LONDON (Alliance News) - Nyota Minerals Limited Thursday said it has put its Tulu Kapi camp on care and maintenance until it completes ongoing sale agreement.
The gold exploration and development company in East Africa said it had cash of AUD900,000 at September 30, but said it should receive a short-term loan for up to GBP360,000 as part of its ongoing sale agreement with an unnamed party.
Nyota said it has insufficient working capital for the current quarter without the completion of its ongoing sale agreement, and it believes the loan will be enough to enable the company and its subsidiaries to continue operating during the period required to complete the sale.
The company said that from Thursday its Tulu Kapi camp will be put on care and maintenance and that it has made significant cuts throughout its third quarter in order to reduce its losses.
Nyota said on October 24 that it expects the deal to be for a 75% stake of its Nyota Minerals (Ethiopia) Limited, which holds the Tulu Kapi gold site. Nyota will be left with a 25% stake and will be required to contribute to the funding of the subsidiary's exploration activities once an updated mineral resource statement is completed at the site.
The company said that during the first six months of 2013 it became apparent that it wasn't viable for the company to keep developing Tulu Kapi, which it attributed to the inadequate financial return to investors linked to the falling gold price during the period and the possible financial costs of having to resettle a number of villages and farmlands around the Tulu Kapi area.
The company said that, along with its partner, a new work programme has been submitted jointly to the Ethiopian Ministry of Mines after the end of the half year, and the evaluation and approval by the ministry is pending. Nyota said the plan represents a 'back to basics' approach to the re-evaluation of the technical data at the site with focus on higher grades and lower costs.
Nyota shares were up 19% to 0.720 pence Thursday.
By Tom McIvor; tommcivor@alliancenews.com; @TomMcIvor1
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