Orsu metals corporation Crisis or Opportunity? by 24hgold

Orsu Metals � Crisis or Opportunity?

Survivability must be the only question on investors� minds as they see Orsu�s stock trading at four cents - $0.04! - even as their mine is increasing production, throughput and cash flow, albeit almost a year behind schedule.

But is it increasing it fast enough? To build the mine, the company took on $61 million of limited recourse long-term debt. Despite raising another $66 million in equity this summer to help service their hedging commitments, as things sit today, investors believe they may not have enough cash to pay down the first tranche of $16.65 million due December 31, 2008.

Assuming this is true, what does this mean, when the company can�t repay their debt? They would have a few options:

1. Raise equity. At 5 cents a share they would issue at least 330 million shares;

2. Get subordinated debt, which even in the best of times would include an equity kicker;

3. Sell a part interest in the project, just as copper and gold prices bounce off recent lows;

4. Renegotiate the debt.

The mining finance houses that make it their business to lend to miners do NOT want to own or operate a mine. That is the LAST thing they want to do. If Orsu can�t make the payment, and doesn�t do any of the first three by December 31 then the banks don�t have much choice � they re-negotiate an extended time period for repayment, and charge the company extra for the concession.

Maybe what put the bee in investors� collective bonnets was a recent brokerage report on Orsu which stated that they expect news on debt re-negotiation by mid-December 2008. Oh! Are they in trouble?

A quick look at Orsu�s recent financial disclosure as at September 30 reveals that their working capital is negative $1.7 million � a going concern issue to be sure. However, this simply means that the current assets and current liabilities (�current� meaning within one year) almost offset each other � with a relatively minor shortfall.

To help with the math, keep in mind that included in those current liabilities is not only that first tranche of $16.65 million due Dec 31, but another $19.45 million (the total of $36.1 million is due over the next year as per their disclosure).

So, by definition, we may not need to be overly concerned about them making their December 2008 payment, because current assets are at least $34.4 million ($36.1 million less that $1.7 million deficit � Accounting 101), which comfortably cover that Dec 31st payment of $16.65 million. Of course I�m not saying that�s where they will or even can put their resources to work. But that�s the math.

Full article

For more information about Orsu Metals, please contact:

Keith Schaefer, Investor Relations
Vanguard Shareholder Solutions
Tel: 604-608-0824
Toll Free (N. America): 1-866-448-0780
Toll Free (International): 1-888-504-5259
www.orsumetals.com

Orsu Metals
Vanguard Shareholder Solutions
Vanguard Shareholder Solutions (Vanguard) provides, for remuneration, corporate communications and investor relations services to the above mentioned client(s). The information contained in this email is based on existing disclosure documents or other publicly available information. You are encouraged to seek independent verification of any information that is important to your decisions. By responding to your inquiry neither Vanguard nor the above mentioned client(s) is offering securities or advising or soliciting the purchase or sale of securities.

Hosting by YourMailingListProvider

Legends
	Production
	Mine development
	Discovery
	Exploration
	Past producer
On Google Earth, click on the button, to show property information, and access to project page or company page.