Ortac Resources steps up its exploration campaign with 1,200 metre drill programme at Zlata Bana

Ortac Resources (LON:OTC) said it is embarking on a 1,200 metre drilling programme on its Zlata Bana exploration licence in eastern Slovakia.

In total the company’s contractors Drillrock will sink five holes, the aim being to verify the results of previous exploration which points to the existence of gold and silver in bonanza grades.  

An extensive work programme was carried out during the 1970s and 1980s on the area, which has an historic non-JORC resource of 500,000 ounces of gold equivalent.

In that period over 100 holes were drilled from surface to depths of 300 to 1,800 metres for a total of 40 kilometres.

Exploration was originally focused on a potential copper porphyry, but instead uncovered “disseminated and vein type precious and base metal mineralisation”, Ortac said.

Samples from an adit created by the original explorers of the area returned gold grades of up to 48.5 grams per tonne and silver up to 1,220 grams per tonne.

The area, 200 square kilometres in total, is 15 kilometres east of the town of Presov. 

Ortac chief executive Vassilios Carellas said: "I am delighted to report that following the recently initiated exploration campaign at our Cejkov licence, our exploration drill programme has now commenced at Zlata Bana, as part of our wider exploration and appraisal efforts in this highly prospective area.   

“Zlata Bana, which has a current non-JORC resource of 0.5 million ounces of gold equivalent, has demonstrated potential high grade gold and silver mineralisation. 

"This programme will provide the company with confidence in the previous exploration results as well as in the current geological interpretation.  

“Based on the success and results of this drilling, the next stage will be to incorporate the previous exploration results into a credible geological model to determine the resource potential of the project and expand Ortac's current JORC resource inventory of 1.1 million ounces of gold equivalent." 

Ortac is stepping up its exploration programme and earlier this month, began work on its Cejkov licence area in south-east 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. 

However the company’s primary focus remains Kremnica, its most advanced project, which hosts a JORC-compliant resource of 1.1 million ounces of gold.  

Zlata Bana contractor Drillrock is already carrying out a drilling programme on the Šturec deposit at Kremnica.

The historic mine 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. 

A recent report from the company’s broker Seymour Pierce says the current share price of 0.92 pence fails to reflect the full potential of the company.

In a 15-page report issued earlier this week it said the upcoming scoping study on the Šturec zone should “provide a clear valuation milestone”.

It ought also to underpin Seymour Pierce’s price target of 2.8 pence a share.

“It is only by visiting Kremnica, as we did recently, that a true sense of this region’s long history of gold mining can be fully understood,” said analysts Asa Bridle and Matthew McDonald in a note to clients.

“Furthermore, it is only by seeing the Šturec deposit, its setting and the archive of data that exists, that the project’s remaining potential can truly be recognised.” 

Ortac’s current goals include re-establishing production at Kremnica in line with EU sustainable development standards and with the backing of the local community. 

The remainder of the year should see significant developments on this front with the key highlight being the release of a scoping study on the project. 

Analysts say initial gold production could be underway as early as 2013, while the company is fully-funded through to the bankable feasibility study in the next two years. 

With this in mind, the current share price remains an enigma.

“Ortac Resources has all the key elements of a developing gold story – a one million ounce-plus resource on a site boasting good infrastructure in a stable country, sufficient funds for its appraisal work and a capable management team,” the Seymour Pierce analysts said.

“However, the share price has yet to reflect these factors. 

“The upcoming scoping study on the company’s Šturec project near the town of Kremnica in Slovakia should provide a clear valuation milestone and we recommend buying ahead of this event.”