Oriole Resources PLC
('Oriole Resources' or 'the Company' or 'the Group')
Unlocking Value in Turkey
Oriole Resources, the AIM-quoted exploration company focused on West Africa, provides an update on Turkey where it has made significant progress operationally and where it continues to realise value across the portfolio.
In the year to date, the Company has received income of two million Turkish lira ("TL") (c.US$341,000) from success-based payments and through consultancy fees. This has enabled the Turkish team to become financially self-sustaining during 2019, whilst they continue to manage the Group's multiple investments in the country. The Company's portfolio of interests are largely managed by local third parties and include multiple Net Smelter Return ("NSR") royalty positions, two of which are on projects that are at the Environmental Impact Assessment ("EIA") stage.
· Year to date cashflows from the Company's Turkish investments have exceeded the Company's G&A for Turkey during the same period;
· 1.2 per cent ("%") NSR royalty confirmed at the Muratdere project - EIA awaiting approval;
· US$75,000 success-based fees received to date for the Karaağac project, where the Company also has a 1.5% NSR - monthly installments totalling US$425,000 are outstanding, with US$100,000 overdue;
· New agreement signed with Turkish company Bati Toroslar ("Toroslar") for the Hasançelebi and Doğala projects:
o Toroslar to spend up to US$1.38 million on exploration and drilling at the projects within two years;
o Turkish team to be funded by approximately TL50,000 (c. US$8,800) per month once the licence transfer is complete;
o US$500,000 success fee payable upon definition of 100,000 ounces of gold JORC-compliant Measured or Indicated resource at Hasançelebi;
o 1.5% and 5.0% NSR royalties on future production of precious metals and other metals respectively.
· Sale of bentonite stockpiles at the Șehitler project has delivered c.US$26,000 during 2019;
· Turkish team providing external consulting services to a local group with projects in Turkey and Uzbekistan. Total net consultancy fees received in the year to date of TL1.37 million (c.US$240,000).
Oriole Resources CEO, Tim Livesey, said: "We are extremely pleased to see the Turkish entity become financially self-sufficient and to see the opportunity of it becoming a future profit centre for the Group. The advancement of existing projects through EIA permitting, alongside the returns seen from outsourcing our teams' technical skills, takes us significantly closer to the realisation of success-based payment and royalty returns from these historic assets, vindicating our decision to maintain the projects and the Turkish team within Oriole.
"Driving the Turkish assets to a position of self-funding is in line with our efforts to significantly reduce Group G&A which at 30 June 2019 had declined by 43% year on year. Our objective is to ensure that the majority of our expenditure is focussed in the ground or on analysing exploration results, thereby driving value uplift for our shareholders.
"We look forward to our Turkish partners progressing the various projects towards development and operation, with continued and expanded value realisation of legacy assets for Oriole across the portfolio."
At the Muratdere copper-molybdenum-gold deposit ("Muratdere"), where the Company has previously announced a positive Feasibility Study that reported a net income after tax of US$57 million over a 16 year mine life (announcement dated 11 March 2015), Oriole's partner, Lodos Maden Yatırım Sanayii ve Ticaret A.Ş. ("Lodos"), a wholly-owned mining investment company of Turkish investment company Pragma Finansal Danışmanlık Ticaret A.Ş., has continued to progress Muratdere towards mine-contsruction. Following the signing of share purchase and royalty agreements, with exchange of contract anticipated later this week, Oriole's interest will be convert to a 1.2% post-tax NSR,. Lodos has submitted an EIA and a decision is awaited. Subject to approval of the EIA, construction is expected to be completed within two years.
At the Karaağac gold project ("Karaağac"), the Company's partner Anadolu Export Maden Sanayi ve Ticaret Limited Şirketi ("Anadolu") received approval for its EIA application on 8 May 2019. The Company awaits an update on whether Anadolu will move to develop Karaağac. Anadolu had previously identified an Indicated and Inferred Mineral Resource of 348,150 ounces of gold (167,486 ounces of gold Indicated, 180,664 ounces of gold Inferred) and 2,832,036 ounces of silver (1,255,604 ounces of silver Indicated, 1,576,432 ounces of silver Inferred), significantly in excess of a 50,000 ounce minimum threshold, which triggered a sucess-based payment of US$500,000 (announcement dated 13 March 2019). An agreement was made for this to be paid in monthly installments of US$25,000 per month over a period of 20 months. To date the Company has only received U$75,000 and Anadolu is currently four months in arrears (for an overdue debt of US$100,000). Oriole is currently persuing options to recover the amount in full. Oriole retains a 1.5% NSR royalty on any future mineral production at Karaağac.
On 15 February 2018, the Company announced a partnership with TET Madencilik Ltd. Şti. ("TET") to fund future exploration at its Hasançelebi and Doğala high-sulphidation gold licences (the "Projects"). Despite the payment to the Group of US$0.05 million in 2018, and funding exploration of US$0.12 million, TET subsequently became unable to complete the licence transer process. Shortly after signing the agreement, the original two-year exploration period was suspended on advice that a new high-speed railway had been designed to pass directly through the mineralised zone at Hasançelebi. Following a successful appeal to re-route the railway line, the Company is pleased to advise that it is now clear to recommence work and has been able to secure a new Turkish partner, Toroslar, on similar terms to the original agreement, as follows:
· Toroslar to spend up to US$1.38 million on exploration and drilling at the Projects within two years ("the Exploration Period");
· The Oriole team to be funded by Toroslar to manage the exploration and drilling programmes for a minimum expenditure of approximately TL50,000 (c. US$8,800) per month;
· Toroslar to pay Oriole US$500,000 success fee, in cash, if minimum JORC-compliant Measured or Indicated resource of 100,000 ounces of gold (at 0.3 g/t Au cut off) is confirmed within oxide and transition material at Hasançelebi within the Exploration Period;
· Oriole to receive a 1.5% NSR royalty on any future precious metals production at the Licences, and a 5.0% NSR royalty on the future production of any other metals or industrial raw minerals.
At the Șehitler project, the Company has received US$26,000 from local Turkish company S&B Endüstriyel Mineraller A.Ş. ("S&B") for the sale of bentonite stockpiles which were mined during the first half of 2019 in order to prove commerciality and retain the licence. A second ageement, dated May 2016, exists between Oriole and local group Yildizim Makine with regards to ongoing exploration and mining of bentonite at Șehitler and the nearby Enez project. The Company will receive 1.0% of the gross sales value of any bentonite sold. Oriole retains the exploration and mineral rights for gold at Enez.
During the year, the Company also signed a consultancy agreement with a local group operating in Turkey and Uzbekistan. The Turkish team has been providing technical services in respect of project management, core logging and geochemical sampling. Whilst there is no fixed monthly commitment, total net fees received in the year to date stand at TL1.23 million (c.US$216,788). Other groups have also expressed an interest in the Company's consultancy services and these will be considered, subject to demands from Oriole's existing investments, which will be our priority.
In total, the Company has received net proceeds of TL2.0 million (US$341,000) across its Turkish portfolio and through consultancy fees during the year to date. This is in excess of the Turkish office's G&A costs during the same period. This reflects the Company's ongoing strategy to improve operational efficiency and lower its net overheads wherever possible.
Oriole continues to seek other monetisation opportunities across its portfolio, with a view to continued streamlining of the business
The information communicated within this announcement is deemed to constitute inside information as stipulated under the Market Abuse Regulations (EU) No. 596/2014. Upon the publication of this announcement, this inside information is now considered to be in the public domain.
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For further information please visit www.orioleresources.com, @OrioleResources on Twitter, or contact:
Oriole Resources PLC
Tim Livesey / Bob Smeeton / Claire Bay
Tel: +44 (0)20 7830 9650
Blytheweigh (IR/PR contact)
Tim Blythe / Megan Ray / Rachael Brooks
Tel: +44 (0)20 7138 3204
Grant Thornton UK LLP
Samantha Harrison / Ben Roberts / Niall McDonald
Tel: +44 (0)20 7383 5100
Adrian Hadden / Darshan Patel / Lydia Zychowska
Tel: +44 (0)20 7220 1666
Notes to Editors:
Oriole Resources PLC is an AIM-quoted exploration company, operating in Africa and Europe. It is focused on early-stage exploration in Cameroon and the more advanced Dalafin gold project in Senegal, where IAMGOLD has the option to spend US$8 million to earn a 70 per cent interest. The Company has a number of interests and royalties in companies operating throughout Africa and Turkey and is assessing new opportunities in both regions.