Ortac's decision to invest in Andiamo should be closely looked at by investors
THIS ARTICLE WAS PREPARED FOR Ortac Resources BY BRAND:MINING
Ortac Resources (LON:OTC), the AIM-listed developer of the 1.32 million ounce, Šturec gold mine in Slovakia, today announced it will make significant investments into Andiamo, a private UK registered company, which holds advanced stage, large scale VMS gold-copper exploration projects in Eritrea.
Under the terms of the subscription, Ortac will invest US$ 1.5 million to acquire and initial 26.7% stake, with an option to increase their holding by 21% for a further investment of US$ 2.0 million, which if exercised, would take their total interest in Andiamo to 42.2%
Cantor Fitzgerald is acting as Ortac’s broker.
It is reported that for some time now, the board of Ortac have been looking to add another project that would deliver further shareholder returns, as the company continues to work towards the permitting of its flagship Slovakian Šturec gold mine project.
The decision by Ortac to invest in Andiamo, is one that investors should look at very closely, given the quality of technical, financial and mining expertise contained within the Ortac board, where this deal and the quality of Andiamo’s Eritrean portfolio, has been seen by Ortac as “Stand Out”.
Andiamo has raised, privately,over US$ 10 million. Ortac has clearly been impressed by the quality of geological and technical work undertaken on their projects in Eritrea, where this deal now offers Ortac shareholders a margin of investment safety, whilst the company bides its time in the steadfast pursuit of permitting at Šturec.
Confirmation of the quality of Andiamo’s Eritrean portfolio can be traced back to January 21, 2013, when AIM listed natural resources investment house, Paternoster Resources Plc (PRS:AIM) subscribed for 640,000 new ordinary shares in Andiamo at a price of US$ 50 cents per share, as part of a fund raising of up to US$ 3 million, representing an investment, in aggregate, of US$ 320,000, thus valuing Andiamo at US$ 12 million on a pre-investment basis.
At that time Paternoster chairman, Nicholas Lee said: "The quality of the operation at Andiamo is seldom seen in companies of this size. The potential of the deposits within the licence area are significant and it is expected that production can be achieved within the short to medium term with relatively low levels of investment."
Paternoster should now do more to promote their investment into Andiamo, given this news by Ortac.
As a mining and natural resources exploration jurisdiction, Eritrea is as good, if not better, than any of its African counterparts and is certainly “Investment Grade”.
Geologically, Eritrea sits on a patch of the Arabian Nubian Shield, the geological feature that stretches from Saudi Arabia and Yemen in the east, to Sudan and Egypt in the west.
“We are a small country, but over 60% of our land mass is covered by Nubian Shield rocks which are home to several rich gold and base metal mines in the region.
"I firmly believe that Eritrea is going to be one of the new entrants in the global mining arena. I am on record as saying that reserves identified in Eritrea so far are only the tip of the iceberg, and I stand by that viewpoint. In the next five to ten years I expect the number of mining companies exploring and producing in Eritrea to have at least doubled to more than 30," the director general of the department of mines in the Eritrean ministry of energy and mines, Alem Kibreab is quoted as saying back in October 2013, when Canadian Nevsun Resources (TSX:NSU) commissioned its new copper flotation plant at its Bisha gold-copper mine operation.
Nevsun’s Bisha mine began construction in September 2008 and declared commercial production in February 2011 at a rate of 2Mtpa.
The mine produced low-cost gold-silver doré until mid-2013 when, through a $110 million copper expansion, throughput expanded to 2.4Mtpa and the product switched to copper in concentrate.
The Bisha mine, with 12 years of current reserves, ranks as one of the highest grade open pit mines in the world and, in 2012, produced 313,000 ounces of gold.
Other mining and exploration companies operating in Eritrea include fellow Canadian company, Sunridge Gold Corp (TSX.V: SGC), which is developing its Asmara project.
The Asmara project hosts four deposits, three of which, EmbaDerho, Debarwaand AdiNefas, have a combined NI 43-101 measured and indicated resources totaling, 1.26 billion pounds of copper, 2.5 billion pounds of zinc,930,000 ounces of gold, and 28.3 million ounces of silver.
A fourth deposit, Gupo Gold, contains an additional Inferred resource of 47,000 ounces of gold.
Other VMS discoveries in Eritrea include: JabalSayid (Barrick Gold Corp, Saudi Arabia); Sukari (Centamin, Egypt); and Hassai (La Mancha Resources, Sudan).
The upside for Ortac and Andiamo, Why Investors Should Take Comfort.
Eritrea’s recent track record in attracting Chinese investors is something Investors in Ortac should take some comfort from.
For example, Chalice Gold Mines Limited (ASX: CHN/TSX: CXN) completed the sale of their Zara Gold Project in Eritrea back in 2012, to China SFECO Group for US$78 million plus a deferred payment of US$2 million.
The Chinese clearly like what they see in Eritrea. Indeed Chalice is still active in Eritrea and has just announced a new VMS discovery,
Andiamo’s portfolio of projects look pretty breathtaking and show all the hallmarks of ones that, with some further drilling, could become attractive to the Chinese over the near term.
Andiamo’s Eritrea exploration acreage is defined within its Haykotalicence, held by the company since July 2009.
The shining star project in the licence area is Yacob Dewar, a near surface gold-copper VMS discovery ( just 55km form Bisha) where initial drill results have revealed some impressive numbers.
2010 - 2 short aircore holes
14 m at 3.5 g/t gold
2011 - 32 diamond drill holes
16.2 m at 5.0 g/t gold
2012 - 58 reverse circulation holes
25.2 m at 7.3 g/t gold
2013 – 9 diamond drill holes
19.9 m at 6.2 g/t gold
9.0 m at 22.5 g/t gold
2011 32 diamond drill holes
13 m at 1.8% Copper
2012 - 3 diamond drill holes
63 m at 2.4 % Copper
Drill programme should generate significant newsflow
Andiamo will now press ahead with an intensive drill campaign with a view to securing a resource classification this year.
If results follow the promise already shown at Yacob Dewar, then Ortac should start to see increasing retail investor interest generated from what could well be a very positive year of new releases.
Ortac shares are down 58% over the last 12 months, the stock trades on average daily volumes of 19 million shares, is liquid and is trading just above its 52 week low at 0.00235p.
This deal with Andiamo is likely to see a significant re-rate of the Ortac stock.
http://www.ortacresources.com Market Cap £5.4 Million
THIS ARTICLE WAS PREPARED FOR Ortac Resources BY BRAND:MINING