Orsu Metals

Developing the Next Significant Gold Deposit in Russia

This Orsu Metals profile is part of a paid investor education campaign.*

Overview

Orsu Metals Corp. (TSXV:OSU) is a mineral exploration and development company focused on advancing its 90 percent owned Sergeevskoe gold project in Russia’s Transbaikalian region. The property is leased until 2031 and that can be extended for an additional 10 years if the mine starts producing.

The Sergeevskoe license area is comprised of 7.6 square kilometers and has excellent access to the infrastructure needed to develop the property. The licensed area is in proximity to the Trans-Siberian railway and the Chita-Khabarovsk motorway. The Russian government has also installed various cell towers along the highway and access to water and power is not an issue.

The property sits between Sun Gold Ltd.’s past-producing Klyuchevskoe gold mine and producing Aleksandrovskoe gold mine owned by Zapadnaya Gold Mining Limited. The two past-producing mines have reported resources over 5.5 million ounces and 2.2 million ounces gold, respectively.

Overall, the Mogocha district has seen extensive mineral exploration and has reportedly produced approximately 18 million ounces of gold. On the Sergeevskoe property, Zone 23, Koziy, and Vodorazdelnoe have been particular areas of focus for previous operators. In the 1960s, approximately 16,200 meters of trenching was conducted over the three zones and returned intervals ranged from a width of two to 48 meters and grade between 1 g/t and 5 g/t gold.

Since acquiring the property in 2016, Orsu Metals has completed approximately 15,000 meters of drilling and approximately 5,000 meters of trenching on the property. A majority of exploration has been focused on Zone 23 and at Klyuchi West, where a 200-meter-wide mineralized corridor of bulk mineralized stockwork grading 0.8 g/t to 1 g/t gold with high-grade veins that grade up to 3 g/t gold was discovered.

Orsu Metals recently announced its maiden resource for the Sergeevskoe property. The resource estimate includes an inferred mineral resource of 25.09 million tonnes grading 1.47 g/t gold and containing 1.19 million ounces of gold when using a 0.5 g/t gold cut-off grade. Moving forward, Orsu Metals is expected to work towards a preliminary economic assessment (PEA) for the property with the goal of eventually declaring a resource over three million ounces of gold.

Orsu Metals is led by an experienced management team that has worked on various exploration projects in Russia and internationally.

Orsu Metals Company Highlights

  • Maiden resource includes an inferred resource of 25.09 million tonnes grading 1.47 g/t gold and containing 1.19 million ounces of gold.
  • Sergeevskoe license expires in 2031, but it can be extended for an additional 10 years once the mine starts producing.
  • Situated in a historical mining district that has reportedly produced approximately 18 million ounces of gold.
  • Situated between two open-pit mines.
  • Extensive historical exploration has been conducted on the property.
  • Metallurgical recovery rates of up to 85.8 percent.
  • Orsu Metals is now aiming to complete a PEA for the property.
  • Management hold approximately 35 percent of the company’s shares.

Sergeevskoe Gold Project

In December 2017, Orsu Metals closed its purchase for the Sergeevskoe gold project. The company holds a 90 percent stake in the property. The Sergeevskoe license area covers 7.6 square kilometers and is approximately 40 kilometers southwest of the town of Mogocha, located in Transbaikalian Administrative region, Russia.

2019 Resource Estimate

Orsu Metals has completed a maiden resource for the Sergeevskoe project. The report highlights an inferred resource of 25.09 million tonnes grading 1.47 g/t gold and containing 1.19 million ounces of gold when using a 0.5 g/t gold cut-off grade. The resource also suggested that an open-pit mining operation could be implemented at the property.

Historical exploration

Orsu Metals’ management team believes that the geology of the Sergeevskoe property is similar to the geology found at the Klyuchevskoe deposit area, whose open pit is just 300 meters east of the property boundary.

In the 1950s and 1960s, the Sergeevskoe property was discovered and partially drilled. Approximately 8,500 meters of drilling was completed and was mainly focused on Zone 23, Koziy and Vodorazdelnoe occurrences. The reported core recoveries were approximately 50 to 70 percent. Some notable results were recovered from Zone 23 which include three meters grading 2.97 g/t gold and 6.5 meters grading 2.23 g/t gold. More notable results were found at the Koziy occurrence and include an intercept of 7.5 meters grading 1.53 g/t gold.

Exploration in the 1970s included soil geochemistry sampling and airborne and ground geophysical surveys which outlined a number of gold, copper and molybdenum anomalous areas. Most of these anomalies were identified at Zone 23, Koziy, Vodorazdelnoe, Peak Klyuchi and Karamaevskoe. Approximately 16,200 meters of trenching was conducted at these occurrences and it intercepted wide gold-mineralized intervals in the eastern section of the Sergeevskoe license area. The historical intervals range from a width of two to 48 meters and grade between 1 g/t and 5 g/t gold.

Between the mid-1980s and 2013, no field work conducted on the property. No historical resources were generated between 1950 and 2013 for the property. However, a historic estimate has been outlined for several prospects in the licensed area that ranges from 2 million to 4 million ounces of gold grading between 1.67 g/t to 1.77 g/t gold.

Ongoing exploration

Following Orsu Metals’ announcement about their proposed acquisition of the property in 2016, the company immediately started their Phase 1 exploration program for the property. The program included the digitization of all historical trench and drill hole data, magnetic and PD-IP surveys over the entire property, scout lump sampling, a mineralogical study, geochronological dating, trenching and drilling.

The 15 initial lump samples taken from the property were assayed and 13 samples returned values between 0.18 g/t and 5.69 g/t gold from various trenches at Zone 23 and Koziy occurrences. Initial metallurgical testing returned recoveries between 85 percent and 95 percent when using cyanide leaching.

In 2017 and 2018, Orsu Metals completed approximately 15,000 meters of drilling and approximately 5,000 meters of trenching in preparation for a maiden resource for the property. Drilling at Zone 23 confirmed a strike length to 740 meters and 200 to 250 meters downdip extent of the mineralized system. Zone 23 remains open downdip.

Drilling in this area also opened a new target of exploration known as Adit 5, which is to the east of Zone 23. Drilling highlights from Adit 5 include widths between two meters to 21.8 meters that grade between 0.52 g/t gold and 3.07 g/t gold. Orsu Metals was able to recover 11.5 meters grading 6.49 g/t gold in its trenches.

A significant discovery was also made at Klyuchi West, with a 200-meter-wide mineralized corridor of bulk mineralized stockwork grading 0.8 g/t to 1 g/t gold. In its central part, Orsu Metals was able to uncover higher-grade veins grading over 3 g/t gold at depth and surface.

orsu metals map

Throughout the 2018 exploration program, Orsu Metals was able to confirm that the Klyuchi West and Kozie occurrences are part of a single 250-meter-wide mineralized stockwork that extends for 750 meters. Highlights from drilling in the area include 17.5 meters grading 6.86 g/t gold and 4.6 meters grading 3.34 g/t gold. The company was also able to extend Zone 23 from 740 meters to 900 meters.

Metallurgical Testing 

As part of Orsu Metals’ development of a maiden resource estimate, the company conducted metallurgical testing on a primary sulfide sample from multiple targets at the Sergeevskoe property. The testing returned positive cyanidation results for oxide samples from Adit 5 and Kozie. The samples at Adit five had a recovery rate between 85.17 percent and 95.3 percent, while Kozie has recovery rates between 91.72 percent and 92.32 percent. Results from Klyuchi West had a recovery rate of 85.8 percent.

“Our first metallurgy tests for the primary mineralization sample from the Klyuchi West prospect achieved 85.8 percent to 89 percent recoveries of gold with cyanidation in gravity-flotation scheme. This result is consistent with historically achieved recoveries at the nearby Klyuchevskoe gold mine. Orsu is conducting additional metallurgy tests on samples for the Zone 23 and Adit 5 prospects,” said Orsu Metals Director of Exploration Alexander Yakubchuk.

Moving Forward

Moving forward, Orsu Metals is expected to work towards a PEA for the property with the goal of eventually declaring a resource over three million ounces of gold. To this aim, the company has commenced phase one of its 2019 exploration program, which is comprised of 3,500 meters of drilling and 3,00 meters of trenching.

Management

Dr. Sergey V. Kurzin — Director and Executive Chairman

Dr. Sergey Kurzin is a Russian-born research engineer who moved to the United Kingdom in 1990. He has played a key role in the acquisition and progress of several important former-Soviet Union mining assets. These include Julietta, a high-grade gold deposit in Magadan, Russia, with Bema Gold; Kupol, a high-grade epithermal gold deposit in Chukotka, Russia, with Bema Gold; and the Varvarinskoye copper and gold skarn deposit in Kazakhstan with European Minerals Corporation. He has also played a key role in establishing UrAsia Energy Ltd, a uranium producer with mining operations in the Republic of Kazakhstan. He founded and was Executive Chairman of Oriel Resources Plc.

Sergei Stefanovich — Managing Director

Sergei Stefanovich is a lawyer by initial training. He received an MBA from the Institute for Management Development in Lausanne, Switzerland. He has over 16 years of corporate finance, strategy and business development experience primarily in Russia and the larger FSU area. He has managed a public equity mining fund that was invested into junior mining companies. He was also a Director for Norilsk Nickel and a Board member for Gold Fields Limited. He has served as a legal counsel for Sputnik private equity funds, AT&T and McKenna & Co.

Dr. Alexander Yakubchuk — Director of Exploration

Dr. Alexander Yakubchuk joined Orsu in 2008. He brought an experience which he gained in Russia, Kazakhstan, Kyrgyzstan and Uzbekistan, as well as internationally in Australia, Mongolia, China, Canada and several European countries. During 2003-07, he held the position of Exploration Manager for Europe and FSU for Gold Fields. Dr. Yakubchuk has also previously worked with and consulted for companies such as BHP-Billiton, Norilsk Nickel, Goldcorp, Rio Tinto, World Bank and Inco. He was also an Associate Professor at Lomonosov Moscow State University.

Dan O’Brien — CFO

Dan O’Brien is a member of the Chartered Professional Accountants of British Columbia. He is also Chief Financial Officer for a number of publicly listed exploration companies trading on the TSX and TSX Venture exchanges. He was previously a senior manager at a leading Canadian accounting firm where he specialized in the audit of public companies in the mining and resource sector.

Doris Meyer — Corporate Secretary

Between 1985 and 2003, Doris Meyer was the Vice President Finance of Queenstake Resources Ltd. In 1996, Meyer launched her private company Golden Oak Corporate Services Ltd. with Queenstake as her first client. Since that time, Golden Oak has provided publicly traded mineral exploration companies with administrative, financial reporting and corporate compliance services. She is a former CPA, CGA.

Mark Corra — Non-Executive Director

Between March 2007 and April 2014, Mark Corra was Senior VP Finance and CFO of B2Gold Corp. He started his career at Placer Dome where he spent 11 years in various positions in the accounting department. Corra worked with Bema Gold Corporation for 17 years, first as Controller and was later appointed Vice President Finance in 1995 where he oversaw financial reporting, cash management, tax planning and was a member of the management committee for B2Gold. Over the years, he has also acted as CFO for Consolidated Puma Minerals Corp., Victoria Resources Corp. and Consolidated Westview Resource Corp. He is a Certified Management Accountant, with a diploma in financial management from the British Columbia Institute of Technology.

David Rhodes — Non-Executive Director

David Rhodes is a Managing Director at Endeavour Financial. His experience in the natural resource sector spans over 25 years, having arranged, structured and advised on over $4.5 billion of resource related projects around the world. Prior to joining Endeavour, Rhodes worked for Standard Bank, Barclays Capital and the Royal Bank of Scotland. At Standard and Barclays, he sourced, structured and syndicated financing for resource projects and companies on a global basis.

Having lived and worked in London and New York, he has international experience of the CIS, North and South American, European and African markets. Rhodes is a member of the Institute of Financial Services and has a BSc (Hons) in Financial Services.

Vladimir Pakhomov — Non-Executive Director

Vladimir Pakhomov is a Managing Partner and Partner at Olympia Capital, an asset management and merchant banking firm specializing in investment opportunities primarily in Russia and CIS. He was also the Investment Director with Onexim Group. He graduated from the Moscow Institute of International Relations and is CFA Charterholder.


 

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