He added that the current valuation for the company, which works out at $14 per ounce, is at a significant discount to other miners.

"The current valuation reflects a combination of the cash in the company and the book value of the exploration licences," he said.

"We view the market is assigned no value to the resource base at its two main projects Stakhanovsky and Rassoshinskaya which contain a combined resource base of 1 million ounces."

Running through Fairfax's own valuation of 65 pence per share, it puts cash at $11.1 million, assets available for sale $43 million, total gold resource of 1 million ounces with a discounted value at $50 million making a total of $104 million, or £65 million.

The note also highlighted that previously Ovoca acquired, developed and sold the Goltsovoye silver project located in the Magadan region to JSC Polymetal for a cash and share consideration worth $47.7 million in 2009.

The management team have been involved directly in a number of successful projects in the Magadan region, it added.

Ovoca Gold (LON:OVG) revealed this morning it had continued to buy back its own stock. It acquired 25,000 shares for 33.75 pence each on Tuesday, following on from the June 1 purchase of 35,000 at 31 pence. 

It is almost unheard of for a junior miner to use its funds this way. However the move reflects the growing frustration of chief executive Tim McCutcheon and his team with the current share price, which values Ovoca at less than its cash and near cash investments.

The company has permission to repurchase up to 10 per cent of its own equity.

Ovoca, whose sphere of interest is the Magadan Province of Russia, has a simple, achievable mine development story, some potentially very interesting exploration.  And, crucially, with around US$50 million, it has the financial wherewithal to fund its plans.

McCutcheon said  recently: “The fund managers love the story, but the people I know are big funds and they can’t buy equity in a company of Ovoca’s size. This puts the emphasis for share based appreciation on retail investors.”

Commenting last week on the group’s buyback plans, Job Langbroek, an analyst at the Irish broker Davy, said it was an unusual but nevertheless “value accretive” strategy. 

"It is another aspect of what is a small company with options beyond what we would normally expect at this stage,” he added. 

“Foremost among its features is the fact that its cash and investment shelter shareholders from the dilution normally associated with companies in their formative years. Its buy-back capability will help ensure that market pricing adequately reflects the company's positive features."

At the end of March, the Russia-focused company laid out its plans for the 2011 drilling season, which included a 5,000 metre programme on the Podgorniy target, and 2,000 metres on the Zet target. Both are part of the Rassoshinskaya exploration licence.

The company also revealed it will begin 20,000 ton bulk of sampling on Stakhanovsky, where a 4,000 metre programme of diamond drilling will take place.

Stakhanovsky is being developed as an open-pit project that could be in production by 2013. Analysts suggest it could produce between 30-50,000 ounces of gold.

The company carried out trench sampling on the Zet prospect, which lies between the Olcha and Podgorniy projects, during the 2010 exploration programme and the results revealed a gold-bearing vein system which occupies around 40 square kilometres. 

Ovoca acquired the Rassoshinskaya license - which hosts the Olcha, Podgorniy and now the Zet gold prospect - back in December 2009. 

"Zet is the latest target that has been identified by the Ovoca team on the Rassoshinskaya license area,” chief executive Tim McCutcheon said. 

“Despite being one license, Rassoshinskaya’s 2,460 square kilometre area is substantial and is in a very prospective region for gold discoveries. Given past historical work and our work in 2010, we have combined over 8,000 meters of trench work, plus detailed mapping, geophysics and geochemical data on Zet. 

“Ovoca’s plan is to drill on Zet in order to establish that the vein outcroppings, which have been thoroughly tested by trenching, extend to depth.”

The company said that Zet’s alteration zone is between one and two kilometres wide and it has a 7 kilometre strike - in a north-easterly direction. 

Twenty mineralised veins have been identified. The veins vary in length from 100 to 1,900 metres, they are between one and four metres wide and have grades up to 20 grams per tonne gold.

The company acquired the project twelve months ago and since then it has been working to re-classify Stakhanovsky’s Russian P1 1.2 million ounce gold resource - a highly prospective resource category which generally ranks below inferred resources in JORC reporting standards.

The resource statement was prepared by SRK Consulting. It is an inferred resource of 9.1 million tonnes grading 1.2 grams per tonne gold, which gives 350,000 ounces of gold. 

It is based on around 10,000 metres of drilling data - comprising 3,000 metres of historic data and 7,000 metres drilled by Ovoca in 2010.

"The JORC maiden resource for Stakhanovsky is an important step in advancing the asset,” chief executive Tim McCutcheon said.

Crucially SRK believes that the resource comes from just a quarter of the area that has previously shown encouraging results from geological mapping and grab sampling.

As such SRK reckons the project has good exploration potential and there are a number of areas adjacent to the current model where Ovoca could increase the resource with further exploration work.

Ovoca will continue exploring Stakhanovsky with 20,000 tonnes of bulk sampling and 4,000 metres of drilling planned for 2011.

Primarily this is intended to confirm that Stakhanovsky’s gold veins extend at depth, to about 100 to 200 metres below the surface.  

Ovoca said that while the planned work is quite intensive it will allow Ovoca to register a gold resource with the Russian state authorities - if it is success of course. Then Ovoca will be able to begin feasibility studies and eventually start mining.

McCutcheon adds: “Our work in 2010 combined with historical work, has positioned Ovoca to aggressively prove up and expand our resource base at the site, which we are excited to begin with our bulk sampling program in 2011. 

“Also this year we have already started detailed metallurgical testing, geotechnical studies, and other work (that will be) necessary to complete a feasibility study of the project"

With a market worth of 26.3 million, or 31 pence per share, Ovoka is valued at a discount to its cash and investments.

The company has taken around 2,500 samples which returned assays of up to 21 grams per tonne of gold and 14 grams of silver.

Ovoca isn’t saying how many samples contained these high grades. But it did reveal they were re-assayed using the fire assay method.

The results chimed with historical data which revealed three samples with gold grades ranging from 5 grams per tonne to 21 grams and silver grades from 15 grams to 64 grams.

The Podgorniy gold-silver anomaly is approximately three kilometers long and one kilometer wide. 

Two alluvial gold placers have been mined in the streams heading to the west and to the south from the Podgorniy area. 

Ovoca chief executive Tim McCutcheon said: "The Rassoshinskaya license area is 2,460 square kilometers, a huge area in a very prospective region for gold discoveries. 

“Our Olcha project, in the Southern part of the Rassoshinskaya license, is advancing as we have reported earlier this year. 

“Podgorniy, in the Northern part of the Rassoshinskaya license area, is a new target for us and we intend to push forward and combine geophysical analysis with the start of trench and drilling work in the 2011 exploration season. 

“The geochemical analysis is particularly exciting due the close overlap of gold and silver showings, as well as showings of other minerals associated with bedrock gold deposits."

Last month the group unveiled a maiden JORC inferred resource of 344,000 ounces at the Olcha project in the Magdan region of the country.

“Operationally, things have been going well,” said chief executive Tim McCutcheon. 

“At Olcha we have completed almost 8,000 metres of drilling and the season has until the end of this month for active operations. 

Ovoca produced maiden JORC Inferred resource for Olcha, in the Rassoshinskaya licensed area, of 344,000 ounces of gold.

“This resource only takes into account data collected before Ovoca acquired the property and will be updated with new data later this year.

“At the end of August we announced some preliminary results of drilling at Olcha, which were very positive and demonstrate that the resource has the grade and interval to be economic. Our main task now is to continue to define the ore body and 'put ounces on the books'."

The company also said its share consolidation and stock buy-back programme were having the “desired effect” as it gave an upbeat assessment of prospects after a solid six months of progress.

The period to the end of June included the purchase of three companies that own the Nevsko Pestrinskoye, Stakhanovsky and Rassoshinskaya licences in Magdan.

It also sold its Norplat operation in Murmansk to Black Foxes Resources for US$1.25 million.

The sale proceeds will add to the company’s coffers. Currently it has cash and equivalents of US$47.3 million, after offloading its Goltsovoye silver asset last year.

This has allowed Ovoca to bankroll the repurchase of 10 per cent of its equity base.

The company has also initiated a share consolidation on a one-for-five basis.

Ovoca posted pre-tax profits of 926,000 euros in the six months ended June 30 compared with a 6.2 million euro surplus a year ago.

The Russia-focused gold explorer made a number of boardroom appointments during the first six months of the year. Svetlana Radchenko comes in as chief financial officer and Kirill Golovanov has been appointed corporate secretary.

Don Schissel, an ex-BHP Billiton regional exploration manager, was named a non-executive director.

The Russia focused company has entered into a share purchase agreement to sell its wholly owned and Isle of Man incorporated subsidiary Norplat Limited to Grangesberg Iron Ore for US$1.25 million in cash, thus existing the Murmansk region of Russia.

Norplat Limited has a 95% interest in the Oleninskoye gold project and the Pellapakh copper-molybdenum project in the Murmansk Region.

“The sale of our Norplat subsidiary and exit from the Murmansk Region is part of the company's strategy to focus our financial and management resources on Ovoca's Magadan properties,” explained chief executive of Ovoca Gold Tim McCutcheon.

The company said that while it believes that the Oleninskoye and Pellapakh projects have potential, the current form of ownership prevents them from unlocking that value and is not priced into its share price.

“As such, the company is selling Norplat and will redeploy capital,” concluded McCutcheon.

The sale follows an announcement of what the company called significant drilling results from the Olcha project in the Magadan region.

Lab results from the first 1,840 metres returned significant intersections, with lengths ranging from 0.8 – 14.1 metres and grades between 4 and 44.5 g/t (grammes per tonne) gold. Additionally silver grades ranged from 13 to 110.4g/t.

In response to the statement, broker Davy commented that initial drill results from Olcha “comfortably achieved commercial status”.

With several projects hosting established in-situ gold resources, and nearly €40 million in cash and assets, the analyst said that Ovoca is “well positioned to pursue the commercialisation” of its projects.

In June 2010, Ovoca reported a maiden 344,000 oz JORC resource for the Olcha project.

Ovaca said it has a strong balance sheet - US$43 mln in net cash and securities, or 34 pence per share - and in recent months has completed a significant corporate acquisition, undertaken operational activities across its portfolio of assets and made a number of board and management changes.  However, despite such activities, the company's market capitalisation continues to trade at a substantial discount to the value of its cash and other liquid investments.

Shares in the group started trading in positive territory while most stocks on AIM and the wider market took another nasty beating in early trades today. Ovoca opened up 1.2 percent at 21p on the buy-back news.

Having the authority to repurchase its shares, will enable the company to respond to volatile stock market conditions, help stimulate liquidity in its shares and provide shareholders with the flexibility, but without any compulsion, to realise value in respect of all or some of their shareholdings in a tax efficient method, the company said in its statement.

Share buy backs will only be executed when appropriate financial and stock market conditions prevail and when the board determines that they are in the interests of the company and its shareholders as a whole.

A circular containing further details on the proposed buy back authorities and convening an extraordinary general meeting of the company, to be held on the day of the company's next annual general meeting in July 2010, will be posted to Shareholders with the 2009 Annual Report.

CEO Tim McCutcheon commented: "I believe this share buy-back is an important step for Ovoca and is part of the foundation for long-term shareholder value.  We have an excellent multi disciplined and experienced team who are working on a portfolio of exciting gold assets and we are well funded for several years of operations.

“Ovoca has a proven track record of successfully developing precious metals assets in Russia and utilizing those assets to create value for shareholders. The sale of Goltsovoye in 2009 at a 194% premium to our market capitalisation at the time demonstrates this.  Despite this, the company's market capitalization has traded below the value of the company's cash and securities position for over a year.  The buy-back programme will allow the board to create additional value for the benefit of our shareholders,"  McCutcheon added.

Mineral exploration and mine development company Ovoca Gold is listed on AIM and on the ESM market of the Irish Stock Exchange (Ticker: OVX). Its principal activity is gold exploration in the Magadan region of the Russian Federation.

Previously Ovoca acquired, developed and sold to JSC Polymetal the Goltsovoye silver project located in the Magadan region.  Currently, Ovoca is aggressively exploring and developing its 100 percent owned Stakhanovsky, Rassoshinskaya and Nevsko-Pestrinskoye licenses.

 Stakhanovsky is located approximately 40 kilometres north of Susuman, the second largest city in the Magadan region.  It is accessible by year-round road and there is power infrastructure on site. Internal preliminary estimates suggest a gold resource (non JORC code of Russian standard compliant) of over 700,000 ounces.  The company intends to put Stakhanovsky into production by 2013.

 Rassoshinskaya is in the North Eastern part of the Magadan region about 200 kilometres from the town of Simchan. There is no nearby infrastructure. Rassoshinskaya hosts an epithermal gold deposit named Olcha, which is the focus of Ovoca's exploration program. Olcha and nearby satellite deposits have the potential to host a high grade multi-million ounce gold resource.

 Nevsko-Pestrinskoye is located in the central part of the Magadan region near the town of Omsukchan. A year-round road and powerline are near the site. The license completely surrounds the Goltsovoye silver deposit, which was owned by the Company from 2006 - 2009 and sold to JSC Polymetal for US$47.7 million at the time of closing. Ovoca intends to investigate and explore known mineral occurrences that extend beyond the Goltsovoye license area onto Nevsko-Pestrinskoye.