UPDATE: Ortac Resources to begin exploration work on Cejkov licence area in Slovakia

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Ortac Resources (LON:OTC)  is to begin exploration work on its Cejkov licence area in Slovakia, which is prospective for silver, lead and zinc.

The initial campaign will start with four diamond drill holes sunk to an average 225 metres, and some 2.5 kilometres of ground-based geophysical work.

The focus at this stage is to incorporate the previous exploration results into a “credible geological model that determines the potential extents to this mineralisation”, Ortac said.   

The company believes Cejkov has the potential to host high grade precious and base metal mineralisation.

Certainly data from the 1990s suggest this is the case. 

One hole drilled in this period contained a 2.5 metre section with a bonanza grade of 514.2 grams of silver per tonne, 13.37 per cent lead and 8.34 per cent zinc.

Another had 156.59 grams of silver over 2.9 metres, 13.02 per cent lead and 14.45 per cent zinc. 

Ortac chief executive Vassilios Carellas said: "The Cejkov licence has delivered extremely encouraging historical exploration results identifying it as a priority area of focus for Ortac as we commence exploration activities across our Eastern Slovakian portfolio ofassets.  

“It is believed that Cejkov has the potential to host high grade precious and base metal mineralisation, and this exploration campaign will provide the company with a more substantiated reference to confirm the resource potential of this licence.”

Cejkov is one of nine exploration licences that cover 200 square kilometres of south-eastern Slovakia.

They are around 200 kilometres east of the company’s most advanced project, Kremnica, which hosts a JORC-compliant resource of 1.1 million ounces of gold.  

That figure is expected to rise, particularly after the results of the latest drilling campaign on the Šturec deposit have been fully analysed.

Last month the group gave the latest highlights from that programme. 

They included a 144.6 metre section at 1.36 grams per tonne of the precious metal and 8.85 grams from a 64.4 metre section from the same borehole, STOR-3.9.

A one metre section from borehole STOR-3.4 returned a grade of 36 grams per tonne of gold and 189 grams of silver.

Updating investors today, CEO Carellas said: "In tandem with our exploration activities in eastern Slovakia, we continue to make progress at our more advanced Šturec resource in Kremnica, where we have received consistently encouraging drilling results and where a scoping study is due for publication by the end of 2011."

Kremnica is 100 miles north-east of the Slovakian capital Bratislava and is an area of historic gold mining that has yielded over 4 million ounces of the precious metal. 

The mint there, dating back to 1328, bears testament to this. 

Ortac’s project in the area is well advanced, so there is little or no exploration risk, and analysts say initial gold production could be underway as early as 2013. 

The company has around £10 million in the bank, which means it is fully-funded through to the bankable feasibility in the next two years. 

At midday the shares were down around 5 per cent at 0.77 per cent, reflecting the wider malaise in the small-cap market.

The company’s broker Seymour Pierce reckons the stock is worth 3 pence, and points out that Ortac trades at a major discount to its peers in the precious metals sector.

“This is a valuation discrepancy which we believe is unjustifiable,” says analyst Matthew McDonald.