Nyota begins drilling Billa-Guliso and Yubdo licence areas in Ethiopia

December 6, 2010

The company is using the recently commission fifth rig to carry out the work.

It will consist of 10 holes concentrated on the north-east portion of Guliso Trend, a 14 kilometre by 2.5 kilometre “structural corridor consisting of many targets with significant gold mineralisation”.

The campaign will begin at the Soyoma target where previous trench results revealed a 14.2 metre section at 8.2 grams per tonne of gold over a 200 m strike-length.

It will also encompass the Dina target, which is located 2.5 km south-west of Soyoma.

This area was trenched and drilled from 2007 to 2009 by Minerva Resources and Nyota.

The results returned up to 8.75 metres at 1.23 grams per gold, while test borehole results returned a 7.1 metre section at 8.23 grams per gold.

Nyota said both Dina and Soyoma show evidence of historic mining activities dating back to the 1930s.

Separately, the group said it had completed the 44,500 kilometres of airborne geophysics over the company’s entire Ethiopian land holdings.

The latest drilling campaign is designed to assess the company’s wider Ethiopian assets as much of Nyota’s value is currently accounted for by just one project – Tulu Kapi in the far south-east corner of the Yubdo licence area.

In October it raised almost £22 million to fast track work there, which initially means carrying out a NI43-101 compliant preliminary economic assessment feasibility (PEA) study.

Located 375 kilometres west of Ethiopia’s capital Addis Ababa, TK was bought last year for US$3.2 million with a resource base of 690,000 ounces of gold.

This has risen to a JORC-compliant 1.38 million ounces at 1.68 grams per tonne of gold (at a cut-off grade of 0.5g/t).

The figure is expected to hit 2 million ounces by the end of the year, and analysts say it could feasibly grow to 2.5-3.0 million ounces.

In fact the respected mining team at Mirabaud Securities goes a step further.

“Based on the ground magnetic data, that has highlighted several satellite targets as well as confirmed the view that extensions to the main zone exist, we believe Tulu Kapi has multi-million ounce potential in the longer-term,” a recent note said.

The group has launched into the preliminary evaluation a lot earlier than one would normally expect.

It is being carried out by SRK Consulting and it builds on earlier scoping work carried out by Venmyn Rand last year.

Analysts say the speed with which the group is working underlines the high degree of confidence management, led by the experienced Terry Tucker, has in the project.

Under the terms of the prevailing mining legislation, Nyota may either look to convert the existing Tulu Kapi exploration licence to a mining license prior to the current period of tenure expiring in May 2011 or, alternatively, seek a further extension of the existing exploration licence.

Obviously, the long-term tenure afforded by a mining licence makes this an attractive option for the company.

Broker Mirabaud said: “While the company will continue to drill deeper holes, holes along strike and indeed look to target satellite deposits, it [should] now ring-fence the main Tulu Kapi zone and prepare that portion of the project for mining license status.

“In other circumstances one would probably expect to see further exploration before proceeding with an economic assessment.”