds the project to Orsu or its subsidiaries, with only USD230 is being spent on the 94.8% stake.
The deferred consideration of up to USD2.0 million is based on 67% of relief obtained for corporate take losses or recovery of VAT, Orsu said.
Notably, Orsu will be liable to pay a USD400,000 termination fee if it pulls out of the deal, and will also be liable to pay Karasat's costs up to a maximum of USD150,000 under that scenario.
"Although management believe in the long term prospects for copper, it cannot ignore the current economic reality of a sustained period of depressed commodity prices and of negative investor sentiment towards the resources sector generally and junior resource companies in particular, which have affected the company's ability to finance the Karchiga project both to date and in the foreseeable future," said Executive Chairman Sergey Kurzin.
"The sale of Karchiga, if completed, will provide the company with a platform to identify new potential opportunities to seek to create value for shareholders," he added.
The Kogodai project was at a very early stage, and Orsu said the deal will release the company from its ongoing exploration and financial obligations.
By Joshua Warner; [email protected]; @JoshAlliance
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