The analogy is simple. If a certain Kazakhstan focused copper “waste dump” processor called Central Asia Metals (LSE:CAML) can deliver a dividend on 0.10% copper, What can Ortac do on 1.3% high grade copper from its Eritrea deposit? Copper grades in Eritrea deposit to outclass and outperform
WHEN AIM listed exploration and mine development company Ortac Resources (LSE:OTC) informed the market in January that it had taken an investment stake in the private Eritrean focused exploration company Andiamo Exploration, the market took and instant like to the deal, Ortac shares rose over 10% in January on the back of the news.
Since the deal with Andiamo was announced, significant progress has been made on their flagship Eritrean copper gold project, Yacob Dewar, where last month the first assay results were released which have turned out to be pretty impressive including 53m at 1.38 % copper and 42.5 m at 1.32 % copper respectively, secured from an oxide ore body and at surface.
At the same time Ortac announced they had increased their stake in Andiamo to 25.37% in what is now a US$ 1.5 million investment with the option to take that stake to over 40%. This investment by Ortac is not to be sniffed at, clearly they see something in Eritrea and in particular the Yacob Dewar project that they like, least of which is the extensive level of high quality technical work and investment of over $10 million that Andiamo has already sunk into its Eritrea projects.
What I have picked up on is an interesting analogy between Ortac-Andiamo and Central Asia Metals (LSE:CAML) the Kazakhstan focused copper “waste dump” processor. The reason that I am making the connection between Ortac and CAML is that I was astonished to learn that CAML not only paid a dividend to shareholders in 2013 but is also planning to pay a dividend this year too……………… and the really incredible point about this is that the grades of copper they are processing from their Kounrad dump are 0.10% from their oxide eastern dump and as little as 0.03% from other parts of their dump.
his is absolutely incredible and I have to say to CAML well done! Not only are you paying a dividend, you are also delivering real shareholder value (stock is up 54% this year so far) and you are also proving technically that you can make a profit by processing copper at grades of 0.10% and you only own 60% of the Kounrad project!!!!!!!!!!! And this is your only cash-generating asset!
Which leads me nicely into Ortac. I understand that by next year Ortac-Andiamo will deliver a technical and economic assessment of Yacob Dewar. Subject to approval by the Eritrean authorities, and by the way they have the right to buy into the project, Andiamo could be awarded a mining licence. This leads me to my next point.
Ortac-Andiamo like CAML plans to use a solvent extraction, leaching method & electrowinning (SX-EW) process to recover the copper and produce a saleable copper cathode.
Its worth noting that CAML’s Kounrad waste dump processing plant was constructed within 21 months for a capital cost of $39m, $8m below the budget, so whilst their might be some short term dilution for Ortac, in the medium term it will be pretty easy to secure debt finance to get Yacob-Dewar into production, especially if the Eritrean government buy in.
The high copper grades that Yacob Dewar is currently delivering over more than decent lengths, all within oxide and at surface, essentially mean that Yacob Dewar could initially be mined pretty much as an open cast operation where their would be some blasting, shoveling to a heap, followed by exactly the same process that CAML are using at Kounrad, so not much difference in extraction costs.
I can categorically state that it will not cost Ortac-Andiamo the value of 1.2% copper to just blast and scoop, more like 0.1%.
To cap this all off, Yacob-Dewar will also deliver a high grade gold deposit that will further add to the economic viability of the project as a whole, an aspect that CAML appears not to be getting from their waste dump treatment.
So really it’s quite a story. Ortac is currently trading at 0.021 p and is one of the most liquid stocks on AIM trading over 6 million shares daily.
If CAML can deliver a dividend on 0.10 per cent copper what can Ortac do on 1.3 per cent copper?
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