(Image via Orsu Metals)
In the world of gold investments and exploration, oftentimes it’s a simple case of knowing where to look (and knowing when you’ve found something).
That was the case when Alexander Yakubchuk, a geologist with more than 35 years of experience in Asia, Europe, Australia and Canada, first visited the Sergeevskoe Project in Russia. Located in the well-known Stanovik Gold Province, the project lays in the vicinity of multiple mining towns, accessible transportation, and most importantly, strong gold deposits with millions of ounces in reserves and existing infrastructure.
Yakubchuk was no stranger to strong gold deposits in the area, having worked across Russia, Kazakhstan, and Uzebkistan. He was also well-known in the gold space, having previously served as the Exploration Manager for major
Gold Fields Ltd. (
NYSE:GFI) in Europe and the Former Soviet Union (FSU), as well as consulting with other majors including
BHP (
NYSE:BHP),
Norilsk Nickel (
OTC:NILSY), and
Goldcorp.
(Image via Orsu Metals. Click image to enlarge)
The geologists from Orsu quickly realized the potential of Sergeevskoe and estimated what kind of straightforward work it needed to come to fruition. As the Director of Exploration of
Orsu Metals Corp. (TSX-V:OSU, OTC:ORSUF, Forum), Alexander relayed his findings and recommendations to the Chairman Sergey V Kurzin and the board, and they quickly set about to acquire the project in 2017.
Just three short years later, Orsu Metals is gearing up to take Sergeevskoe into pilot production.
How? In a recent interview with Stockhouse Editorial, the Company’s Director of Exploration Alexander Yakubchuk and Managing Director Sergei Stefanovich said it was all about results, inherent strength, and knowing what to do. Orsu Metals was built from the ground up with a small but mining-savvy management team that works remotely with little overhead, all to ensure that the Company could focus money solely on exploration.
And as time passed by, those results spoke for themselves. Orsu Metals spent $5.5 million on fleshing out the Sergeevskoe Project, with more than 20,000 m drilled and 11,000 m trenched and metallurgy tests completed. By April 2019, e.g., in two years after beginning the ground work, they had a maiden NI 43-101 resource of 1.2 million oz Au, and in January 2020 it was updated to 1.42 million oz Au, for a low discovery cost of under US $4/oz Au.
In fact, the more people learned about Sergeevskoe, the more clear-cut the opportunity looked. It was located right next to the Klyuchevskoe open pit mine that had 1.5 million oz Au produced until 2002 and another 4+ million oz Au resource recently identified, and extremely close to the Aleksandrovskoe open pit and gold processing plants, which Orsu Metals could use. Major shareholders joined Orsu, including noted investor Doug Casey and Gold Field Ltd., and in 2018 the project was deemed one of the best gold exploration projects in Russia by winning the Gold Prize MineVenture Competition in Moscow.
(Image via Orsu Metals. Click image to enlarge)
Even with the impressive work already done by Orsu Metals at Sergeevskoe, the management team is confident there’s more to uncover. With the money they had, they scored a resource estimate of more than 1.2 million oz Au relatively easily, but according to Yakubchuk, the vast exploration upside at the project could reach 2.5-3 million oz Au via simple follow up on already well-understood mineral pattern.
“We knew what to do from day one. This wasn’t a greenfield, it’s a brownfield, and it was all about results. It was clear opportunity, and not that I would say that the exploration risk was low, but it was significantly reduced. When you have a license that is just 300 meters from the walls of a pit, geologically and based on common sense it means something should be there. Even with the nearby open pit, historically they extracted around 1.5 million ounces, it was never a huge production but it still has a resource and waste dumps that can be leached, and we felt we could do the same thing at Sergeevskoe and do it quickly. With more exploration money, Sergeevskoe would probably be now not with 1.2 million ounces but closer to 3 million.”
Having been on a clear roadmap since day one of acquiring Sergeevskoe, Orsu Metals has already progressed well down the path of a gold exploration company. This summer, the Company is making the leap to what Yakubchuk described as a “producing junior.”
That’s because, unlike in other districts, mining projects in Russia can start with pilot mining licences. As the land is technically leased from the State, this helps the company to demonstrate mineralization and potential before ramping up to scale, and Orsu Metals is ready.
On May 27, the Company announced it was moving forward with
plans to conduct a bulk test pilot mining program at Sergeevskoe. With establishing RC and grade control drilling, the plan would see the initial mining and milling of approximately 50,000 tons of mineralized material at a grade of approximately 1.6 g/t Au to establish achievable recoveries of gold. On June 3 and 9, Orsu Metals released the
establishing drill results, including 2.96 g/t Au over 24m and
grade control results at the part of the Project’s Kozie domain of 2.12 g/t Au over a central section of 30x15m.
(Image via Orsu Metals. Click image to enlarge)
Finally, on June 11, 2020, Orsu Metals obtained a
permit for pilot mining from the Russian Subsoil Agency Commission. With the Russian technical report on the Sergeevskoe Project approved, the Company can mine 1.05 million tonnes of mineralized material for up to three years.
With pilot mining slated to begin in the late summer of 2020, Orsu Metals already has its eyes on the next steps and what pilot mining will bring. Managing Director Sergei Stefanovich emphasized one obvious benefit will be immediate revenue generation, useful to fund further exploration and advance the project and deposit without diluting the shareholder base.
And because Orsu Metals knows what they’re doing, the management team also knew not to wait around before starting to prepare for the project. Vegetation over the 8 hectares covering the planned open pits and waste dump pad has already been cleared, and a mining plan drawn up that envisages three pilot open pits dug to a depth of 35m, one North pit and two South pits.
Likewise, the Company planned for the processing of material as well, and worked
with the owners of the Alexandrovskoe gold plant to develop the plan for mineralized material. At first, mined material have to be trucked via existing roads, but upon the receipt of necessary approvals, a new road will be constructed to reduce trucking costs later this year.
(Image via Orsu Metals. Click image to enlarge)
Again, the Orsu Metals story is unlike many others in the gold market, and it’s as real as it gets. When you get a good team at the right property, as Managing Director Sergei Stefanovich put it, the puzzle starts to solve itself.
“It's nothing short of remarkable. In terms of scale and potential and how quickly we have been able to do this project, we're talking about matter of months. It was one of those rare cases where a lot of components just fit into place. We kept ourselves as a very small team, we have a very good geological team that was able to get to the property and see the indications of a strong deposit, the infrastructure is right around the property so we didn’t have to hire helicopters or pay for any sort of expensive exploration. There’s a processing facility five kilometres line of sight away from our project, that’s simply amazing.”
But the key for investors to remember about Orsu Metals is that, though Sergeevskoe is ready for lift-off, it hasn’t launched
yet. The pilot mining program has already been licenced and approved, and all of the building blocks are in place, but the real upside from the potential cash flow and scaling up of the project are close on the horizon.
The biggest benefit of a pilot mining program is its use in a
final feasibility study to build out the project even further. The Orsu Metals team is confident that there is significant upside at the Sergeevskoe project yet to be discovered, and as activity in projects in the vicinity picks up, the Company’s position looks better and better. One million tonnes for a pilot license at a profitable grade is millions in potential revenue, and it can only increase from there.
There’s a reason Orsu Metals has won exploration awards and brought in major shareholders while making sure not to dilute the company. Rather, there are plenty of reasons. The Company’s experienced management team secured a strong project with proximity to past-producing gold mines and infrastructure, progressed it from inferred resource to measured, indicated, and a pilot mining license, and has done so in the span of just three years. Orsu Metals isn’t impressive in just the gold and mining markets, it’s impressive as a business.
(Video via Orsu Metals. Click image to play video)
Orsu Metals - Sergeevskoe License from Adnet Communications Inc. on Vimeo.
orsumetals.com
FULL DISCLOSURE: This is a paid article produced by Stockhouse Publishing.