Orsu Metals Corp V.OSU.H

Revised Question for Omniportent

[amarksp]

revised due to bad cut & paste...

Your comment:
"According to the feasibility study Varvarinskoye SHOULD be cash flow positive at current metals prices; however, shareholders have received no guidance from management saying when this might happen."

Compare the grade and recovery rates of the techncial report to the actual grade and recovery rates for the 2Q08 and 3Q08.  There are not only problems with reaching 100% capacity but also problems with grade and recovery...  See page 1.10 of Amended March 2005 Tech Report.

No doubt OSU can achieve profitablity, but it appears unlikely that we can rely upon the profits forecast per the feasiblity study anytime soon given the "grade control" problems and current recovery rates.  The recovery rates have been moving up which is encouraging, but OSU will have to perform a lot more tinkering to get recovery rates in line with 87% per Tech Report for LGCF ore (69.5% actual for 3Q08).  The average HGCF gold recovery rate is over 72% per the tech report vs. 51% in 2Q08 and 59% in 3Q08.  Moving in right direction, but there is 20% room for improvement in both LGCF and HGCF ore.

In regard to LGCF Grade Au g/t, the tech report showed an average 1.05 g/t  for proven reserves, yet Orsu has been reporting grades around .60 these last 2 quarters and even the 1Q08 showed just .79.  With a 1.05 g/t average, you would think OSU could easily find some 1.5 g/t LGCF high grade gold to process this quarter...?  Yet, OSU is talking about increasing throughput to the HGCF circuit because this is more profitable at $1.80 copper...?

 
Your comment:

"Can Kurzin live up to his reputation and turn Orsu around?   I hope so"

Well, I hope so as well...  Per that interview, he has a good reputation but boy oh boy does he have his hands full.  I do not think the SA banks can find anyone better qualified to replace him (unless they can engineer a takeover by a major), and even the majors have limited expertise in operating Eastern European mines which is Kurzin's background.  Thus, the banks will likely have to extend the loan if Kurzin and company can keep showing progress.  Keeping Kurzin is likely the best way for the SA Banks to recover their capital...  But Kurzin & Co have to not only show improvements in reaching 90+% capacity but also getting the grade  and recovery issues resolved to get to those Tech Report profitability projections....

Just my opinion.