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Ortac Resources Limited is an AIM listed company focussed on the development of natural resource projects in Europe. Using industry knowledge, and project development and technology expertise, we identify new business opportunities and develop sustainable solutions to mobilise the economic and human potential of resource assets.
Ortac Resources Interview Transcript with CEO -Vassilios CarellasFebruary 06 2012, 1:39pm
Harry Norman: Hello, this is Harry Norman for Proactive Investors and welcome to another Proactive audio interview. Today is the 19th January 2012 and I’m talking with Vassilios Carellas, CEO of Ortac Resources, listed on the AIM market mining sector, stock ticker OTC, share price .85 of a penny, market capitalisation £19.7 million Sterling. Web address: ortac, O, R, T, A, C, ortacresources.com. Vassilios, thank you very much for joining us for this interview.
Vassilios Carellas: Thank you Harry, it’s a pleasure.
Harry Norman: Please give investors a brief introduction to Ortac Resources and the company’s strategy for creating value.
Vassilios Carellas: Ortac Resources is a London listed public company, focused on financing and developing projects in the Natural Resource Sector in Europe. We currently own 100% of a gold project in Slovakia, which we have just completed a scoping study on. We work to co-create projects that deliver robust investment returns while respecting the criteria of socially responsible investment. We create value by implementing sustainable and innovative solutions for the development of natural resources.
Harry Norman: Please would you talk investors through the salient points of the scoping study for Ortac’s flagship project, the Šturec gold/silver deposit in Slovakia, which you published a week ago? And tell us how you plan to take Šturec forward.
Vassilios Carellas: The recent scoping study, complete by SRK Consulting on the Šturec deposit confirms the attractive fundamentals, and suggests that this has the potential to become a robust and profitable asset. The numbers demonstrated in the scoping study are highly encouraging, with a post-tax NPV of over $300 million and internal rate of return of 36% at current metal prices, which is just under $1600 an ounce gold equivalent.
The life of mine revenue for the Šturec deposit is projected to be around $1.5 billion over an 11 year life, with average annual production of 86,000 ounces, cash costs of just over $500 an ounce.
The beauty about the project is what has come out on the scoping study, is there are hardly any infrastructural requirements. And that we have a very straightforward metallurgy with recoveries projected to be in the region of 95%.
We now plan to engage with all stakeholders of the project, which will include authorities, communities, supply chain, etc, to co-create a project that is not only technically and economically robust, but that is also socially and environmentally acceptable.
Harry Norman: What is the state of gold and silver reserves and resources at the Šturec gold and silver deposit Vassilios?
Vassilios Carellas: The current resource at our Šturec deposit is just over 1.2 million ounces of gold equivalent, and a half a gram ton gold cut off, with around half of this resource in the measured and indicated categories.
Harry Norman: What scope is there for increasing gold and silver reserves and resources in the area around Šturec?
Vassilios Carellas: We’ve always felt that the land package in Slovakia that we hold, has the potential to host at least 2 million ounces. And this is based on the fact that we have a six and a half kilometre mineralised structure, along which there has been historical mining activities. And the current Šturec resource is based upon a 1.2 kilometre length of this mineralised structure.
The historical areas along the structure that have been mined in the past, there has been some drilling which will verify that there, still mineralisation there. And on that basis, with what we have at Šturec and what we still have along the structure, we’re quite confident that 2 million ounces would be achievable.
Harry Norman: What can you tell us about exploration at the Zlatá Baňa and Cejkov Projects, which are also in Slovakia?
Vassilios Carellas: Yes, with Zlatá Baňa and Cejkov, they’re both really interesting deposits. Cejkov has had some historical work there, that’s shown that there’s really some high grade mineralisation there. And the programme then was just to define, to see if that mineralisation had any lateral extent. We drilled four holes there and we’re still waiting for those results.
At Zlatá Baňa, this is a much more advanced, here, initial exploratory activity was for a Deep copper porphyry that resulted in over 120 drill holes for a total length of 53 kilometres, along with 3 underground exploration adits being developed for a total length of 4 kilometres. Initially, not all of this data was analysed for gold. But where analysis has been carried out, the result is that we have a non-compliant resource of around half a million ounces gold equivalent.
We have recently completed a verification drill programme at Zlatá Baňa, the results for which are still pending. But the intention is to compile a maiden JORC Code compliant resource, once we have this data.
Harry Norman: What are your thoughts on developing a mining company in Slovakia? And what can you tell us about costs in Slovakia and the country’s fiscal regime?
Vassilios Carellas: Slovakia and the area surrounding our project has a rich mining tradition. Along with our neighbours in Central and Eastern Europe, it has finalised the modernisation of its mining and environmental legislation, in line with EU directives and international best practice. The region, we believe, is on the brink of a renaissance in the natural resource industry. Hence we believe this is an exciting time for us to be doing business here where we have to proactively balance market and sustainability requirements.
In line with this, we are addressing the key sustainable development opportunities associated with our assets for the benefit of all stakeholders, including the local communities. Regional development integration, and strategic local investments in partnership with community projects and programmes, with short, medium and long term returns are key elements to this.
By implementing this multifaceted investment strategy, the company is approaching its resource development objectives in a proactive manner, in line with EU, market and local community requirements.
With respect to costs, Slovakia is a highly competitive place in which to do business in a European context. It has a straightforward tax system with a flat 19% corporation tax and a fiscal regime that encourages direct foreign investment. This is demonstrated by the fact that a number of large global businesses, that include the likes of VW, Samsung, Kia, Peugeot, have all chosen to locate a significant part of their European manufacturing capacity here.
Harry Norman: Please would you talk us through Ortac Resources capital structure and the company’s financial situation going forward?
Vassilios Carellas: The market capitalisation of the company is roundabout $30 million. We have 2.3 billion shares in issue, with the directors and management currently holding around 10% of the company. Significant institutional shareholders include Henderson Global and BlackRock and we have a large retail holding which gives us excellent liquidity, which is what most AIM companies lack. Also have a healthy cash position of £8.2 million, of which we expect to spend roundabout £2.5 to £3 million to progress the Šturec deposit through BFS.
Harry Norman: What can we expect from Ortac Resources over the next 12 to 18 months Vassilios?
Vassilios Carellas: The next, sort of, 12 to 18 months will continue to be a period of high activity for Ortac. We will continue to develop our Šturec deposit and anticipate a resource update in the first half of this year. Followed by a pre-feasibility study in the second half of the year, that will result in JORC Code compliant reserves for Šturec. We expect to complete the BFS and full ESIA to international standards in 2013.
With respect to our other projects in the country, obviously with Zlata Baňa , we would anticipate producing a maiden JORC Code compliant resource. And then doing a little bit of work on the other projects, moving those forward and just seeing if there is anything there that could be developed further.
At the same time, we are on the look out for further projects through which we can expand our portfolio and global resource inventory, in order to further build shareholder value. With a strong cash treasury and a highly encouraging scoping study under our belt, I believe that we are well positioned to build value in Ortac. And I look forward to updating shareholders with our progress.
Harry Norman: Remember Proactive Investors is not an investment advice service. Make sure you register at proactiveinvestors.co.uk for our weekly newsletter, which will keep you informed about our articles, events and interviews. Thank you for listening. Please note, I hold shares in Ortac Resources.