The share price of Nyota Minerals (LON:NYO, ASX:NYO) tells its own story. Up 132 per cent this year, it maps the group’s progress in developing the Tulu Kapi Project in Ethiopia.
Last month it raised almost £22 million to fast track work there, which initially means carrying out a NI43-101 compliant preliminary economic assessment feasibility (PEA) study.
It says much about the potential of Tulu Kapi that the company was able to place almost a third of its equity base seemingly without a hiccup.
Certainly the impact on the share price has been minimal. And those who acquired the stock in the cash call at 16p have made a tidy 12.5 per cent profit already.
You really can see why investors are getting excited.
Located 375 kilometres west of Ethiopia’s capital Addis Ababa, Tulu Kapi was bought last year for US$3.2 million with a resource base of 690,000 ounces of gold.
This has risen to a JORC-compliant 1.38 million ounces at 1.68 grams per tonne of gold (at a cut-off grade of 0.5g/t).
The figure is expected to rise to 2 million ounces by the end of the year, and analysts say it could feasibly grow to 2.5-3.0 million ounces.
In fact the respected mining team at Mirabaud Securities goes a step further.
“Based on the ground magnetic data, that has highlighted several satellite targets as well as confirmed the view that extensions to the main zone exist, we believe Tulu Kapi has multi-million ounce potential in the longer-term,” a recent Mirabaud note said.
The group has launched into the preliminary evaluation a lot earlier than one would normally expect.
It is being carried out by SRK Consulting and it builds on earlier scoping work carried out by Venmyn Rand last year.
Analysts say the speed with which the group is working underlines the high degree of confidence management, led by the experienced Terry Tucker, has in the project.
Under the terms of the prevailing mining legislation, Nyota may either look to convert the existing Tulu Kapi exploration licence to a mining license prior to the current period of tenure expiring in May 2011 or, alternatively, seek a further extension of the existing exploration licence.
Obviously, the long-term tenure afforded by a mining licence makes this an attractive option for the company.
Broker Mirabaud said: “While the company will continue to drill deeper holes, holes along strike and indeed look to target satellite deposits, it [should] now ring-fence the main Tulu Kapi zone and prepare that portion of the project for mining license status.
“In other circumstances one would probably expect to see further exploration before proceeding with an economic assessment.”
Nyota won’t be idle while it waits for SRK to complete the PEA, which it ought to receive by the end of this year.
Instead, Tucker and his team will focus on the remaining 3,550 square kilometre exploration licence areas.
Earlier this week it began a month-long aeromagnetic survey. It also said the regional exploration programme will also include rock, stream sediment and soil geochemical sampling, mapping, trenching and drilling.
“The team of geologists employed by Nyota (now totalling seven) is confident that further gold mineralisation similar to that at Tulu Kapi will be found,” said Simon Garner-Bond of Ocean Equities in a recent note to clients.
“Exploration across the larger exploration licence areas should produce a large amount of positive news flow as it progresses.
“We also eagerly anticipate fresh drill data from the Guji deposit, which has the potential to be a satellite deposit for the Tulu Kapi mine.”
It is worth at this point talking about boss Terry Tucker, who has been charged with fast-tracking Tulu Kapi.
He joined in May and took over last month as CEO from Melissa Sturgess, who is staying on as chairman of Nyota.
He was boss of StrataGold Corp which was bought by Victoria Gold last year and comes with 24 years experience of the sector.
A geologist by training Tucker’s forte is taking projects such as Tulu Kapi through feasibility.
“We have been impressed so far with Terry’s enthusiasm, drive and obvious excitement at getting involved in a new project.
His international experience of running a junior exploration company has already led to changes that will help Nyota to continue its stellar growth profile,” said Ocean’s Garner-Bond.
In April the group received a significant boost from International Finance Corporation, an arm of the World Bank.
It took a stake of 10 per cent that pumped £3.4 million into Nyota, which allowed it to accelerate work on the potentially world class gold project.
“The IFC investment is a sign of the quality of Nyota’s assets in Ethiopia and also the importance of Tulu Kapi to Ethiopia,” concluded Garner-Bond.