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Ambrian raises stance on Nyota Minerals after visiting Tulu Kapi gold project in Ethiopia


Ambrian Capital issued a note on African focused nickel and gold exploration and development junior Nyota Minerals (AIM, ASX: NYO), lifting its rating on the stock to ‘BUY’ from ‘Speculative Buy’ following a site visit to the Tulu Kapi gold project in western Ethiopia this month. It has an initial price target of 11.4 pence a share, a significant upside compared to the current level of around 6.88p.

It is applying a value of US$20.7 million to the initial resource, assuming a price of US$30 per ounce, and a nominal US$10 million to the Muremera nickel project in north-east Burundi.

Tulu Kapi is one of the assets acquired by Nyota, formerly Dwyka Resources, in the July 2009 £1.8 million takeover of Minerva Resources. The package included a substantial database of mapping, geochemistry and drilling.

Only last week, Nyota said the project, which has a maiden inferred gold resource of 690,000 oz, has been progressing well with drill rigs currently making their way to the site to drill around of Tulu Kapi Main to delineate 1 million oz of gold and increase the potential size of the orebody.  Trenching and drilling would also commence on a number of “very exciting satellite targets.”

The broker said it believes that Tulu Kapi has the potential to support a Bankable Feasibility Study for a standalone commercial gold mining project. The proposed drill programme will thus be the main share price driver. There have been factors affecting the delivery of the drill equipment, which are likely to affect the resource development schedule, but should have little impact on fundamental value factors.

“If the company achieves the targeted 0.5 million of measured & indicated plus 0.8 million oz inferred resource, that equates to a net total valuation of 18.7p/share,” Ambrian added.

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