Copper grades to outclass and outperform
When AIM listed
exploration and mine development company Ortac Resources (LSE:OTC)
informed the market in January that it had taken an investment stake in the
private Eritrean focused exploration company Andiamo Exploration, the market
took and instant like to the deal, Ortac shares rose over 10% in January on
the back of the news.
Since the deal with
Andiamo was announced, significant progress has been made on their flagship Eritrean
copper gold project, Yacob Dewar, where last month the first assay results were
released which have turned out to be pretty impressive including 53m at 1.38 per cent
copper and 42.5 m at 1.32 per cent copper respectively, secured from an oxide
ore body and at surface.
At the same time Ortac announced they had
increased their stake in Andiamo to 25.37% in what is now a US$ 1.5 million
investment with the option to take that stake to over 40%. This investment by
Ortac is not to be sniffed at, clearly they see something in Eritrea and in
particular the Yacob Dewar project that they like, least of which is the
extensive level of high quality technical work and investment of over $10
million that Andiamo has already sunk into its Eritrea projects.
What I have picked up on is an interesting
analogy between Ortac-Andiamo and Central
Asia Metals (LSE:CAML) the Kazakhstan focused copper “waste dump”
processor. The reason that I am making the connection between Ortac and CAML is
that I was astonished to learn that CAML not only paid a dividend to
shareholders in 2013 but is also planning to pay a dividend this year too………………and the really incredible point about this
is that the grades of copper they are processing from their Kounrad dump are
0.10% from their oxide eastern dump and as little as 0.03% from other parts of
their dump.
This is absolutely incredible and I have to say to CAML well
done! Not only are you paying a dividend, you are also delivering real
shareholder value (stock is up 54% this
year so far) and you are also proving technically that you can make a profit by
processing copper at grades of 0.10% and you only own 60% of the Kounrad
project!!!!!!!!!!! And this is your only cash-generating asset!!!!!!!!!!!
Which leads me nicely into Ortac. I understand
that by next year Ortac-Andiamo will deliver a technical and economic
assessment of Yacob Dewar. Subject to approval by the Eritrean authorities, and
by the way they have the right to buy into the project, Andiamo could be
awarded a mining licence. This leads me to my next point.
Ortac-Andiamo like CAML plans to use a solvent extraction, leaching method & electrowinning (SX-EW)
process to recover the copper and produce a saleable copper cathode.
Its worth noting that CAML’s Kounrad waste dump
processing plant was constructed within
21 months for a capital cost of $39m, $8m below the budget, so
whilst their might be some short term dilution for Ortac, in the medium term it
will be pretty easy to secure debt finance to get Yacob-Dewar into production, especially if the
Eritrean government buy in.
The high copper grades that Yacob Dewar is currently
delivering over more than decent lengths, all within oxide and at surface,
essentially mean that Yacob Dewar could initially be mined pretty much as an
open cast operation where their would be some blasting, shoveling to a heap,
followed by exactly the same process that CAML are using at Kounrad, so not
much difference in extraction costs.
I
can categorically state that it will not cost Ortac-Andiamo the value of 1.2%
copper to just blast and scoop, more like 0.1%.
To cap this all off, Yacob-Dewar will also deliver a high
grade gold deposit that will further add to the economic viability of the
project as a whole, an aspect that CAML
appears not to be getting from their waste dump treatment.
So really it’s quite a story. Ortac is currently trading at 0.021 p and is
one of the most liquid stocks on AIM trading over 6 million shares daily.
If CAML can deliver a dividend on
0.10 per cent copper
What
can Ortac do on 1.3 per cent copper?
Central Asia Metals SX-EW Kounrad Project
Simple Processing method that would be a benchmark for
Ortac-Andiamo’s Yacob-Dewar Project
Low cost Capex built in under 2 years and was
producing 10,000th tonne of
99.99%-purity copper. within 12 months of commissioning.
