Monday 13th January 2014, London
Ortac Resources (OTC:AIM)
Secures Major Stake in Andiamo Exploration
Ltd
Securing Advanced Stage Eritrean,
Volcanogenic Massive Sulphide (VMS)
Gold & Copper Projects
Ortac Resources, the AIM listed
developer of the 1.32 million ounce, Šturec gold mine in Slovakia, today
announced that it will make significant investments into Andiamo, a private UK
registered company, who hold advanced stage, large scale VMS gold-copper exploration
projects in Eritrea. Under the terms of the subscription, Ortac will invest US$
1.5 million to acquire and initial 26.7% stake, with an option to increase
their holding by 21% for a further investment of US$ 2.0 million, which if
exercised, would take their total interest in Andiamo to 42.2%
Cantor Fitzgerald is acting as
Ortac’s broker.
It is reported that for some time
now, the board of Ortac have been looking to add another project that would
deliver further shareholder returns, as the company continues to work towards
the permitting of its flagship Slovakian Šturec gold mine project.
The decision by Ortac to invest
in Andiamo, is one that investors should look at very closely, given the
quality of technical, financial and mining expertise contained within the Ortac
board, where this deal and the quality of Andiamo’s Eritrean portfolio, has been
seen by Ortac as “Stand Out”
Andiamo has raised, privately, over
US$ 10 million. Ortac has clearly been impressed by the quality of geological
and technical work undertaken on their projects in Eritrea, where this deal now
offers Ortac shareholders a margin of investment safety, whilst the company bides
its time in the steadfast pursuit of permitting at Šturec.
Confirmation of the quality of
Andiamo’s Eritrean portfolio can be traced back to the 21st January 2013, when
AIM listed natural resources investment house, Paternoster Resources Plc
(PRS:AIM) subscribed for 640,000 new ordinary shares in Andiamo at a price of
US$ 50 cents per share, as part of a fund raising of up to US$ 3 million,
representing an investment, in aggregate, of US$ 320,000, thus valuing Andiamo
at US$ 12 million on a pre-investment basis.
At that time Paternoster
Chairman, Nicholas Lee said, "The
quality of the operation at Andiamo is seldom seen in companies of this
size. The potential of the deposits within the licence area are
significant and it is expected that production can be achieved within the short
to medium term with relatively low levels of investment”
Paternoster should now do more to
promote their investment into Andiamo, given this news by Ortac:
As a mining and natural resources
exploration jurisdiction, Eritrea is as good if not better than any of its
African counterparts and is certainly “Investment Grade” Geologically, Eritrea
sits on a patch of the Arabian Nubian Shield, the geological feature that
stretches from Saudi Arabia and Yemen in the east, to Sudan and Egypt in the
west.
“We are a small country, but over 60% of our land mass is covered
by Nubian Shield rocks which are home to several rich gold and base metal mines
in the region. I firmly believe that Eritrea is going to be one of the new
entrants in the global mining arena. I am on record as saying that reserves
identified in Eritrea so far are only the tip of the iceberg, and I stand by
that viewpoint. In the next five to ten years I expect the number of mining
companies exploring and producing in Eritrea to have at least doubled to more
than 30.”
Director general of the
department of mines in the Eritrean ministry of energy and mines, Alem Kibreab
is quoted as saying back in October 2013, when Canadian Nevsun Resources
(TSX:NSU) commissioned their new copper flotation plant at its Bisha
gold-copper mine operation. Nevsun’s Bisha Mine began construction in September
2008 and declared commercial production in February 2011 at a rate of 2Mtpa.
The mine produced low-cost gold-silver doré until mid-2013 when, through a $110
million copper expansion, throughput expanded to 2.4Mtpa and the product
switched to copper in concentrate.
The
Bisha mine, with 12 years of current reserves, ranks as one of the highest
grade open pit mines in the world and, in 2012, produced 313,000 ounces of
gold.
Other mining and exploration
companies operating in Eritrea include fellow
Canadian company, Sunridge Gold
Corp (TSX.V: SGC), who are developing their Asmara project. The Asmara Project hosts
four deposits, three of which, Emba Derho, Debarwa and AdiNefas, have combined
NI 43-101 measured and indicated resources totaling, 1.26 billion pounds of
copper, 2.5 billion pounds of zinc,930,000 ounces of gold, and 28.3 million
ounces of silver
A fourth deposit, Gupo Gold,
contains an additional Inferred resource of 47,000 ounces of gold.
Other VMS discoveries in Eritrea
include:
Jabal Sayid
(Barrick Gold Corp, Saudi Arabia); Sukari (Centamin, Egypt); and Hassai (La
Mancha Resources, Sudan).
The Upside for Ortac and Andiamo, Why Investors Should Take
Comfort.
Eritrea’s recent track record in
attracting Chinese investors is something Investors in Ortac should take some
comfort from. For example, Chalice Gold Mines Limited (ASX: CHN/TSX: CXN) completed
the sale of their Zara Gold Project in Eritrea back in 2012, to China SFECO
Group for US$78 million plus a deferred payment of US$2 million. The Chinese clearly
like what they see in Eritrea. Indeed Chalice
is still active in Eritrea and has just announced a new VMS discovery,
Andiamo’s portfolio of projects look pretty breathtaking and
show all the hallmarks of ones that, with some further drilling, could become
attractive to the Chinese over the near term. Andiamo’s Eritrea exploration acreage
is defined within their Haykota licence, held by the company since July 2009.
The shining star project in the
licence area is Yacob Dewar, a near
surface gold-copper VMS discovery ( just 55km form Bisha) where initial drill
results have revealed some impressive numbers.
Drilling Record:
Gold
2010 - 2 short aircore holes
14 m @ 3.5 g/t gold
2011 - 32 diamond drill holes
16.2 m @ 5.0 g/t gold
2012 - 58 reverse circulation
holes
25.2 m @ 7.3 g/t gold
2013 – 9 diamond drill holes
19.9 m @ 6.2 g/t gold
9.0 m @ 22.5 g/t gold
Copper
2011 32 diamond drill holes
13 m @ 1.8% Copper
2012 - 3 diamond drill holes
63 m @ 2.4 % Copper
Drill Programme Should Generate Significant News flow
Andiamo will now press ahead with
an intensive drill campaign with a view to securing a resource classification
this year. If results follow the promise already shown at Yacob Dewar, then Ortac
should start to see increasing retail investor interest generated from what could
well be a very positive year of new releases.
Ortac shares are down 58% over
the last 12 months, the stock trades on average daily volumes of 19 million
shares, is liquid and is trading just above its 52 week low at 0.00235p. This
deal with Andiamo is likely to see a significant re-rate of the Ortac stock.
References:
http://www.ortacresources.com Market Cap 5.4 Million
STG
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