Orsu metals corporation James Winston on Orsu Metals by 24hgold

Keywords : Copper | Hedge |

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Orsu Metals (OSU, TSXV)

Issue 23, May 21, 2010 - By James Winston

The market seems to have forgotten Orsu Metals has one of the largest developing gold deposits in the world.

Because of that, Orsu Metals is standing out as a great bottom fishing pick in the low 20 cent range. With this stock just coming off a 10:1 roll back in November plus having a cashed up treasury to the tune of CDN $28 million in April, I figured the game was finally on.

Orsu has two key projects, the Taldybulak Gold-Copper Porphyry with Gold Fields and the high grade Karchiga Copper Project.

Goldfields has now earned 60 per cent in Taldybulak after spending $10 million in exploration. More than 6 million ounces of gold are now in a 43-101 compliant resource, with almost 1 billion pounds of copper and 70 million pounds of molybdenum. And they are still exploring for more.

The goal for this year is to come up with a scoping study - expected to be completed by June.

An updated indicated resource estimate was published for the Taldybuluk-Talas project which is now thought to contain 2.99 million ounces of gold (0.3 Au g/t cut off), 527 million pounds of copper and 30 million pounds of moly. Inferred resources add another 3.24 million ounces of gold, 506 million pounds copper, and 40 million pounds of moly.

This is one of Gold Fields' top worldwide exploration projects of which Orsu holds a 40 per cent interest.

The Karchiga Project though is the most advanced project of the company and this past week they consolidated their position by increasing their ownership to 94.75 per cent. A further 24.73 per cent of the project was purchased from Eildon Enterprises for US $6,187,500 in an all cash deal.

Days later, they announced a scoping study for the deposit that estimated copper production costs of only $1.13 per pound - leaving lots of room for profit at $2.50 copper. Payback on the $100 million cost is only 2 years. This makes me hopeful they could hedge that production immediately and get almost all the capital cost in debt.

At a copper cut-off grade of 0.5 per cent, Karchiga contains indicated mineral resources of 8.49 million tonnes at 1.95 per cent copper, and at a copper cut-off of 0.5 per cent, contains inferred mineral resources of 1.79 million tonnes at 1.62 per cent Cu. This is rich, high grade copper for an open pit mine.

Orsu plans to fast track the Karchiga Project towards the completion of a feasibility study by early 2011.

The Talas joint venture project and the Karchiga are at those very technical engineering stages which don't produce a lot of drama for a stock compared to early discovery stage. The result is that stocks at this period of the timeline usually trade conservatively. As positive news builds toward a production decision then the fun really starts as we are seeing with Nevsun right now.

The prospect of cash flow gets investors interested. As I've stated before there are two times to make money in these mining deals. The first time is upon the discovery phase and next is the build up toward production.

Orsu has two good projects which potentially could move forward but investors must be patient for the development work to get done. With the stock trading at historic all time lows, this is the time to plant your seeds and reap the harvest later.

Full Article

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