NEWS OF SALE2 Aug 2016 13:01
Orsu Metals Corporation: Sale of Akdjol-Tokhtazan Project
LONDON, UNITED KINGDOM--(Marketwired - Aug. 2, 2016) - Orsu Metals Corporation ("Orsu" or the "Company"), the London-based TSX-listed (TSX:OSU) company, announces that its wholly owned subsidiary, Lero Gold Corp. ("Lero") has entered into an agreement (the "Sale and Purchase Agreement"), with three arm's length individuals (the "Purchasers"), to sell its 100% interest (the "Equity Interest") in Tournon Finance Limited ("Tournon"), which owns 100% of Oriel in Kyrgyzstan LLC, ("OiK") and which in turn holds the Company's interest in its Akdjol-Tokhtazan Project in the Kyrgyz Republic (the "Transaction"). The Company has been actively seeking to sell this project since the end of 2011.
The key terms of the Sale and Purchase Agreement, which will be filed on SEDAR, are as follows.
The Equity Interest will be sold for an effective initial consideration of US$0.5 million comprising
the nominal sum of US$1, and
the Purchaser's assumption of the existing liabilities of OiK, estimated at US$0.5 million.
In addition, the existing interest free loan, payable on demand, of approximately US$4.19 million between Lero (the "Loan") and OiK will remain in place and the Purchasers may, within two years of the effective date of the Sale and Purchase Agreement (i.e. on or before August 1, 2018) elect to
purchase the loan for the sum of US$2 million, or
cancel the loan upon the payment by the Purchasers of the sum of US$2.0 million, or
in the event that the Purchasers do not elect either of such options, the loan will become repayable within three years from the commencement of production at an interest rate of LIBOR plus 5%.
Deferred consideration of US$2 million is payable from production revenues over the first two years of production at the Akdjol-Tokhtazan Project, at US$250,000 per quarter from the commencement of production ("Deferred Consideration").
The Transaction is subject to normal commercial conditions, including formal exchange of documents and re-registration of the licences in the name of the Purchasers, which are expected to be completed within two weeks.
Lero has the right to assign its rights and obligations under the Loan and the right to assign the Deferred Consideration to a third party (including other members of the Orsu group).
The carrying value of net liabilities attributable to the Akdjol-Tokhtazan Project in the Company's unaudited consolidated financial statements as at March 31, 2016 was US$0.5 million. The losses attributable to the Akdjol-Tokhtazan Project were US$30,000 for the quarter ended March 31, 2016 (US$4.4 million for the year ended December 31, 2015, which included an impairment charge of US$4.3 million).
FORWARD-LOOKING INFORMATION
This press release contains forward-looking information which is not comprised of historical facts. Fo