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Ortac Resources: Andiamo to further exploration in Eritrea with latest option deal

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Ortac Resources (LON:OTC) said Andiamo Exploration, with which it recently struck a strategic tie-up, has unveiled a deal to expand exploration in Eritrea.

Andiamo has granted Environminerals East Africa (EEA) an option to earn a 50% interest and subsequently a 75% interest in its rights over 87 square kilometres (sq. km) in the northern part of the Haykota licence, which spans a total of 252 sq. km.

This represents 35% of the total licence area held by Andiamo.

The option is exercisable for a period of three months from January 30 this year and EEA is to fund analysis of geochemical soil samples at an estimated cost of US$50,000.

If it exercises the option, EEA can earn a 50% interest in Andiamo's rights over the project by funding exploration worth US$2mln by December 31, 2015.

As reported earlier, Ortac struck a subscription agreement with Andiamo to acquire up to 26.75% of the firm by subscribing for shares in three equal tranches for US$1.5mln.

The deal includes an option to acquire a further 10 million shares for US$2.0mln for a total interest of up to 42.2%.

Andiamo holds the 252 sq/ km Haykota exploration licence and the funds will be used to kick off a drill programme in the first quarter this year at the recently discovered high grade copper mineralisation at the Yacob Dewar deposit, where 63 metres of mineralisation from surface has been intersected - at an average grade of 2.4% copper.

A second drill programme is set to begin later in the quarter to target the high grade oxide gold VMS occurrence at Yacob Dewar, in a bid to expand the deposit along the known 800 metre strike

On Monday, Ortac's chief executive Vassilios Carellas said: "The option agreement with EEA enables Andiamo to expand its exploration activities in Eritrea and begin work on targets that have previously not been pursued.

"This option covers 35% of the Haykota licence and does not impact the Yacob Dewar or Ber Gebey targets that are the current focus of Ortac's interests in Andiamo. I strongly believe that this agreement confirms the value of Ortac's investment in this highly prospective area."

Ortac shares eased 3.92% to stand at 0.245p.

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