LONDON (Alliance News) - Nyota Minerals Ltd saw almost a quarter of its market share wiped Friday after it said it having to change its "strategy", after its mining licence application for the alluvial deposits along the Abay River was rejected earlier this week.
The company owns 100% of the Northern Block exploration licences, namely Brantham and Towchester, in Western Ethiopia.
In a statement Friday, Nyota said that following the Ethiopian government's decision against issuing it a mining licence for mechanised alluvial mining along the Abay River, it has now commenced a strategic review of opportunities and investment in Ethiopia.
"During the quarter we focused on Nyota's future, both inside and outside of Ethiopia. However, with the mining licence application for the alluvial deposits along the Abay River rejected a few days ago, our strategy has had to change, particularly given that the company is not to be self-sustaining in terms of cash flow in the short term based on its current assets. Therefore the new opportunities being evaluated become all the more important and, although we have stabilised our costs at a very low level, we plan to act rapidly to define our future," said Chief Executive Richard Chase in a statement.
According to Nyota, the rationale for the decision by the Ethiopian government is that the success of the new dam and its intended transformation of the Ethiopian economy is so much in the national interest that the risk of any negative impacts arising from any mining activities outweigh the potential economic gains from gold royalties and taxes during the period that those activities might take place before flooding.
Nyota received the Brantham and Towchester exploration licence renewals in early December, so those exploration licences are unaffected by the Ethiopian government's decision on alluvial mining.
At the end of the quarter to end-December, Nyota held cash of AUD0.71 million.
"Administration costs are significantly lower than in previous years and exploration will be managed according to the available resources," the company said.
Nyota shares were down 23.6% Friday mid-morning, trading at 0.0535 pence. The stock was the second worst performing stock on AIM.
By Rowena Harris-Doughty; rowenaharrisdoughty@alliancenews.com; @rharrisdoughty
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