Orsu Metals Director of Exploration: Russia an Optimal, Low-cost Jurisdiction

MINEX Forum | April 24, 2019 | Views: 80 | Source: Investing News

Alexander Yakubchuk of Orsu Metals believes Russia is the perfect jurisdiction for his company’s Sergeevskoe gold project.

Orsu Metals (TSXV:OSU) Director of Exploration Alexander Yakubchuk is enthusiastic regarding the company’s recent maiden resource announcement.

In the interview below, Yakubchuk was joined by Orsu Metals Managing Director Sergei Stefanovich to discuss the company’s property in Russia’s Zabaykalsky Krai province, a mining jurisdiction with a significant history of exploration in the area. The region has been host to numerous mineral deposits including gold, copper, zinc and lead.

Orsu Metals recently announced its maiden resource on the Sergeevskoe property. The resource estimate includes an inferred mineral resource of 25.09 million tonnes, grading 1.47 grams per tonne gold and containing 1.19 million ounces gold at a 0.5 grams per tonne gold cut-off grade. Moving forward, Orsu Metals is expected to continue to develop its resource at Sergeevskoe with the goal of eventually declaring a resource of over three million ounces of gold.

Below is a transcript of our interview with Orsu Metals Director of Exploration Alexander Yakubchuk and Managing Director Sergei Stefanovich. It has been edited for clarity and brevity.

Investing News Network: Please give our investor audience an overview of Orsu Metals and its Sergeevskoe property in Russia.

Orsu Metals Director of Exploration Alexander Yakubchuk: Orsu Metals acquired the Sergeevskoe gold property in May 2017. We are 1000 kilometers to the east of Lake Baikal and China’s border is some 100 kilometers to the south. Our project resides in the Zabaykalsky Krai province, which is a well-known historic mining region in Russia that hosts numerous gold, copper, zinc and lead deposits.

The Sergeevskoe also hosts some great infrastructure. We’re eight kilometers from the Federal Highway and 30 kilometers from the Trans-Siberian Railway. We also have access to water and power. Our property is next to Sun Gold’s five to six million ounce Kluchevskoye mine, which has been put on care and maintenance.

INN: Can you tell us more about the exploration progress made at the property?

AY: Sergeevskoe is the only property that Orsu is exploring at the moment. It’s a gold exploration property. Orsu Metals acquired this property in May 2017 and has been exploring the property for about two years now. As of today about US$4.5 million has been spent in the exploration.

For that money, Orsu Metals has done about 17,500 meters of diamond drilling and over 5,000 meters of trenches, including geophysical studies.

INN: What can you tell us about Zabaykalsky Krai as a mining jurisdiction?

AY: One could not wish for a better location for our project. From the federal highway, it’s only eight kilometers via gravel road to a settlement where we have the camp. The Trans-Siberian Railway is only 30 kilometers away from our property. Power is available from the grid. Water is available and labor is available. So, it’s a luxury location.

We also have another mine to the west from our property near the mill that processes the ores from this open pit. We are already in discussions with our neighbors about them possibly taking our ores for processing purposes, which would generate early cash flow for Orsu Metals and allow us to fund any further exploration out of internally generated cash flow without relying upon the market and diluting the shareholders.

INN: Are there any team members at Orsu Metals you would like to highlight?

Orsu Metals Managing Director Sergei Stefanovich: The company was founded by Sergey Kurzin. Sergey has hit a number of home runs in his mining career. His biggest success was Oriel Resources, a London-listed company which he sold in 2007 for $1.8 billion enterprise value. He was also involved in the creation and integration of UrAsia Energy, which is now part of one of the largest uranium producers on the planet. He was the one who actually brought the famous Kupol deposit to Clive Johnson of Bema Gold in 2001. Bema Gold was later sold to Kinross (TSX:K) for US$3.7 billion.

INN: How does Russia compare to other mining jurisdictions in the world?

SS: We feel comfortable about working in Russia. The country has been growing its gold production steadily over the past 15 to 20 years. Today Russia is now number three in gold production after China and Australia. More interestingly, Russia as a region is the lowest gold producer in terms of costs. The Russian miners are quite efficient thanks to a cheaper ruble evaluation. Russia is a cheap place to operate as well; the cost of diesel, power and labor are lower compared to many jurisdictions.

INN: What makes the Sergeevskoe project an attractive prospect for investors?

SS: We believe that the property that Orsu owns has every promise of becoming a large deposit. Large meaning three million ounces, that’s the ambition. We cannot say that it is three million ounces, but there’s certainly geological potential.

There’s excellent infrastructure as well, which could really contribute to lower capital cost of construction. It’s also an opportunity to consolidate the region. We could be in a very competitive situation a year or two down the road. I guess that’s what makes the property overly attractive.

INN: What’s next for Sergeevskoe and how does that fit into Orsu Metals’ long-term plans?

SS: We’ve just released our maiden resource. We want to restart the drilling again in the summer, June or July. The size of the drilling campaign is to be defined within the next month or so. The long-term ambition would be to keep upgrading the resource both in terms of size and in terms of the categories. We want to shift ounces out of the inferred category into measured and indicated.

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