Ortac Resources, Investment in Eritrea Set to Pay Dividends

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!!!!!!!!!!!

CAML Share Price    Jan to MayCAML stock has risen over 54%In the last 12 months

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.

Ariana Resources, Flagship Red Rabbit Project Boosted by New Gold & Silver Discoveries

Ariana Resources the Anglo Turkish gold exploration and mine development company advanced Thursday with news that it had discovered new gold and silver zones Kiziltepe Sector of the Red Rabbit Mining Project, in Turkey.

See below for for details of the RNS

Ariana Resources plc ("Ariana" or "the Company"), the Anglo-Turkish gold exploration and mine development company is pleased to announce the discovery of additional gold-silver bearing zones within the Kiziltepe Sector of the Red Rabbit Mining Project, which it holds in a joint venture with Proccea Construction Co.

Highlights:

• New highly anomalous zone of mineralisation identified at Kepez Far West with rock-chip samples of up to 6.3g/t Au + 54.8g/t Ag, 5.1g/t Au + 31g/t Ag and 3.5g/t Au + 17.3g/t Ag

• Mineralised zone extended to over 1.6km in strike length at Kepez West and Far West, containing alteration and high-grade quartz veins

• Trenching completed at Camalani identifies several anomalous elluvial quartz fragments with grades of up to 1.9g/t Au + 0.3g/t Ag, 1.2g/t Au + 91.2g/t Ag and 0.9g/t Au + 77.2g/t Ag

• Significant resource upside remaining, with only 6% of the total vein system mapped across the Kiziltepe Sector having received resource drilling

Dr. Kerim Sener, Managing Director, commented:

"The latest sampling in the Kepez Far West area of our flagship Red Rabbit project has returned exciting results, and confirms the potential of the area to host a mineralised structure of over 1.6km in length.  We have previously drill-tested the far eastern end of this structure and intercepted 8m @ 3.65 g/t gold equivalent and have evidence that the mineralised structure continues at depth.

"We have now established over ten new drill targets across the Kiziltepe Sector, many of which are located within agricultural land and will not require forestry permits to be drill tested. Of 34km of veins mapped and sampled across the region only 2km have been resource drilled and have yielded JORC reserves of 1.1Mt @ 3.1 g/t Au and 39.8 g/t Ag.  We expect to identify significant further resources across this region that have the potential to increase mine life well beyond eight years."

Kepez West Sampling

In September 2013, Ariana announced the discovery of a high-grade zone of mineralisation encountered at the western end of the Kepez West structure* (Figure 1).  This area is referred to as Kepez Far West.  A second phase of exploration was recently undertaken to follow-up on a broadly east-west trending corridor of kaolinite-illite alteration, which continued beyond the known area of mineralisation.  The programme consisted of a 3.9km x 1.5km portable X-Ray Fluorescence ("XRF") soil study and aimed to comprehensively cover the east-west trending alteration zone.  

A total of 1,500 XRF readings were taken and a full geochemical analysis was completed.  Trends in trace element geochemistry, particularly for certain pathfinders such as arsenic and antimony were associated with known zones of mineralisation.  A new area extending a further 500m west of Kepez Far West was defined by anomalous arsenic trends and textured quartz vein float material.  Assay results from randomly selected quartz float samples returned with grades of 6.28g/t Au + 54.8g/t Ag, 5.09g/t Au + 31g/t Ag and 3.54g/t Au + 17.3g/t Ag.  The new area of mineralisation remains open to the west.  Further work will commence later this year to refine several drill targets to include within a future drilling programme. 

Figure 1: Kepez West and Kepez Far West discoveries identified from XRF geochemistry superimposed on satellite imagery.  A quartz vein bearing structure can be traced for over 1.6km in this area in addition to associated alteration.  The structure is significant due to the highly anomalous gold and silver grades and due to its ENE-trending orientation, which is not typical of the orientation of mineralised structures elsewhere in the project area.

* Kepez West occurs to the west of Kepez North within which the Company has identified an Indicated JORC resource of approximately 9,000 oz Au equivalent.  Kepez North is located 6.5km north-east from Kiziltepe. 

Camalani Trenching

In addition to the Kepez Far West work, the team have been working throughout the winter on a series follow-up targets.  Since obtaining access to the N2D (Newmont Two Decade) database early last year, the team have generated over 380 exploration targets within 75km of the Kiziltepe mine site.  Currently over 90 targets have been followed up, including several important targets within the Sindirgi Gold Corridor.  As part of this on-going work, 194m of trenching was completed within the Company's 100% owned Camalani licence located approximately 16km east of the planned Kiziltepe mine.  Results have identified a zone containing several anomalous elluvial quartz fragments (1.89g/t Au + 0.3g/t Ag, 1.205g/t Au + 91.2g/t Ag and 0.89g/t Au + 77.2g/t Ag) associated with a Miocene conglomerate horizon occurring between overlying and underlying volcanic tuffs.  Further work is currently on-going to locate the primary source of the elluvial fragments.  

Current Exploration Plans

The Ariana team are currently in an advance stage of initiating a 500km2 airborne geophysics programme, designed to cover all of the Kiziltepe Sector tenements including all the new targets identified above.  This geophysical programme is to be undertaken to further enhance our understanding of the structural architecture of the region and will likely lead to the identification of several new conceptual drilling targets.  Furthermore, early preparations are being undertaken for a drilling programme on the Kizilcukur and Karakavak prospects and scheduled to commence in Q3 2014.

Big Vote of Confidence by Standard Life Investments in Atlantic Coal (ATC:AIM) & Anthracite

For those of you who follow me, you might know that I have been taking an interest in the coal market of late. Particularly as a result of what has been happening in the Ukraine. If you check my blog, I wrote a piece on the coal sector in Ukraine and some observations on the Ukraine coal market. For those of you that did not read it, I took the trouble to point out that Ukraine's coal production is contained primarily in eastern Ukraine, in exactly the area where patrician is underway by the Russian's. Like it or like it not, Ukraine's coal production area is now under threat from Russian influence.

Most of Ukraine’s coal is produced from the Donbas basin, in Eastern Ukraine and when exported by sea often goes through the Berdyansk commercial seaport and or the Mariupol commercial seaport, both located on the Sea of Azov.

So far Russia has focused its attention on securing the Crimea peninsula and is currently in control of the Port of Sevastopol, home of its Black Sea military naval fleet and the straits of Kerch where much of Ukraine's coal is exported through by ship.


On Thursday this week, Standard Life took a 3% stake in London listed Atlantic Coal, one of a limited number of public quoted companies investors can actually invest in, if they want exposure to the anthracite market (Anthracite accounts for about 30% of Ukraine’s coal production)

Clearly Standard Life have seen something in Atlantic Coal, that I actually saw (Did they read my blog..........looks like they might have done) 

Although Atlantic Coal is a US based anthracite miner, how the pricing, supply and demand of anthracite is likely to unfold because of the Ukraine crisis, know one yet knows. What is certain is that production disruption from Ukraine can only add to supply shortages, serving to increase prices and may even see customers look as far afield as the US for their anthracite. Is this what Standard Life are seeing????????????????????
Watch this space

www.atlanticcoal.com

Ariana Resources, Head Closer to Production at Red Rabbit as Ore Stockpiling Begins

Ariana Resources (AAU:AIM) The Turkish near term gold and silver miner, released an update today on its Red Rabbit Gold-Silver project in Turkey. See RNS Below. It takes under 18 months to get a CIL plant up and running, Proccea are very experienced in the construction of CIL plants having built several of them over the years, both in Turkey and overseas, their track record is as below

• Vasgold Gold Mine, Kazakhstan
• Amesmessa-Trek Gold Mine, Algeria
• Çöpler Gold Mine, Turkey
• Eti Gümüs-Silver Mine, Turkey
• Kittila Gold Mine, Finland
• Koza Gold-Mastsa Gold Mine, Turkey
• Maaden Gold Mine, Saudi Arabia
• Tüprag (Eldorado Gold)/Klada Gold Mine, Turkey
• Minera Triton, Argentina
• Ouagadogou Gold Mine, Burkina Faso
• Tüprag (Eldorado Gold)/Kisladag
• Gold Mine, Turkey
• Zarcan-Takeb Gold Mine, Iran

So the question is, when is the best time to invest in a near term gold play?

Have a look at the diagram below

If you look at the projected cumulative cash flow and how that should elevate the share price, you are looking for a three fold increase in share price performance over the next three years, and I would suspect that within 12 months the stock could be around 2p if not higher meaning that if you invested now at 0.88p you would more than double your money, subject to Ariana maintaining its progress on permitting as I think funding Red rabbit will not be a problem

Se below details of RNS

Ariana Resources plc ("Ariana" or "the Company"), the gold exploration and development company focused on Turkey, is pleased to announce an update on the Kiziltepe Sector ('Kiziltepe') of the Red Rabbit Gold-Silver Project in Western Turkey ('Red Rabbit'). The Kiziltepe Sector will be the initial mine site at Red Rabbit, which is being advanced towards production with its joint venture partner Proccea Construction Co. ("Proccea").

Highlights:

• Proccea continuing to earn-in on Red Rabbit, having spent approximately US$1.2 million during 2013.

• Proccea has indicated that a conditional financing arrangement to fund mine construction has been negotiated with a Turkish bank.

• Proccea now owns 26.5% of the project and is continuing sole-funding through the final permitting and construction stages.

• Trial mining at the Kiziltepe Sector has produced 4,800 tonnes of ore, which is stockpiled on site ready for processing.

• Positive report completed by the General Directorate of Mining Affairs following a site visit as part of the mining licence renewal process.

Dr. Kerim Sener, Managing Director, commented:

"We are very encouraged by the progress our Joint Venture partner Proccea has made on the Red Rabbit project and specifically at the Kiziltepe Sector which is being advanced towards production. Following the receipt of the Environmental Impact Assessment, which was a major project milestone, our partners are continuing to fund the development of Kiziltepe through the permitting and construction stages. With the final stage of permitting fast approaching, we look forward to updating our shareholders on new developments in due course."

The anthracite coal market, could Ukraine unrest disturb exports & pricing?

The anthracite coal market, could Ukraine unrest disturb exports & pricing?

The current crisis underway in Ukraine and in particular the Crimea peninsula

could serve to have some impact on the anthracite export and price markets particularly related to Ukraine bulk anthracite seaport exports. Ukraine typically exports between 4 to 5 million metric tons of anthracite each year, primarily to Turkey, Bulgaria, Poland, Spain, Italy and Belgium. Naturally, the biggest regional export competitor is Russia. Anthracite accounts for about 30% of Ukraine’s coal production

The pricing of Ukraine anthracite has essentially been controlled by the Ukraine State, given that the majority of coal mined in Ukraine is sold for domestic use, the Ukraine government does not want to purchase high cost coal. Essentially this pricing situation has made Ukraine anthracite competitive and attractive for customers in Asia and Western Europe, but how long can Ukraine’s export market for anthracite continue either un interrupted or indeed un affected by events in Ukraine?

Most of Ukraine’s coal is produced from the Donbas basin, in Eastern Ukraine and when exported by sea often goes through the Berdyansk commercial seaport and or the Mariupol commercial seaport, both located on the Sea of Azov.

So far Russia has focused its attention on securing the Crimea peninsula and is currently in control of the Port of Sevastopol, home of its Black Sea military naval fleet.

The most important seaport and main commercial export port in Ukraine, is the Port of Odessa, which is still under control of the State of Ukraine and not hindered by Russian military activity.

Should the situation in Ukraine worsen and Russian influence in terms of military presence spread to include a partition of Ukraine, where the east of Ukraine becomes under Russian control, then Ukraine would lose its most important energy asset, that of its coal fields. This is why the crisis in Ukraine is a serious one. Should Russian influence spread to east Ukraine, the whole of Ukraine from an energy security perspective would be affected.

There are two private coal miners of significance currently operating and exporting coal from Ukraine, they are;

DTEK, Ukraine’s largest privately integrated energy-company, involved in power generation and coal mining.

http://www.dtek.com

Sadovaya Group a pure play coal mining operation, with its head office in Alchevsk, Ukraine, but also with a domiciled address in Luxembourg. Sadovaya has its shares traded on the Warsaw Stock Exchange, ticker (SGR:WSE)

The company has seen its shares decline by 63% over the last 52 weeks.

http://sadovayagroup.com

The potential for supply disruption of Ukraine’s anthracite coal bound for export markets is clearly there and may well drive some of the Asian and European importers to look further afield for anthracite supply. Indeed, any export restrictions would only serve to increase the price of anthracite on world markets, as would demand by Ukraine domestic thermal power producers.

TSX and AIM listed East Coal (AIM: ECX) ceased trading on the 26^th February 2014, after acquiring theVerticalnaya anthracite mine and Menzhinsky mine in Ukraine, eventually disposing of these assets after filing for bankruptcy in November 2013.

http://www.eastcoal.ca

Clearly the opportunity for Ukraine to attract foreign direct investment into its coal sector, certainly from Western investors, remains challenging, given the difficulties East Coal faced in what was a pre-Russian interventionist environment.

For investors looking to get a position in the anthracite market, opportunities to invest in listed production and earnings play anthracite securities are slim.

South African listed securities, Petmin (PET:JNB) would give investors exposure to the anthracite market in South Africa, but also increasing the risks that the South African mining sector is facing in general with its current workforce unrest. Petmin cancelled a planned listing of their shares on London’s AIM market back in October 2013.

Closer to home, AIM listed Atlantic Coal (ATC:AIM) is one of  few anthracite focussed mining companies that is currently listed, is operationally profitable and with its main Stockton mine located in the anthracite coal fields of Pennsylvania USA, faces none of the geopolitical risks associated with other investment targets. Indeed, Atlantic’s Stockton mine does have the rail and port infrastructure to export, should it be able to increase its mining output through its stated plans to acquire other anthracite assets in Pennsylvania.

Investment Summary:

Listed on AIM, Atlantic Coal (ATC:AIM) is probably the best listed anthracite mining play with which UK investors can get access to at a time when the anthracite market is facing potential supply and pricing volatility.

ATC shares have rallied in recent days by 5%, partly due to a recent announcement of a major equipment purchase. Over a 5 year period, the stock is down 70%, over the last 12 month the stock is down 26% but in the last 6 months the stock has rose by 39%.

Further information on the company can be found at

www.atlanticcoal.com

Atlantic Coal AIM:ATC, Revving Up With Major Equipment Purchase and Lowering Idiosyncratic Risks

Last friday, Atlantic Coal (AIM:ATC) one of only a few globally listed anthracite miners, and one of just a limited number of AIM listed coal miners, announced a major order for six Komatsu Model HD785-7 100 ton haul trucks and two CAT D9 dozers. 

The market seems to have really missed the significance of this news by Atlantic Coal at a time when the anthracite sector in the USA has been posting some good results. I draw people's attention to a recent article in the Republican Herald a daily newspaper serving Pottsville, Schuylkill County, the main anthracite coal production regions in Pennsylvania, with Greg Driscoll, president and CEO of Blaschak Coal Corp, one of the leading US anthracite miners. Driscoll, reported that  Blaschak had seen record production output in 2013 and that the anthracite community at large in Pennsylvania was quite optimistic about prospects for the sector heading into 2014. The full interview can be seen at;

 http://republicanherald.com/news/local-coal-companies-producing-record-numbers-1.1639580

Share Price Prognosis:

I would see the order for this additional equipment as being a strong sign by management that demand and pricing for anthracite will remain robust throughout 2014 in line with the sentiment put forward by Blaschak who are backed by the private equity group Milestone Partners, http://www.milestonepartners.com and where this private company has no need to indulge in any PR share ramping.

The idiosyncratic risks for Atlantic Coal appear to be lowering as the company is now operationally profitable and appears to be lowering its debt risk. The average daily share volume traded through the stock is circa 14 million daily about 26,000 stg in real terms, making it at least for AIM, one of the more liquid stocks on the market. The US is certainly heading out of recession and the economy is on the move. I know this from personal experience given that I am a significant investor in the US, but also having just returned from a 6 week visit to the Midwest, can testify that there is a feel good factor heading back to the market. 

Whilst the recent weather in the US may have had some impact on mining activities (coal washing plants hate freezing weather), the longer term prognosis for ATC looks good and with uncertainty surrounding anthracite production from Russia and the Ukraine, because of geo-political risk, the ability for cheap anthracite imports to head to the US may well be set back. Anthracite is also a specialist coal and has a number of sales outlets, and is not just exposed to thermal heating market demand, but that of the steel sector where it is used as a carbon additive and reductant, the industrial sector where it is used in water filtration (A massive growth sector in the US) and in diverse demand markets such as bottle colouring, yes you might actually be buying some Atlantic Coal when you next purchase a Budweiser!!!

Anyway, thoughts are my own as usual,  but still  born out of more that 20 years of successful investment experience.

Atlantic Coal plc / Index: AIM / Epic: ATC / Sector: Mining

28 February 2014

Atlantic Coal plc ("Atlantic" or the "Company")

Purchase of New Equipment to Significantly Increase Production

Atlantic Coal plc, the AIM listed open cast coal production and processing company with activities in Pennsylvania, USA, is pleased to announce that it has ordered six Komatsu Model HD785-7 100 ton haul trucks and two CAT D9 dozers. This equipment purchase is expected to enable the Company to continue to increase the run-of-mine ("ROM") production profile at its Stockton Colliery, a producing opencast anthracite operation in Pennsylvania ("Stockton"). The purchase of the equipment is to be funded through a lease purchase agreement at a total cost of $8.5m over six years.

Atlantic Managing Director, Steve Best, said, "We anticipate that the acquisition of the new equipment will assist with our operational efficiency and enable us to meet our production goals for the immediate future. This should allow us to increase our production of ROM coal to the wash plant and maximise the circa 1.8* million tons defined anthracite reserves at Stockton."

"We look forward to providing further updates on our progress at Stockton and our Pott and Bannon project, together with our wider strategy to increase our presence in the US anthracite industry, at the appropriate time."

*As announced on 11 June 2013. The revised estimate is subject to completion of drilling to confirm the extent of prior by-passed coal on the south wall of the mine and development of an updated mine plan for recovery of remaining coal.