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Ortac Resources' mining re-start at Šturec gold project welcomed by analysts

City analysts roundly applauded Ortac Resources' news on Friday that it had received the green light to begin underground trial mining at the Šturec gold deposit. 

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City analysts roundly applauded Ortac Resources' (LON:OTC) news on Friday that it had received the green light to begin underground trial mining at the Šturec gold deposit. 

It means that after a break of two decades, the property in Slovakia will be mined once more.

Investors also cheered the milestone - sending the shares up over 11% in early deals before they eased back.

The country's central mining bureau confirmed the earlier granting of approval by the regional body, said Ortac, which added that it planed to start mining imminently.

Dr Ryan Long, at broker Northland, hailed what he called "positive news", adding:

"Ortac plans to mine around 1,000t of gold and silver ore per year but more importantly the operation enables the company to satisfy the terms of its mining licence. 

"The small underground pit operation should be seen as a proof of concept for the larger open pit operation to demonstrate that the company can operate the mine in a socially and environmentally friendly manner, hopefully assisting with the surface mining application that is still pending."

Asa Bridle, at Cantor Fitzgerald, said it was an important and "very postive" step, which showed that patient companies can navigate the permitting process in Slovakia, which allows for input from all stakeholders.

"There is still a long way for Ortac to progress to a position where it can begin construction of the 70koz/year mine at Sturec, but this decision should provide some positive news flow from the project in the short term, on top of the continuing positive results coming from Andiamo's (OTC 25% stake) exploration work in Eritrea."

The broker has repeated its 'buy' recommendation and target price of 5.5p (current price: 0.265p).

The Šturec project lies in central Slovakia close to the town of Kremnica, where mining dates back to the 8th Century, and 17km west of central Slovakia's largest city, Banská Bystrica.

It has a JORC resource estimate of 1.36 million ounces of gold equivalent.

As well as developing the Šturec project, the firm is also in alliance with Andiamo Exploration in Eritrea.

Last month, further assay results from  Andiamo’s drilling programme at the Yacob Dewar copper/ gold prospect showed economic grades.

Under the terms of the partnership deal announced in January, Ortac will invest US$1.5mln to acquire a 26.7% stake, with an option to increase its holding by 21% for a further investment of US$2mln.

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