Exploration Insights by Robert Tyerman

Big miners came in for some selling recently on fears that China wants to cool down its construction boom, and in oils BP’s Gulf of Mexico crisis has done its shares no favours. But there is life yet at the smaller end 

Nyota Minerals hopes to move in six months towards embarking on a bankable feasibility study of its Tulu Kapi gold project in Ethiopia. 

The company, formerly gem flop Dwyka Resources, has already doubled the formal resource estimate for Tulu Kapi to 1.4 million oz at a low grade of 1.68 grammes of gold per tonne of ore, and observers suggest that capital spending of £50 million could lead to production of 100,000 oz a year, with likely cash costs put at $500 an ounce, against a current gold price of nearly $1,200 an ounce. The World Bank’s International Finance Corporation arm recently paid £3.5 million for 10 per cent of Nyota and is understood to be willing to help with project finance for Tulu Kapi, where some analysts suggest the full resource could exceed three million oz.

Nyota has options on 4,000 sq km around Tulu Kapi and owns Burundi’s Muremara nickel project, next to mining giant Xstrata’s Kabanga operation. Floated at 40p as Dwyka nine years ago, the shares fell heavily but have lately rallied from 2.75p. Highlighted by Growth Company Investor in February at 9.25p, they have now reached 15.75p. They carry risk, but could handsomely reward a punt.

Rockhopper rocks on
Fluid sampling has confirmed that Rockhopper Exploration’s new Sea Lion find in the Falkland Basin contains oil. The Salisbury-based AIM high-flyer says preliminary sampling of Sea Lion prospect’s 14/10-2 well shows signs of a ‘good-quality reservoir’ and characteristics of ‘a mobile crude oil’. Rockhopper, which floated on AIM in 2005 at 42p, has four offshore production licences to the north of the Falkland Islands and a 7.5 per cent working interest in another two, operated by Desire Petroleum.

The company, whose shares fell to 17.5p in the past 12 months, has enjoyed a stock market surge since recent discoveries, coupled with hopes that the UK government will defend its licences against any Argentine challenges. After raising £50 million in the autumn at 54p, Rockhopper, recently highlighted by Growth Company Investor at 189p, still looks popular at 227.5p, though some profit taking is on the cards.

Kiwi hopeful goes offshore
New Zealand-focused Kea Petroleum has acquired a new offshore interest after raising £7 million at a discounted 16p.

Floated on AIM early this year at 8p by veteran Australian entrepreneur Ian Gowrie-Smith, the company is to take a 10 per cent participating interest in PEP38524, a 2,500 sq km offshore area near the north of New Zealand’s South Island, with Aussie-listed company AWE.

Kea will contribute to the cost of drilling one well there, Tuatara-1, at a cost not expected to exceed $3 million (£2.1 million).The company, which had pre-float backing at 5p from serial investor Nigel Wray and Mark Knopfler of the band Dire Straits, combined its placing with two-year warrants exercisable at 23p for up to another £5 million.

Shares in Kea, which last month announced an onshore find in New Zealand’s Taranaki Basin and is drilling for gas at its nearby Beluga project, now trade at 18.5p. They should be a lively market.

Chaarat’s Asian promise
Chaarat Gold says work on its four million oz project in Kyrgyzstan suggests an initial low-cost, 336,000 oz open-pit zone. The AIM-quoted company, steered by Israeli entrepreneur Dekel Golan, reports a current pre-feasibility study on the Chaarat project on the Tien Shan gold belt in Central Asia’s Kyrgyz Republic indicates a viable open pit prospect within the project’s Tulkubash zone.

Chaarat hopes that consultant SRK will have the pre-feasibility study finished later this year. Floated at 60p in 2007, Chaarat shares had a rough ride, falling to 8.75p not so long ago, but they have been rallying of late.
Highlighted by Growth Company Investor at 23.75p in November, they are now 49.5p. Hold on.