Orsu Metals Corporation

Orsu Metals Corporation

November 13, 2008 07:37 ET

Orsu Metals Corporation announces Interim Results for the Period Ended 30 September 2008 and 2007



November 13, 2008

Orsu Metals Corporation Announces Interim Results for the Period Ended 30 September 2008 and 2007 (Unaudited)

LONDON, UNITED KINGDOM--(Marketwire - Nov. 13, 2008) - Orsu Metals Corporation ("Orsu", or the "Company")
(TSX:OSU)(AIM:OSU), the London-based base and precious metal mining, development and exploration company today
reports its results for the quarter and six months ended 30 September 2008. All amounts are reported in United
States Dollars unless otherwise indicated. Canadian Dollars are referred to herein as CAD$.


- Orsu settled in advance its September to December 2008 gold forward contract obligations

- Orsu announced changes to the Board of Directors

- Orsu announced plans to procure a secondary low cost screener and crusher at the Varvarinskoye plant

- Orsu announced being served with a Statement of Claim


- Orsu announced an update regarding the Statement of Claim

- Orsu announced the reclamation of Rand 40.9 million (US$3.65 million) MDM contractor advances.


A full Management's Discussion and Analysis of the results for the quarter and nine months ended 30 September
2008 and year ended 2007 ("MD&A") and Financial Statements ("Financials") for the Company for the nine months
ended 30 September 2008 and year ended 2007 will soon be available on the Company's profile on SEDAR
(www.sedar.com) or on the Company's website (www.orsumetals.com). These can also be obtained on application to
the Company. The following information has been extracted from the MD&A and the Financials.


For the three month period ended 30 September 2008, the Company incurred a net loss of $4.0 million (compared
to a loss of $35.7 million for the same period in 2007) and a nine month loss of $49.4 million (compared to a
loss of $44.5 million for the same period in 2007).

The financial results of the operations for the three months ended September 30 2008 from the Varvarinskoye
Project have been included into the consolidated statements of operations.

Commercial production levels (defined by the Company as the earlier of the stage when mining and milling
activities are operating at 65% of design capacity for a sustained period for not less than 30 days, or 30 June
2008) were achieved during the third quarter and accordingly the Company commenced recognising operating
revenues and expenses for production activities with effect from 1 July 2008. All pre-commercial production
operating expenses, including applicable stock compensation costs and interest, have been capitalised as
development costs; pre-commercial production metal revenues have been credited against capitalised costs.

During the quarter the Company recognized revenues of $15.5 million and a net gain on derivative instruments of
$19.1 million. These were offset by operational costs of $27.7 million, administration costs of $4.9 million,
exploration expenditure of $2.7 million, foreign exchange losses of $1.7 million and other charges of $1.6


For the nine months ended 30 September 2008, the Company invoiced a gross amount totalling $38.8 million which
was revalued using a final settlement price for copper of $2.25 per lb. This gave rise to a total settlement
adjustment to revenue of negative $5.7 million; $2.4 million relating to the six months ended 30 June 2008 and
$3.3 million for the three months to 30 September 2008.

For the three month period to 30 September 2008, the Company invoiced $21.2 million against which the
aforementioned settlement adjustment of negative $5.7 million was made resulting in revenues for the period of
$15.5 million.

Finally, the Company recognised sales on gold and copper concentrate as revenues for the three month period 30
September 2008. As a by product of the production process, a small amount silver was produced which generated
sales totalling $21,000. The Company does not recognise this as income and has been recorded as part of
operating expenses.

Derivative instruments

During the three month ended 30 September 2008 the Company settled gold hedge contracts in cash at a cost of
$9.2 million (Nil for the same period in 2007). These have been recorded in the income statement as realised
derivative losses for the quarter. Of this, the Company settled future contract hedges for the period October
to December 2008 at a cost of $5.0 million at a forward gold sales settlement price of $794.75 per ounce.

Following a decrease in the spot market and forward price of gold during the third quarter (spot price gold 30
September 2008 $884.50), the mark to market revaluation of the Company's remaining hedge contracts gave rise to
unrealised derivative gains of $28.3 million during the quarter (a loss of $34.8 million for the same period in

Operational costs

The operational costs during the quarter of $27.7 million include mining, processing and site costs totalling
$20.6 million; selling and distribution costs of $2.2 million; depreciation and amortisation charges of $4.6
million and accretion charges of $0.3 million. Included with these are inventory write offs of $4.4 million.

Administration charges

Administration costs for the nine month period include termination and redundancy costs of $4.3 million
relating primarily to changes in senior management in connection with the business combination. Legal and
professional costs relating to the Lero acquisition of $4.9 million are included as part of the Lero purchase
consideration (not included within the Statement of Operations).

Foreign exchange and interest income

The Company successfully repatriated Rand 28.2 million in contractor advances (relating to MDM) along with
accrued interest of Rand 12.7 million on 22 October 2008 at an exchange rate of Rand to the US($) of 11.21,
$3.65 million. The advances had been previously been recorded by Company at an exchange rate of Rand to US($)
6.75. As at 30 September 2008 the Company recorded a realised foreign exchange loss of $1.7 million and accrued
interest income of $1.1 million.


At 30 September 2008 the Company's main source of liquidity was unrestricted cash of $17.9 million (2007
US$25.2 million).

At 30 September 2008, the Company's consolidated working capital was a deficit of $1.7 million (30 September
2007 working capital surplus of $8.2 million; 31 December 2007 working capital deficit of $1.6 million)
comprising free cash, inventory, accounts receivable, prepayments, less accounts payable and current portion of
the principal on long term debt. This represents a decrease of $0.1 million versus 31 December 2007 and a
decrease of $8.3 million versus 30 September 2007. The movement during the nine months ended 30 September 2008,
in the Company's consolidated working capital comprised a decrease in unrestricted cash of $7.4 million,
increase in inventories $7.6 million, increase in accounts receivable and prepayments $5.2 million, less an
increase in accounts payable $7.3 million and decrease in the current portion on the principle long term debt
of $1.8 million.

Going concern

At 30 September 2008 the Company had a working capital deficit of $1.7 million, (31 December 2007 a working
capital deficit of $1.6 million), accumulated losses of $267 million (31 December 2007 - $218 million) and
capital commitments for the Varvarinskoye Project amounting to $4.7 million. In addition, the Company was
served with a statement of claim in September 2008.

As at 30 September 2008 a total of $61.0 million long-term debt had been drawn down under the Varvarinskoye
limited recourse project finance debt facility with Investec Bank Limited, Nedbank Limited and Natixis Bank
(the "Lenders"), of which $36.1 million is due within one year, including a first tranche of $16.65 million
which is due 31 December 2008. The Company is currently seeking to negotiate an extension of the first tranche
repayment. To date no waiver or extension of the first tranche repayment of $16.65m due in December 2008 has
been secured.

As a condition of the long-term debt facility, the Company entered into monthly US dollar flat forward gold
sales (the "Varvarinskoye Hedge") over a term of 8 years. The Company has 372,478 ounces of unmargined forward
gold sales contracts remaining at a strike price of $574.25 per ounce as at 30 September 2008. To date the
Company's monthly gold production has been insufficient to meet its forward contract commitments resulting in
cash settlements of maturing contracts of $20.5 million in the nine month period to 30 September 2008 (2007 -
nil). Further cash payments are expected to be required to settle future commitments as they fall due.

While these financial statements have been prepared using Canadian GAAP applicable to going concern, which
contemplates the realisation of assets and liquidation of liabilities during the normal course of operations,
the conditions and events above cast significant doubt on the validity of that assumption. The ability of the
Company to continue as a going concern is dependent upon achievement and maintenance of profitable levels of
commercial production at Varvarinskoye and the ability of the Company to raise additional capital and financing
to fund the Company's current commitments. The Company is attempting to secure short-term financing or project
re-financing options acceptable to the Lenders. Whilst management has been successful in the past in raising
new debt and equity financing, and modifying its debt repayment terms, there can be no assurance that they will
be successful in the future.

These financial statements do not reflect adjustments to the carrying value of assets and liabilities, the
reported revenues and expenses and balance sheet classifications used that would be necessary if the going
concern assumption were not appropriate; such adjustments could be material.


The following table summarises the long-term commitments of the Company as 30 September 2008:


                          Total          2008           2009           2010
                           $000          $000           $000           $000

Long-term debt           61,000        16,650         40,525          3,825
Capital commitments       4,700         4,700              -              -


Under the terms of the Sub Soil Use Contract ("SSUC") with JSCV, the Company has agreed to repay certain
historic costs totalling $2.1 million (2007 - $2.1 million) that the Republic of Kazakhstan incurred for a
geological survey of the licence area.

These costs are repayable in annual instalments after both of the following events have taken place:

(i) the first discovery of a reserve in the licence area - complete as at 30 June 2007; and

(ii) the completion of the first year (not earlier than the year in which the discovery of a reserve occurs)
during which the licensee has a net profit for tax purposes. As the Company has yet to complete a year in which
a net profit for tax purposes is recorded, no liability has been recorded at September 30, 2008.

If and when the liability crystallizes, payments under the terms of the SSUC will be charged to operations as

Related party transactions

For the nine month period ended 30 September 2008 (and for the nine month period ended September 30 2007), the
Company was party to the following transactions involving related parties, all of which have been recorded at
the exchange amount:-

Dragon Management International Services Limited ("DIS") charged the Company a total of $1,699,752 (2007 -
$450,576) in respect of the provision of office facilities, general office overheads and re-charged costs
incurred on behalf of the Company. A. J. Williams, former Chairman and director of the Company, beneficially
owns DIS.

Endeavour Financial Corporation ("EFC") charged the Company a total of $3,612,391 (2007 - $124,227) in respect
of the provision of consulting services and related expenses of which $3,539,778 has been recognised in the
purchase consideration. A.J. Williams, former Chairman and director of the Company, is a shareholder of EFC. In
addition, on 18 April 2008, EFC made a bridging loan of $5 million to the Company for working capital purposes,
which was then subsequently repaid to EFC. A total of 254,479 shares were issued to EFC as part of the fee for
providing the bridging loan. EFC were also issued 500,000 purchase warrants, at an exercise price of CAD$1.20,
for advisory work on the Varvarinskoye debt renegotiation.

During the period ended 30 September 2008 Lero was charged $357,000 for rent and service charges from Oriel PLC
a company on which Sergey Kurzin, Executive Chairman of Orsu, served as a director (resigned 19 September



Orsu's current projects include the Varvarinskoye open pit copper-gold mine and exploration projects at the
Karchiga copper project in Kazakhstan and the Taldybulak-Talas licence area in Kyrgyzstan.

Varvarinskoye Copper-Gold Mine, Kazakhstan - Located in north-western Kazakhstan, the mine commenced production
of gold dore and copper-gold concentrate during December 2007. During Q3 2008, the Varvarinskoye plant
processed 768,663 tonnes of ore and produced a total of 375,022 grams (12,059 troy oz) of gold. Since
production commenced, a total of 847,523 grams (27,231 troy oz) of gold has been produced. See "Review of
Operations - Varvarinskoye Project Update" for further information.

Total metal production revenue to 30 September 2008 is approximately US$ 38.6 million.

Karchiga Copper Project, Kazakhstan - The 47.3km2 exploration licence contains the Karchiga volcanogenic
massive sulphide (VMS) deposit. In April 2008, Orsu reported a NI 43-101 compliant mineral resource estimate
for Karchiga. The mineral resource incorporates 1,879m of confirmation diamond drilling completed in Q4 2007
and 86 historical Soviet diamond drill holes and trenches totalling 10,330m. At a 0.50% copper cut-off, the
Indicated mineral resource is 4.75Mt @ 2.46% Cu while the Inferred mineral resources total 2.81Mt @ 1.81% Cu.
The deposit is situated 40km from the Chinese border, within the world-class Rudny Altai VMS belt. Management
believes significant potential exists for the discovery of additional mineralisation along the 10km strike of
the fertile VMS horizon contained within the licence perimeter.

Talas Exploration Licence Area, Kyrgyzstan - The Talas mineral exploration licence area is located on the north
slope of the Talas Valley, in the Talas Oblast, north-western Kyrgyzstan, at elevations of 1,800 to 3,000m. The
area is accessible year round via the main Bishkek-Talas road (270km from Bishkek) and comprises four
exploration licences, namely: Taldybulak-Talas, Korgontash, Kentash, and Barkol with a combined area of 371km2.
In April 2008, Orsu reported a NI 43-101 compliant mineral resource estimate for Taldybulak-Talas. The mineral
resource estimate incorporates all drilling data obtained for Taldybulak-Talas from the 2007-2008 drilling
programmes. At a 0.30g/t gold cut-off, the Indicated mineral resource is 79Mt @ 0.63g/t Au and 0.17% Cu and the
Inferred mineral resources of 163Mt @ 0.58g/t Au and 0.14% Cu. Within the Korgontash licence area, Orsu is also
exploring the Tokhtonnisai copper-gold prospect. The Barkol exploration licence area, located immediately to
the west of the Taldybulak-Talas licence, was granted in March 2007. The Barkol licence contains numerous
occurrences of mineralisation, with one known copper-gold-molybdenum occurrence within a 2km2 excision from the
licence. All four licenses are subject to ongoing joint venture negotiations with Gold Fields.

Tokhtazan Exploration Licence Area, Kyrgyzstan - The Tokhtazan exploration licence area is located in the Jalal-
Abad Oblast, western Kyrgyzstan and is covered by two exploration licences, Akdjol and Tokhtazan. Access to the
deposit is via the main Bishkek-Osh bitumen road for 400 km, then 14km on a gravel road. The nearest town and
railway station, Tash-Kumyr, is located 31km from the Tokhtazan deposit, whilst the Kurpsai hydro-power station
on the Naryn River is situated approximately 18km by road from the deposit.


The 100% owned Varvarinskoye copper-gold mine is located 130km southwest of Kostanai in northern Kazakhstan.
The mine produces for sale copper-gold concentrate and gold dore. Orsu's main focus has been the ramp-up of
mining operations at Varvarinskoye where mining and milling activities are operating at or around 80% of design



Varvarinskoye's production plant has seen significant increases in throughput and has now reached an operation
capacity of 80% of design capacity. During Q3, the plant processed a total of 768,663 tonnes of ore compared to
634,485 tonnes in Q2 2008. The plant was not in operation during Q3 2007.

During Q3, Varvarinskoye mined a total of 3,930,900 tonnes compared to 2,319,200 tonnes mined in Q2. A total of
902,700 tonnes of ore was mined compared to a 596,400 tonnes in Q2 and approximately 400,000 tonnes in Q3 2007.

A total of 375,022 grams (12,059 troy oz) of gold was produced during Q3 compared to 349,522 grams (11,239 troy
oz) in Q2. Gold grade of feed to the flotation circuit was 1.11g/t compared to 1.64g/t in Q2 and represents the
main reason gold production was not significantly higher than Q2. Copper production during Q3 was 1,106 tonnes
compared to 1,259 tonnes in Q2. Copper feed grade to the flotation circuit was 0.72% during the quarter
compared to 0.99% in Q2. Gold feed grade to the leach circuit was 0.61g/t in the quarter compared to 0.60 in


                                    1st Quarter   2nd Quarter   3rd Quarter
Varvarinskoye Production                 Actual        Actual        Actual
Total mined tonnes                    2,738,400     2,319,200     3,930,900

Processed tonnes                         62,698       184,948       187,603
Grade Cu %                                 0.46%         0.99%         0.72%
Grade Au g/t                               0.66          1.64          1.11
Recovery Cu to concentrate %               57.6%         68.9%         82.0%
Recovery Au to concentrate %               49.9%         51.3%         59.0%

Processed tonnes                        173,308       449,537       581,060
Grade Au g/t                               0.79          0.60          0.61
Recovery Au (onto carbon) %                68.6%         66.3%         69.5%

Metal Produced
Concentrate tonnes                        1,105         6,497         6,036
Cu recovered to concentrate tonnes          166         1,259         1,106
Total gold produced grams               122,979       349,522       375,022


During Q3, the average ore hardness increased as feed from the mine was fresh un-weathered ore compared to the
softer near-surface ore which was fed to the mill in Q2. The mill operated at an average of 73% of design
capacity through the quarter compared to 60% in Q2.

Within the main pit, mining has reached a high-grade copper-gold zone and management believes grades of mined
ore expected over the next two quarters are therefore expected to be significantly higher than those of Q3. In
addition, four new Caterpillar 777 haul trucks are due to be delivered to the mine in Q4. The addition of these
four trucks to the mining fleet is expected to increase Varvarinskoye's mining capacity from the current
1.3Mt/month to the targeted 2.0Mt/month, a planned increase of some 44%.

Low Cost Project Upgrade

The Company is implementing a plan to add a secondary low cost screening and crushing plant at Varvarinskoye
which is expected to significantly increase throughput in the leach and flotation grinding circuits. Orway
Mineral Consultants Pty Ltd (Australia) ("Orway") has been working with Varvarinskoye engineers since May 2008
in making improvements to the grinding circuits. With the assistance of Orway, Orsu has determined that both
grinding circuits are highly dependent on the size distribution of feed ore. Ore originating from the mine
lacks in fineness over the middle fraction and the intention is to screen the coarse ore from the jaw-crusher
into three sizes and further crush the middle fraction of the screened product.

The additional crushing of the feed to the leach grinding circuit should increase the throughput to 3.6 million
tonnes per annum ("mtpa") or 120% of design capacity. This would represent a 30% increase over what the
grinding circuit is currently achieving.

Throughput of the flotation grinding circuit should be increased to 1.3mtpa, or 108% of design capacity. This
would represent a 50% increase over what the grinding circuit is currently achieving. Overall capacity of the
mill is expected to increase to 4.9mtpa or an increase of 17% over original design capacity. The cost of the
proposed upgrade will total approximately US$5 million and is due to be completed during Q2 2009.

This low cost project upgrade is expected to significantly increase throughput of the grinding circuits and in
one step solves the current flotation grinding-circuit problems, providing the Company with a mill expansion.
The Company does not anticipate having to significantly change the leach or flotation circuits post-grinding to
accommodate the increased throughput and the mine is expected to meet production based on the sustaining
capital costs already built into the life of mine model. An initial scoping study outlined two options for mill
expansion; installation of an additional grinding circuit or modification of existing circuits to achieve
capacities of 6mtpa and 5mtpa respectively. Management feels this second option provides an optimum increase.
Additionally, this project upgrade is achievable in significantly less time than the two years it would likely
take to engineer and construct a second grinding circuit.

Varvarinskoye hedge settlement

As previously announced, on 3 September 2008 the Company settled in advance its September to December 2008 gold
forward contract obligations (a total of 27,340 ozs) at a settlement price of USD$794.75/oz, resulting in a
settlement payment of USD$6,028,000 net of the forward sales price of USD$574.25/oz.

Update on production ramp up

- Leach circuit grinding has been running at over 90% throughput with some days having achieved 100%
throughput. Throughput is highly dependent on feed size distribution.

- Flotation circuit grinding appears to be limited to 110 tonnes per hour ("tph") compared to designed capacity
of 155tph. This is due to the mentioned feed size distribution and the hardness of ore, along with the mill
design which was marginal for the required design throughput.

To enable mine management to meet forecast operating profit, the grinding circuits may at times be switched to
maximise the throughput in the flotation circuit which generates higher return per tonne of ore. This would
allow higher concentrate production compared to what would be achieved by simply operating the regular
circuits. The circuits will be switched according to feed available from the mine.

Varvarinskoye's open pit continues to operate on a normal basis and steps are being taken to improve overall
productivity by optimising truck positioning around the excavators and maximise the hours worked per day. Mine
grades were lower in Q3 due to a lack of waste mining in the first two quarters of the year when previous
management focused on high-grade ore production and shut down one of two shifts to conserve cash. This
necessitated an increase in waste mining during Q3 and is expected to expose higher-grade ore for extraction in
Q4, 2008.

Over the next few months, the operation is expected to continue with its ramp up by:


- Improving mining practices including productivity increases and improved
  grade control
  - Mining additional waste and lower-grade ore to access higher-grade
    copper ore, thereby catching up on the mine schedule which was delayed
    by the Company's decision in Q2 to mine on a single shift
  - Continuing to analyse the two grinding circuits with the possible
    implementation of additional design modifications
  - Increasing ball diameter for semi-autogenous grinding ("SAG") mill
    grinding in both flotation and leach circuits
  - Increasing the grinding throughput in the flotation circuit by improved
    ore blending and stockpile management
  - Fine-tuning the leach circuit and lab testing to improve leach kinetics
    and recovery


The mineral resource and mineral reserve estimates at Varvarinskoye were completed by William Kennedy a former
director of the Company (EMC's President and Chief Executive Officer at the time) and a qualified person as
defined by Canada's National Instrument 43-101 ("NI 43-101").


The Company is also exploring and developing several advanced staged gold and copper deposits in the Tien Shan
metallogenic belt in Kyrgyzstan and the Rudny Altai metallogenic belt in Kazakhstan. The Tien Shan gold belt is
host to some of the world's largest copper-gold porphyries, including a 93 Moz porphyry cluster at Almalyk in
Uzbekistan. These exploration projects are held by Orsu through Lero.


The Talas exploration area comprises the core assets of the Company in Kyrgyzstan including the Taldybulak,
Kentash, Barkol and Korgontash licences. The primary exploration property is the Taldybulak copper-gold
porphyry prospect.

For avoidance of confusion;

1. The Taldybulak copper-gold porphyry prospect within the Taldybulak exploration licence area is a separate
asset from the Taldybulak Levoberezhny gold deposit previously owned by Central Asia Gold Limited, and

2. The Talas Copper Gold Limited Liability Company, holder of the Taldybulak licence, is a separate company
from Talas Gold Mining Company, which was the owner of the Jerooy Gold Project.


(100% owned by Orsu via Talas Copper Gold LLP)

Targeted Mineralisation

Copper-gold porphyry and high sulphidation gold mineralisation is associated with Late Ordovician dioritic-
dacitic stocks, intruding Lower Ordovician intermediate volcaniclastics. The Taldybulak-Talas copper-gold
porphyry deposit was discovered during the Soviet era, but had been subject to limited exploration.

3rd Quarter Activity and Proposed Programme for 4th Quarter

Q3 2008 saw Orsu finalise the drilling contracts with Spektra Jeotek, Turkey and Altyn Jilga, Kyrgyzstan, which
has enabled the continuation of drilling with a total of 17,000m due to be completed in Q1 2009.


Table 1: Proposed drilling within Taldybulak-Talas Exploration Licence

Licence                                                             Proposed
Area     Purpose                         Target                       Metres
         Drill out   Taldybulak Central                               7,000m
Taldybu-             Taldybulak west extension & Taldybulak Central
 lak     Exploration  deeps                                           2,000m
         Exploration Taldybulak East                                  2,000m
Barkol   Exploration Taldybulak West IP Anomaly                       3,000m
                     Taldybulak East extension in to Mag & IP
         Exploration  Anomaly                                           800m
Kentash              Lower Kentash (Dzhangiturmish SE extension)
         Exploration  SW Soils & IP Anomaly                           1,000m
         Exploration Kokkiya                                            400m
Korgont- Exploration
 ash                 Tokhtonnisai                                       800m
TOTAL                                                                17,000m


Wardell Armstrong International, UK ("WAI") has been commissioned to conduct a locked cycle test work on
sulphide and transitional ores and bottle roll leach tests on oxide ores of Taldybulak. The test work on
sulphide and transitional ores has returned positive preliminary results with recoveries from sulphide ores
reaching 89-90% of both Au (head grade 0.6g/t) and Cu (head grade 0.18%).

Two main mineral material types were tested: primary sulphide and transitional. The primary sulphide responded
very well to the flotation test, including locked cycle test. The primary sulphide sample was made up of core
obtained from three separate drill holes in the Eastern, Central, and Western parts of Taldybulak with a final
head grade of 0.17% Cu, 0.01% Mo, and 1.02 g/t Au. It was demonstrated that a concentrate grading 18.31% Cu,
0.27% Mo, 83.8 g/t Au and 92.64 g/t Ag can be produced with 70% to 90% recovery for Au and Cu. The transitional
ore grading 0.28% Cu, 0.005% Mo, and 0.25 g/t Au reported poorer results to the floatation test, as expected.
However, a concentrate grading 18.17% Cu, 0.16% Mo, and 28.12 g/t Au at recoveries of 50% to 80% was achieved.
No penalty elements such as Cadmium or Arsenic were reported to be contained in the concentrate.

The Company is continuing test work on the oxide material from the system, which will involve bottle-roll acid
leach test work.

The mineral resource estimates at Taldybulak were completed by Matthew Boyes (Senior Geologist, Lero), a
qualified person as defined by Canada's NI 43-101, and Julian Woodcock (Chief Geologist, Lero). These results
were reviewed and approved by WAI. However, WAI has relied upon the data presented by Lero in formulating its
opinion. The complete technical report can be viewed on www.sedar.com.


(100% owned by Orsu via Talas Copper Gold LLP)

Targeted Mineralisation

Palaeozoic copper-gold porphyry and associated skarn and quartz vein hosted mineralisation.

Q3 Activity and Proposed Programme for Q4

Within the Kentash licence 3 PD-IP lines totalling 9.55km were completed over the SW anomaly. Two lines of DD-
IP totalling 9.85km were completed within the Barkol licence. Year-to-date IP totals over 106km.

Approximately 1,000m in three drill holes IS planned for Q4 2008.


(100% owned by Orsu via Talas Copper Gold LLP)

Targeted Mineralisation

Palaeozoic copper-gold porphyry and associated skarn and quartz vein hosted mineralisation.

Q3 Activity and Proposed Programme for Q4

A 15km2 ground magnetic survey over the NW extents of the Korgontash license has been completed. The presence
of magnetic highs to the west of the Aktash exclusion zone indicates potential for additional skarn type
mineralisation as well as a potential deeper seated magnetic intrusive. Follow up work with additional IP lines
mainly focussed on the area west of the Aktash exclusion zone is being planned. Location of drill sites for the
Q4 programme will be decided on this basis.


(100% owned by Orsu via Talas Copper Gold LLP)

Targeted Mineralisation

Copper-gold porphyry mineralisation.

Q3 Activity and Proposed Programme for Q4

A total of 49.2 line km of DD-IP geophysics was completed on the Barkol licence during Q3 2007. Approximately
half of this volume was used to identify Ordovician copper-gold mineralisation masked by Devonian volcanics in
the east of the licence with the remainder conducted over the Barkol and Chonur prospects in western section of
the licence.

All results from the geochemical programme completed in Q4 2007 have been received and outlined several
anomalies, which are due to be investigated during Q4 2008.

An orientation Mobile Metal Ions geochemical sampling programme, aiming to identify concealed targets, was
completed in June 2008. Results are pending.

Core drilling is planned for Q4 2008.


Tokhtazan Project

(100% owned by Orsu via Oriel in Kyrgyzstan LLP)

Q3 Activity and Proposed Programme for Q4

Access road construction was conducted during Q3 2008.A diamond drilling programme, consisting of approximately
2,500m, commenced during Q3 2008.

Akdzhol Project

(100% owned by Orsu via Oriel in Kyrgyzstan LLP)

Q3 Activity and Proposed Programme for Q4

Access road construction was conducted during Q3 2008. A trenching programme, consisting of approximately 500m,
started on the Kurpsai area within the licence area during Q3 2008. This will be supplemented by ground DD-IP
geophysical survey.


Karchiga Project

(70% owned by Orsu via GRK MLD LLP)

Targeted Mineralisation

Copper Volcanogenic Massive Sulphide ("VMS")

Q3 Activity and Proposed Programme for Q4

Drilling works during the period focused on the Main and Northeast lodes of Karchiga. The primary scope of the
2008 programme is to upgrade the previously reported mineral resource at the Karchiga project to Measured and
Indicated categories under 43-101. The total drilling programme consists of 11,000m, of which 9,000m is to be
drilled at Karchiga's Central and Northeast lodes, with additional 2,000m planned to test new exploration
targets. By the end of Q3 2008, Orsu completed 8,000m of diamond drilling. All drilling works within the Main
lode of Karchiga have been completed by the end of Q3 2008. Within the Main lode, data from 46 drill holes
completed to date confirms that the general structure of the lode conforms to that of the Soviet data. At the
same time, it revealed a number of peculiar characteristics, which may be of considerable importance. The new
drilling works demonstrated that the total strike length of the Northeast lode is continuous for 659m, which
was only partly included into the April resource model.

Trenching work commenced during the period to sample the oxide mineralization in the Main lode at Karchiga.
This work is due to be completed early Q4 2008. Early results demonstrate that an oxidized zone was locally
worked by ancient miners to a depth of 18 meters.

Sampling has been carried out, with 1,000 core samples due to arrive at the Alex Stewart's Karabalta lab
(Kyrgyzstan), while geochemical samples have been already been sent to Australia.

Geochemistry has been completed over the entire licence area on soils on 100x20m grid. Samples have been sent
to Ultratrace lab in Australia. An IP and resistivity survey was completed on 18 profiles during the period,
totalling 63.55km. A preliminary interpretation was received in September and was used for positioning the
exploration drill holes in two anomalous zones, similar to Karchiga, where a non-outcropping area of
mineralisation is being targeted. The identification of these new targets is based on historical work plus
recently acquired geochemical and induced polarization ("IP") geophysical data carried out by Orsu since
obtaining the licence in 2006. The target areas lie approximately 5km along strike from the Central zone with
the area exhibiting very similar geological terrain and structural characteristics. The Company started
exploration drilling of the new anomalies in Q4 2008.

Metallurgical test work on Karchiga sulphide ores has been completed by the VNIITvsetMet Institute in Ust-
Kamenogorsk with positive results suggesting that a 15.9% Cu concentrate can be produced from the Karchiga ores
at 98% recovery. This result requires optimization of concentrate grade versus recovery. For the purposes of
the feasibility study, three 400kg metallurgical samples are due to be collected. These samples will represent
the three types of Karchiga ore (oxidized, primary disseminated and massive). The analysis of primary ores at
Karchiga showed that 18% of ores are massive (1m average) and 82% of ores is disseminated (4.5 m average). It
is also planned to study a variability of these ore types throughout the deposit. Metallurgical sampling is
scheduled for the latter half of October 2008, with results of metallurgical test-work due approximately Q2

In September 2008, Micon International Co Limited was contracted to carry out a preliminary assessment (scoping
study) of the Karchiga massive sulphide copper project. The scoping study is expected to be completed by mid
December 2008 and is targeted to provide a preliminary estimate of resource/reserve conversion, an estimate of
costs including capital costs, as well as preliminary estimate of environmental aspects of the project.

The mineral resource estimates at Karchiga have been completed by Matthew Boyes (Senior Geologist, Lero), a
qualified person as defined by Canada's NI 43-101. These results were reviewed and approved by WAI. However,
WAI has relied upon the data presented by Lero in formulating its opinion. The complete technical report can be
viewed on www.sedar.com.


Orsu Metals Corporation
Consolidated Balance Sheets
For the Period Ended 30 September 2008 (Unaudited) and 2007

                                                 September 30  December 31
                                                         2008         2007
                                                         $000         $000
Current assets
Cash and cash equivalents                              17,851       25,250
Inventory                                              26,342       18,738
Accounts receivable and prepaid expenses                6,187        1,032
                                                       50,380       45,020

Restricted cash                                            71          127
Property, plant and equipment                         384,644      220,476
Net investment in oil and gas residual interests        1,364        1,364
Contractor advances                                     3,650        4,180
                                                      440,109      271,167
Current liabilities
Accounts payable and accrued liabilities               21,423       14,140
Current portion of-long term debt                      30,654       32,475
Current portion of derivative liabilities              19,443       19,185
                                                       71,520       65,800

Long-term debt                                         22,320       17,645
Derivative liabilities                                115,727      121,436
Future income tax                                      53,964        6,705
Asset retirement obligations                           12,060       11,388
                                                      275,591      222,974

Share capital                                         361,306      204,553
Share purchase warrants                                49,534       46,629
Share purchase options                                 18,370       13,567
Contributed surplus                                     1,956        1,399
Translation reserve                                       754            -
Retained losses                                      (267,402)    (217,955)
                                                      164,518       48,193
                                                      440,109      271,167

Orsu Metals Corporation
Consolidated Statements of Operations, Comprehensive Loss and Deficit
For the Period Ended 30 September 2008 and 2007 (Unaudited)

                                     Three months ended   Nine months ended
                                           September 30        September 30

                                         2008      2007      2008      2007
                                         $000      $000      $000      $000

Sales revenues
Gold                                   11,955         -    11,955         -
Copper                                  3,557         -     3,557         -
                                      -----------------   -----------------
                                       15,512         -    15,512         -

Cost of sales

Operating expenses                    (20,603)        -   (20,603)        -
Selling and distribution costs         (2,215)        -    (2,215)        -
Depreciation, depletion and
 amortization                          (4,560)        -    (4,560)        -
Accretion                                (311)        -      (671)        -
                                      -----------------   -----------------
                                      (27,689)        -   (28,049)        -
                                      -----------------   -----------------

Other (expenses) income
Unrealised derivative gains/ (loss)    28,271   (34,779)    5,451   (38,457)
Realised derivative (losses)/gains     (9,219)        -   (20,512)        -
General and administrative             (4,885)   (1,626)  (14,160)   (4,740)
Exploration and development            (2,770)      (74)   (3,694)     (343)
Stock based compensation               (1,580)     (417)   (1,744)   (2,861)
Interest and finance fees              (1,094)        -    (1,531)        -
Interest income                         1,132       429     1,387     1,123
Foreign exchange (losses)/ gains       (1,678)      723    (2,064)      432
                                      -----------------   -----------------
                                        8,177   (35,744)  (36,867)  (44,846)
                                      -----------------   -----------------
Net loss before income tax             (4,000)  (35,744)  (49,404)  (44,846)

Future income tax                          (3)        -       (43)      300

                                      -----------------   -----------------
Net loss and comprehensive loss
 for the period                        (4,003)  (35,744)  (49,447)  (44,546)
                                      -----------------   -----------------
                                      -----------------   -----------------
Retained loss - Beginning of
 period                              (263,399)  (79,526) (217,955)  (70,724)

Transitional Adjustment                     -   (69,641)        -   (69,641)

                                      -----------------   -----------------
Retained loss - End of period        (267,402) (184,911) (267,402) (184,911)
                                      -----------------   -----------------
                                      -----------------   -----------------
Loss per share
 per common share                      $(0.01)   $(0.13)   $(0.16)   $(0.16)

Weighted average number
 of common shares (000's) - Basic
 & diluted                            310,152   279,764   310,152   279,717

Orsu Metals Corporation
Consolidated Statements for Cash Flows
For the Period Ended 30 September 2008 and 2007 (Unaudited)

                                  Three months ended  Nine months ended
                                        September 30       September 30

                                      2008      2007      2008     2007
Cash flows from operating
 activities                           $000      $000      $000     $000

Net loss for the period             (4,003)  (35,744)  (49,447) (44,546)
Items not affecting cash:-
 Depreciation , amortisation and
  deferred finance charges           7,030         -     7,030        -
 Unrealized derivative loss/
  (gain)                           (28,271)   34,779    (5,451)  38,457
 Stock-based compensation            1,580       418     1,744    2,862
 Unrealised foreign exchange loss    1,097      (291)    1,661        -
 Inventory write offs                4,439         -     4,439        -
 Future income tax recovery              -         -         -     (300)
 Warrants issued to agents               -         -       185        -
 Accrued interest income            (1,130)        -    (1,130)       -
                                   (19,258)     (838)  (40,969)  (3,527)
Change in non cash working
  (Increase) decrease in
    contractor advances,
    accounts receivable and
    prepaid expenses                (2,965)     (242)   (1,425)       1
   Increase (decrease) in
    accounts payable and
    accrued liabilities              7,302      (889)    4,529     (847)

Cash used for operating
 activities                        (14,921)   (1,969)  (37,865)  (4,373)
Investing activities
Expenditures on Varvarinskoye
 property, plant and equipment         (12)  (20,935)  (23,763) (56,323)
Restricted cash                          -     3,651        56    8,201
Acquisition of Lero, net of cash
 acquired                                -         -    29,753        -

Cash provided by / (used for)
 investing activities                  (12)  (17,284)    6,046  (48,122)

Financing activities
Common shares issued                     -     5,338         -    6,249
Proceeds from exercise of stock
 options                               102         -     1,324        -
Proceeds from debt                       -         -     5,000        -

Proceeds from long term debt             -    13,836       786   44,732
Lero cash advances to EMC pre
 acquisition                             -         -    25,000        -
Repayment of debt                        -         -    (5,000)       -

Deferred financing costs            (1,625)        -    (2,690)       -
Cash provided by/ (used for)
 financing activities               (1,523)   19,174    24,420   50,981

Decrease in cash and cash
 equivalents                       (16,456)      (79)   (7,399)  (1,514)

Cash and cash equivalents -
 Beginning of period                34,307    18,119    25,250   19,554

Cash and cash equivalents - End
 of period                          17,851    18,040    17,851   18,040



This press release contains or refers to forward-looking information. All information, other than information
regarding historical fact that addresses activities, events or developments that the Company believes, expects
or anticipates will or may occur in the future is forward-looking information. Such forward-looking information
includes, without limitation, the Company's anticipated rates of production and revenue there from; including
expected levels of operating profits; the Company's planned implementation of a second low cost screener and
crusher at Varvarinskoye and the expected increase in throughput expected; the estimated costs associated with
the proposed upgrade to the screener and crusher; Management's expectations of increased grades of mined ore at
Varvarinskoye over the next two financial quarters; the estimated value of gold-copper concentrate produced
from Varvarinskoye; the expected levels of ore that will be treated at the Varvarinskoye mine; Management's
beliefs with respect to the extent of potential which exists for the discovery of the additional mineralisation
at the Karchiga copper project; the Company's expectations with respect to its planned operations over the next
few months at Varvarinskoye and its other projects; the anticipated timing for completion of the Taldybulak-
Talas drilling programme underway; completion of the follow-up work at Korgontash being planned; the expected
timing of the commencement of investigations of the anomalies identified at Barkol and the Barkol core drilling
programme; at Tokhtazan the diamond drilling programme; and at Akdzhol: undertaking of geophysical survey and
completion of trenching programme; the expected timing of the completion of the scoping study at Karchiga and
anticipated results; development and operational plans and objectives; the Company's expectation of reaching a
satisfactory joint venture agreement ensuring Gold Fields' participation and financial support with respect to
the Barkol, Kentash, Taldybulak and Korgontash licences; estimates of mineral resources and reserves; the
proposed work programs for the Company's exploration properties and their respective costs and timing and the
Company's expectations concerning the outcome of the pending litigation.

The forward-looking information in this press release reflects the current expectations, assumptions or beliefs
of the Company based on information currently available to the Company. With respect to forward looking
information contained in this press release, the Company has made assumptions regarding, among other things,
the Company's ability to generate sufficient cash flow from operations and capital markets to meet its future
obligations, the regulatory framework in Kazakhstan and Kyrgyzstan with respect to, among other things,
permits, licences, authorisations, royalties, taxes and environmental matters, the ability of management to
establish a commercial mining operation at Varvarinskoye, and the Company's ability to continue to obtain
qualified staff and equipment in a timely and cost-efficient manner to meet the Company's demand.

Forward-looking information is subject to a number of risks and uncertainties that may cause the actual results
of the Company to differ materially from those discussed in the forward-looking information, and even if such
actual results are realised or substantially realised, there can be no assurance that they will have the
expected consequences to, or effects on, the Company.

Factors that could cause actual results or events to differ materially from current expectations include, but
are not limited to: the grade and recovery of ore which is mined varying from estimates; capital and operating
costs varying significantly from estimates; inflation; changes in exchange rates; fluctuations in commodity
prices; delays in the development of, and the commencement of operations at, Varvarinskoye caused by
unavailability of equipment, labour or supplies, climatic conditions, delays in the delivery and installation
of plant and equipment or otherwise; termination or suspension of the Company's debt facility; uncertainty of
the outcome of any litigation; inability to delineate additional mineral resources or reserves; and other
factors including, but not limited to, those listed under "Risk and Uncertainties" in this press release.

Any forward-looking information speaks only as of the date on which it is made and, except as may be required
by applicable securities laws, the Company disclaims any intent or obligation to update any forward-looking
information, whether as a result of new information, future events or results or otherwise. Although the
Company believes that the assumptions inherent in the forward-looking information are reasonable, forward-
looking information is not a guarantee of future performance and accordingly undue reliance should not be put
on such information due to the inherent uncertainty therein.

Any mineral resource and mineral reserve figures referred to in this press release are estimates and no
assurances can be given that the indicated levels of minerals will be produced. Such estimates are expressions
of judgment based on knowledge, mining experience, analysis of drilling results and industry practices. Valid
estimates made at a given time may significantly change when new information becomes available. While the
Company believes that the resource and reserve estimates referred to in this press release are well
established, by their nature resource and reserve estimates are imprecise and depend, to a certain extent, upon
statistical inferences which may ultimately prove unreliable. If such estimates are inaccurate or are reduced
in the future, this could have a material adverse impact on the Company. Due to the uncertainty that may be
attached to inferred mineral resources, it cannot be assumed that all or any part of an inferred mineral
resource will be upgraded to an indicated or measured mineral resource as a result of continued exploration.

Additional information about the risks and uncertainties of the Company's business is provided in its
disclosure materials, including its Annual Information Form, available under the Company's profile on SEDAR at


Orsu Metals Corporation
Petro Mychalkiw
+44 (0) 20 7518 3999


Orsu Metals Corporation
Tania Tchedaeva
Company Secretary
+44 (0) 20 7518 3999


Orsu Metals Corporation
Gavin Dallas
Investor Relations
+44 (0) 20 7518 3999
+44 (0)20 7513 3998 (FAX)
Website: www.orsumetals.com


Macleod Dixon LLP
Michael Sabusco
(416) 202-6731


Canaccord Adams Limited
Ryan Gaffney
+44 (0) 20 7050 6500


Vanguard Shareholder Solutions
Keith Schaefer
(604) 608-0824

Contact Information

  • Orsu Metals Corporation