I had a poke around Lero today to help me come to grips with Orsu Metals, as the combination with EPM will be known.
It looks to me like they have a good shot at two mines in Karchiga (copper) and Taldybulak (gold/copper), albeit with a lot of work left to do on each, proving up resources and completing feasibility studies. Each of these properties also has potentially huge exploration upside as well.
Mind you, the reason there is all this unexplored ground is because they are located in Kyrgyzstan. Here's what the US State Department has to say about investing Kyrgyzstan: "2007 Investment Climate Statement – Kyrgyz Republic
Openness to Foreign Investment
The Kyrgyz Republic has a liberal investment regime with a broad base of commercial laws. Unfortunately, these laws are not implemented consistently. Foreign investors must register their firms with the Ministry of Justice. In addition to registration, expatriate employees must obtain a work permit from the State Committee on Migration and Employment. Foreign investors usually form joint ventures with local partners, a step which has proven to be the most successful strategy to date.
The legal concept of contract sanctity is not consistently observed. Kyrgyz law on foreign investment guarantees protection for foreign investors from expropriation and nationalization. Individual investors have become involved in disputes over licensing, registration, and enforcement of contracts. Corruption is also a serious problem, although the Government of Kyrgyzstan (GOKG) has publicly denounced corruption and implemented some steps to counter this problem. In June 2002, Parliament passed the Law on Commercial Arbitration, creating a mechanism for expeditious resolution of commercial disputes. This mechanism, the Commercial Arbitration Court of Kyrgyzstan, opened in October 2002 and began considering cases in April 2004.
Banking laws do not discriminate against foreign banks. Eight foreign banks operate in the Kyrgyz Republic: Demir Bank (Turkey), Bank of Asia (South Korea), National Bank of Pakistan, EnergoBank (90% owned by the Kazakh ATF Bank), Halyk Bank (Kazakhstan), the Kyrgyz Investment and Credit Bank (owned mostly by international public and private development institutions), FinanceCreditBank (Kazakhstan) and KyrgyzCredit Bank (under Italian control).
There is no discrimination against foreign investors enshrined in official government policy. However, procedures for licensing and approvals are not transparent, which can make the process seem discriminatory. Tax authorities may apply greater scrutiny to foreign entities operating in the Kyrgyz Republic. "
[continued here -- state.gov
Most of the foreign investment at this time seems to come from Russia and Kazakhstan, but there is a fair amount of European and North American money invested as well.
But the company will be led by someone very experienced and successful in dealing with this environment. Sergey Kurzin is Russian-born but now a British citizen, and made me a nice bundle in not too long as I rode his previous horse Oriel into its recent takeover. If anyone can get these mines built, or if not sell them at a good price, it is he. He seems to have connections with everyone.
But of course the immediate comncern is to get Varvarinskoye into full gear. Without that, all the exploration upside in the world won't matter in the slightest.
So I would say that Orsu has more risk to it than European Minerals did -- though if they can get Varvarinskoye going that IMO removes more risk than Kyrgyzstan adds -- but also much more potential upside. I like the deal, but will be anxiously watching the legal problems Centerra is having with their Kyrgyz mine.
LC |
