UPDATE: Nyota Minerals makes three new gold discoveries in Ethiopia

UPDATE: Adds comments from broker Ocean Securities

East Africa-focused gold miner Nyota Minerals (LON:NYO, ASX:NYO) has made three new discoveries within the 3,200-square kilometre area of its Northern Blocks exploration zone in western Ethiopia, the firm announced this morning.

Following May’s announcement that an airborne magnetic survey completed over the Northern Blocks had identified 47 targets of merit, seven initial targets were followed up and of these two discoveries have been made at the Bendokoro North prospect and one within the Boka Sirba prospect. Nyota considers these three targets to be ‘drill ready’ and a multi-purpose drill rig has been allocated to them.

The Bendokoro East anomaly comprises an 800-metre strike length, 100-metre wide target and has returned samples with peak grades of 10.6 grams per tonne gold, 8.89 grams per tonne, 8.81 grams per tonne, 5.67 grams per tonne, 4.29 grams per tonne and 3.18 grams per tonne.

The Bendokoro West anomaly extends over a one-kilometre strike length, is between 100 and 200 metres wide and includes continuous gold-in-soil geochemical results that peak at 1.39 grams per tonne.

Meanwhile, Boka-Sirba West, the latest target of three Boka targets, shows high copper, zinc and silver values associated with samples that returned peak gold grades of 16.06 grams per tonne and 8.84 grams per tonne.

The firm said that reconnaissance exploration will continue through to June 2012 (which is the approximate start of the next rainy season) on the other 40 targets within the Northern Blocks, which are located around 100 kilometres north of Nyota’s Tulu Kapi flagship gold project.

“The large number of targets together with the scale and grades of the prospects investigated to date reconfirms the company’s view that Nyota holds licences that make up the most prospective portion of the Western Greenstone Belt and that their significance in terms of the mid-to-long term growth of the company has been underestimated,” said Richard Chase, Nyota’s chief executive officer, who added that any one of the targets “would probably be sufficient to sustain a typical junior gold explorer”.

Ocean Securities analyst Christopher Welch said, in a note to clients, that it is no surprise that Nyota is finding such abundant mineralisation on its large land package.

“Nyota’s decision to acquire the Northern Block licences was based on its understanding of this area of western Ethiopia which is perhaps the least explored section of the Arabian-Nubian Shield,” the Ocean Securities analyst said. 

“Although the Northern Blocks and the southern licence area (which hosts the Tulu Kapi deposit) are separated by approximately 100 kilometres, they are essentially connected by the same north-south trending structures that host some of the larger deposits of the Arabian-Nubian Shield, on both sides of the Red Sea. 

“It is not surprising that Nyota is finding such abundant mineralisation on its large land package; this is essentially virgin exploration ground in a very prospective belt.”

Welch emphasised that Nyota is unusual because it is very well funded for a junior company, which means that it can deploy capital to its grass roots stage targets without draining development capital from its flagship Tulu Kapi project. 

The analyst said: “the quality of Nyota’s project pipeline is starting to emerge, and the company has a spread of projects throughout the exploration to development spectrum.” He believes that with an enterprise value of around £18 million, and an EV per ounce of less than US$20, the stock is attractively valued on Tulu Kapi alone never mind these exploration projects.