May/June 2013 - The ASIA Miner

Central Asia
Exploration agreement for East Balkhash project
ORSU Metals Corporation has entered into
an exclusive agreement to jointly explore the
East Balkhash 2 licence area in Kazakhstan.
The agreement has been signed with Asem
Tas-N LLC, a privately-owned Kazakh registered
company and owner of the subsoil use
contract for the project.
Orsu is granted the exclusive right for a
period of 175 days, ending in September,
subject to extension by mutual agreement
of the parties, to explore and participate in
the Balkhash project. During this period
Orsu and Asem Tas will continue to jointly
explore the project, including geophysical
works and verification drilling of exploration
targets. Orsu will provide about
US$900,000 in funding for exploration
work, including $130,000 already spent in
2013 as part of the predecessor agreement.
Asem Tas will apply to transfer the exploration
licence for Balkhash to a new Kazakh
legal entity jointly owned by Orsu and Asem
Tas, which will be a subsidiary of Orsu, with
Orsu holding an effective interest of 55%. A
transfer of the exploration licence to the JV
company will be conditional upon obtaining
a formal waiver of the Kazakh Government’s
pre-emptive right.
On effective transfer of the licence, Orsu
has agreed to pay Asem Tas up to US$1.5
million to compensate it for historical exploration
costs incurred prior to 2012; $20 per
tonne of economically extractable copper
equivalent, up to a maximum of $10 million,
less any amount paid in exploration compensation
on or before completion of a positive
preliminary economic assessment study; and
$20 per additional tonne of economically extractable
copper equivalent, up to a maximum
of $15 million, less any amounts paid
above, on completion of a positive definitive
feasibility study (DFS).
Orsu will finance the works until completion
of the DFS and Orsu will be responsible for
debt financing. Under the terms of the agreement,
Orsu will have the right to buy-out all
or part of the interest of Asem Tas in the JV
company, for cash or shares, at a price determined
by an independent expert.
Meantime, Orsu has appointed Chris
Power as technical director, replacing Raymond
Oates who has resigned from the position.
Chris Power was previously project
manager for the company’s Karchiga project.
Orsu’ primary focus has been the Karchiga
volcanogenic massive sulphide deposit in eastern
Kazakhstan with a total probable reserve
estimate of 10 million tonnes of
sulphide and oxide ore containing 1.666 million
tonnes of copper at an overall average
grade of 1.67%, of which 1.452 million tonnes
is amenable to flotation and 21,400 tonnes
is amenable to heap leaching.
The company has received approval for
the Karchiga technical project and expects
to receive the remaining local regulatory approvals
during the current quarter. These
will permit Orsu to commence construction
of mine and processing facilities.
Work continues on Benkala expansion
FRONTIER Mining has resumed operations at
its flagship Benkala Copper Project in northwest
Kazakhstan following the winter shutdown.
Frontier anticipates shipping of cathodes from
Benkala to begin in the first week of June.
The operations team has been on site over
the past weeks preparing for operational restart
to allow leaching to begin. Agglomerated
ore had been loaded onto pads before December
to facilitate an immediate start-up, without
the need for crushing stockpiled ore, or
depending on activity resuming at the mine.
This year Frontier will continue to work on
the expansion of the Benkala site from an
annual capacity of 7000 tonnes to 10,000
tonnes and will spend an additional US$6
million of Capex on additional leach pads,
improvements to the crushing and agglomeration
process and general site enhancements.
The preparations made in 2012
will also allow cathode production to continue
alongside enhancement and expansion
activities at the SX-EW plant.
Frontier’s chairman and CEO Yerlan Aliyev
says, “We are keen to resume operations at
Benkala with all haste. Continued development
of the site offers considerable benefits to
both the company and our shareholders, and
I am in no doubt that is a prudent investment.”
The project is about 450km east of Aktobe
(formerly Aktyubinsk) and 100km south of
Zhitigara in northwest Kazakhstan, close to
Trucks lined up for use at the Benkala Copper Project.
Excavation work at Frontier Mining’s Benkala project.
the Russian border. Located within the Urals
copper/gold ore belt, the area presents favourable
geography, the water table is within
25 metres of the surface and the flat landscape
is ideal for heap leach processing.
Current open pit mining targets near surface
oxide mineralization, developed to a
depth of 30 metres. Exploration is under way
at the South Benkala deposit, about 10km
from Benkala, which will benefit from the
newly established infrastructure, extending
the project life span.
Frontier has received credit committee approval
from Sberbank head office in Moscow.
The agreement provides KazCopper LLP,
Frontier’s wholly-owned subsidiary, with a
loan and credit facility to the value of US$17.9
million. The new facility is for five years and
comprises two components - a US$6 million
increase in the Capital Investment Loan at an
interest rate of 9% and a US$11.9 million increase
in the Working Capital Credit Facility
at an interest rate of 8.5%. Sberbank has
provided Frontier with loan facilities since
2011 and the additional loan brings the total
amount of existing Sberbank facilities to
US$52.9 million.
18 | ASIA Miner | May/June 2013