ANALYSIS – ProspectingJournal.com – February 4, 2011 - According to the IFC and World Bank study, Doing Business 2010, Kazakhstan currently has the most improved business regulation in the entire world. Last year, it moved up an astonishing 15 places and now sits comfortably in the top third.
Not surprisingly the country is buzzing with new business opportunities that this distinction presents. Recently, the Eurasian Natural Resources Corporation (ENRC) announced investment of $7 billion in Kazakhstan mining development programs. Already slated for this work, ENRC will invest $2 billion to expand an existing mine, and $750 million to construct a ferroalloy plant in Aktobe.
A landlocked country, Kazakhstan is not only bordered by powerhouses Russia and China, but Kyrgyzstan, Uzbekistan, and Turkmenistan as well. With these markets nearby, and data collection already underway, early indications show the country has the potential for trillions of dollars of metal in the ground.
So far, China has agreed to investments of $13 billion with South Korea ($5 billion), Russia ($3 billion), and France ($2 billion) also investing heavily. This has allowed employment in the mining sector to swell to 130,000 workers.
That said, the United States government is also taking note. Last week Kanat Saudabayev – Kazakhstan’s senior international diplomat met with US Secretary of State Hillary Clinton to formally strengthen their countries' political and economic ties.
Trading on the TSX here in North America, one company that is likely to benefit from the improved regulatory environment is Orsu Metals [OSU – TSX] with interests within Kazakhstan's fertile region.
Sergey Kurzin, CEO of Orsu Metals, is a Russian-born international mine builder and deal maker. A member of Doug Casey’s exclusive “Explorer’s League”, Kurzin has been operating successfully in Kazakhstan for 20 years.
Kurzin played a key role in establishing UrAsia Energy, a uranium producer with mining operations in Kazakhstan that sold to Uranium One in 2007 for $3.1 billion.
“Kazakhstan has advanced legislation,” explained Kurzin in a recent interview, “If you have a contract with the government, and if they change legislation, your document prevails.”
Orsu’s Karchiga Cu deposit is located within the Vavilon-Karchiga zone of the northwest striking, mid-Palaeozoic, Rudny Altai VMS belt, which is ranked in the top four VMS belts of the world.
Orsu recently acquired a further 24.73% of Karchiga, increasing its total ownership to 94.75% from 70.02%.
The Karchiga Scoping Study economic analysis indicates a discounted cash flow Net Present Value (“NPV”) of US$217.9 million and an Internal Rate of Return (“IRR”) of 55.1% based on a conservative copper spot price of US$3.60/lb (discounted 20% from the current spot price of $4.30).
Surging World Bank Group index rankings, combined with high level meetings at The White House, indicate that Kazakhstan’s fortunes are rising. It’s the ultimate rising tide.
Orsu is currently trading at $.28 –with a market cap of only $45 million. With over $1.5 billion of copper in the Indicated & Inferred Category in Karchiga, the stock along with the fortunes of Kazakhstan as a whole has significant growth potential.
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