NEWS RELEASE --------------------------------------------------- Orsu to receive US$5.5 million cash in early and final settlement of deferred consideration for the sale of the Varvarinskoye Project
25 July 2011
Orsu Metals Corporation (TSX:OSU, AIM:OSU), the London-based precious and base metals exploration and development company, is pleased to announce that it has reached an agreement with Open Joint Stock Company Polymetal ("Polymetal") to receive US$5.5 million in cash by the end of September 2011 as early and final settlement of its outstanding deferred consideration entitlement, pursuant to the sale and purchase agreement (the "SPA") dated June 13, 2009, relating to the sale of the Varvarinskoye gold-copper project in Kazakhstan (the "Varvarinskoye Project").
Pursuant to the SPA, Orsu's deferred consideration entitlement is capped at US$12 million, contingent on and calculable by reference to the future metal prices of both gold and copper and the future cash flows of the Varvarinskoye Project. Orsu received US$1.5 million of deferred consideration in cash in January 2011, leaving a further entitlement of up to US$10.5 million outstanding, which amount would, if earned, be payable to Orsu in cash tranches of up to US$1.5 million per annum from 2012 to 2018.
Orsu's executive management team believes that the US$5.5 million cash settlement represents best value (on a discounted net present value basis) for Orsu's shareholders, due to the uncertainty regarding Orsu's future receipt of deferred consideration. A substantial portion of the future deferred consideration payments to Orsu is contingent on the operational cash flows generated by the Varvarinskoye Project.
The carrying value of Orsu's deferred consideration receivable in the Company's financial statements as at March 31, 2011 was US$3,592,000. Accordingly, the Company anticipates that following its receipt of the US$5.5 million cash settlement in September 2011, approximately US$1.9 million in net income will be added to Orsu's financial statements for the quarter ended September 30, 2011.
Dr. Sergey V Kurzin, Executive Chairman of Orsu commented: "We are very pleased that we have reached an agreement with Polymetal to accelerate the receipt of deferred consideration funds. Given current market conditions, Orsu's current share price and its present stage of development, cash is of much greater value to the Company today than in the future."
ENDS ------------------------------------------------------------------- For further information please contact:
Dr Sergey V Kurzin, Executive Chairman, Orsu Metals Corporation Tel: +44 (0) 20 7518 3999
Ryan Gaffney / Andrew Chubb, Canaccord Genuity Limited Tel: +44 (0) 20 7050 6500
Vanguard Shareholder Solutions Tel: +1 604 608 0824 ir@vanguardsolutions.ca |