Nyota Minerals (LON:NYO, ASX:NYO) is a mining business registered in Australia, has its Head Office in Perth, Western Australia and is quoted in London on AIM and on the ASX in Australia. Nyota Minerals changed its name from Dwyka Diamonds in September 2009. And the company until recently had three prospects, all in Africa, in Ethiopia, Burundi and Swaziland. Of these Ethiopia is the most advanced and thus is of the most interest. In Ethiopia, Tulu Kapi is the jewel in the crown. It is ISA-able and seems to me to be a very attractive proposition. I came across the company late in 2009 and made a modest purchase at 7.25p in November 2009. So I am well pleased with progress to date and look forward to plenty more.
In Ethiopia Nyota holds three licences. Its core project here is its gold exploration licence at Tulu Kapi.
It also has gold exploration licences which are all in western Ethiopia in Wellega Province, Oromiya Regional State, approximately 360 kilometres west of the capital Addis Ababa. The platinum interest is at Yubdo where Nyota owns 51% of a historically small producing platinum mine. The intention is to shut down the small pilot plant there and concentrate on further exploration.
In Burundi Nyota has a 100% interest in the Muremera nickel project in Burundi, Africa, which it acquired in January 2007. The Deposit has a similar geology to nearby Kabanga, currently the world’s largest undeveloped nickel sulphide project. The Company controls the Muremera Nickel Project through its wholly owned subsidiary, Danyland Limited, which holds the exploration rights for nickel and associated minerals in the project area. According slide 3 of the Feb 2010 Company Presentation shows this project as a “Potential Spin-out”
In Swaziland Nyota held a 45% indirect interest in the Swazigold Project in Swaziland, Africa. The project was on the back-burner - see slide 3 of the Feb 2010 Company Presentation which shows this project as “Sale or Farm Out”. On 14th May Nyota announced it had transferred its interest in this project to its jv partner, Savinara Company SA. Nyota retained a 50% interest in the proceeds of any sale of the project by Savinara SA.
Back to Tulu Kapi - the jewel in the crown!
This is the most advanced of Nyota's prospects and on 6th May 2010,…
for everyone:
Nyota Minerals Limited ("Nyota") has released some excellent drilling results from its ongoing campaign at its wholly owned Tulu Kapi project in Western Ethiopia .
Today’s release has results from extension drilling to the north and definition drilling of Lode 3, but the headline-grabbing results are from the first of 4 holes that the Company has sunk to greater depths which is thought to have intersected an extremely high-grade feeder-zone for the main Tulu Kapi deposit. This diamond drillhole showed “abundant visible gold” and returned 25.76m @ 23.05g/t Au which contained 15.70m @ 37.04g/t Au.
This is a strong indication that Tulu Kapi is part of a larger gold-bearing system and the style of mineralisation of the new discovery (such as higher temperature minerals such as pyrrhotite) indicates that it could be one of the sources of the gold bearing fluids that led to the deposit of gold at Tulu Kapi.
The extensional drilling immediately to the north of Tulu Kapi has shown good results from 2 new RC holes with intersections that reconfirm the Company’s previous statements that the Tulu Kapi orebody extends to the north. The new holes are 80m to the NW of current drilling and include intersections such as 44m @ 2.09g/t Au from one hole and 8m @ 1.9 g/t Au from the other.
Follow up drilling of 2 diamond holes into Lode 3 have also been successful with intersections such as 25.42m @ 1.98g/t Au in one hole and 4.25m @ 5.81g/t Au in the other. These intersections indicate that Lode 3 is of significant size and could add ounces to the Tulu Kapi deposit.
Following this recent drilling success, Nyota has decided to delay the completion and publication of the SRK-authored PEA so that more drill data, recently completed structural mapping and geo-technical studies (which could help with pit slope angles) can be included in the study. The PEA is now expected to be published in Q1 2011.
Ocean Equities Comment
We are immensely impressed with the deep drilling below Tulu Kapi and while one hole is not enough data to be able to adjust our price target valuation (currently £0.34), we are excited about the future development and now expect this target price to be reached in a much shorter time frame.
In discussion with CEO Terry Tucker, we are struck by the excitement that this discovery has generated within the Company. Terry returned from Ethiopia this morning and talked of the abundance of visible gold in this new zone, commenting that it is the most impressive intersection either he or his Exploration manager have seen in their many years of gold exploration.
Although there is much work to do to develop this new zone, there are some important points that can be taken from this hole. The presence of higher temperature minerals such as pyrrhotite indicate that this zone is much closer to the ‘guts’ of the system and force us to re-focus our view of Tulu Kapi as a much larger system, with the current 1.4moz near-surface resource as the ‘edge’ of the deposit. This is the truly exciting part of today’s discovery: that the current Tulu Kapi resource could be the tip of a gold iceberg.
There are 3 more deep holes with assays outstanding and we expect these results in the next couple of weeks.
Another point to note regarding the new discovery is that the mineralisation seems to occur at depths of approximately 350-450m below the surface. This indicates that if this discovery turns out to be an orebody of economic size then it would be an underground operation, most likely to be accessed by a decline ramp. We are happy with this concept as there seems to sufficient space between the bottom of the lowest near-surface gold that could be included in the open pit (Lode 3 – intersected down to ~250-300m below surface) to the top of the new zone (~350-450m depth) such that enough rock would be left for a substantial crown pillar. This means that the Company could run an underground operation in parallel with an open pit if they so desired with at least 100m of very competent syenite being left under the pit floor. We understand that Nyota will be commissioning an independent study to determine the econometrics of running such parallel operations.
Extension drilling to the North and Lode 3
We are slightly concerned that the impressive deep drilling in today’s press release might put the other drilling results in the shadow as we think that these are also very impressive and demonstrate a good jump forward for the Tulu Kapi open pit project.
Nyota has previously held that the Tulu Kapi orebody extends further to the north, and the 2 RC holes released today (see plan below) show that this is true for at least another 80m to the NW. The Company continues to chase the deposit north and we expect the mineralisation envelope to be pushed even further in this direction.
On a similar positive note, the drilling that has intersected the third gold lode bore good results from areas that are currently not accounted for by the resource statement of 1.4moz. This gives us comfort on our near term resource target of 2 million ounces in an open pittable resource will be achieved in the near term, and we suspect that come 2011 our resource target may increase to 3moz.
With today’s great results on three fronts, it is no surprise to us that Nyota has decided to delay the PEA so that it can include some of these results in the study. The PEA has previously been considering an open pit for the currently defined 1.4moz, and recent exploration work by the Company has meant that this is already woefully out of date. Publishing the PEA in its current state would be almost pointless as it bears little resemblance to the newly expanded project. We look forward to the revised PEA in 1Q 2011 and will re-visit our valuation of the Company at this point.
Upcoming Newsflow
• Interpretations and analysis from the airborne geophysics due in 1Q 2011.
• Further drilling and assay results from the other three deep holes expected within 2 weeks.
• Further testing of the possible new mineralised body to the west of Tulu Kapi – ‘Lode 0’.
• Further confirmation at Tulu Kapi of Lodes 3 and 4 at depth.
• Resource increase and upgrade (from inferred to some indicated) within 3 months.
• Publication of the SRK-authored PEA for the Tulu Kapi project before the end 1Q 2011.
