ALO.L Regulatory News (ALO)

Alecto Minerals plc / EPIC: ALO / Market: AIM / Sector: Exploration & Development

25 November 2011

Alecto Minerals plc ('Alecto' or 'the Company')

Major Expansion of Ethiopian Portfolio with Gold and Emerald Acquisition

Alecto Minerals plc, the AIM listed resource investment company focussed on Africa, has acquired Rift Valley Resources Ltd ('Rift Valley'), holder of the 945.5 sq km Waya Boda gold and emerald licence in the highly prospective central-southern Adola greenstone belt in southern Ethiopia.

Overview

·; Acquired three year exploration licence over the highly prospective Waya Boda gold and emerald exploration licence with good access to infrastructure

·; New licences located in the Adola greenstone belt - a mineral-rich region known to host significant and commercial deposits of gold - MIDROC's Lege Dembi mine located 82km to the north

·; Readymade initial exploration targets provided by extensive historical and current artisanal high grade quartz vein gold mining activity

·; Multiple areas with extensive strikes - open along strike and at depth

·; Degogo emerald mine shows artisanal activity with strikes of up to 150m long

·; Acquisition bolsters presence in Ethiopia, where the Company already holds a 1,953 sq km gold exploration licence in the Aysid-Metekel region in the north-west

·; Ethiopia offers a pro-mining jurisdiction that already hosts a number of multimillion ounce deposits

·; Company now controls an exciting and extensive gold and base metal portfolio totalling ~4,900 sq km in prime mineralised areas of Mauritania and Ethiopia

·; Termination of agreement to acquire Ghanaian gold project due to failure by the vendor to meet the conditions precedent - resources will be released to focus on the advancement of Ethiopian licences

Alecto Managing Director Damian Conboy said, "Waya Boda is a highly exciting gold and emerald exploration opportunity in the central-southern Adola greenstone belt in southern Ethiopia, a region known to host significant deposits. This acquisition, our second in Ethiopia, is in line with our strategy to build a substantial African focussed multi-commodity exploration company with a highly prospective portfolio of assets. 

"Importantly, advanced gold and emerald artisanal workings at the project that clearly show widespread gold mineralisation, provides us with key areas of focus around which to structure an exploration and development campaign. We will now embark on formulating a detailed programme, utilising our in country team in tandem with outsourced consultants and the local community, in order to maximise the full potential of these projects and so generate substantial value for shareholders."

Acquisition Agreement for Rift Valley

Under the terms of a share purchase agreement ('the Agreement'), Alecto has acquired Rift Valley for an initial consideration of £409,200 to be satisfied by a two-stage cash payment of £158,400 to be completed within 60 days of 22 November 2011, and the allotment of the corresponding amount of new ordinary shares of 0.7 pence each in Alecto equal to £250,800 at a volume weighted average share price for the 30 trading days immediately prior to 22 November 2011 and the trading days within the 60 day period immediately after 22 November 2011 ('the Initial Consideration Shares').

Should Alecto decide to continue to fund the exploration programme and commitment beyond 1 July 2012, the Company will pay an additional £250,800 to be satisfied by the further allotment of a corresponding number of new ordinary shares of 0.7p each in Alecto, according to a volume weighted average share price for the 30 days prior to 1 July 2012 ('the Deferred Consideration Shares'). Should Alecto decide not to continue funding the exploration on the Licence on or before 1 July 2012 then it will transfer 51% of the issued share capital of Rift Valley back to the sellers at a nominal consideration of £1 (in aggregate).

Detailed Information on Rift Valley

Gold

The Wayu Boda licence area is located in the central-southern Adola greenstone belt, which comprises a series of meta-volcanics and meta-sediments intruded by a sequence of syn- and post-tectonic granitoids and syenites; these, in turn, are overlain by sequences of sediments. The region, which also hosts MIDROC's Lege Dembe gold mine, is characterised by shearing, faulting and folding creating a complex geological profile. These shears, faults, thrusts and associated quartz veins have historically been a source of gold production in this part of Ethiopia.

Alluvial and bedded gold deposits are located in the region but mineralisation styles in the bedded deposits are varied and appear to be structurally controlled. In summary, interest is focussed largely on metavolcanics and associated intrusives. The suite of rocks that make up the Birbir Group host 90% of the known gold and base metal mineralisation in Ethiopia.

A review of geological maps shows the clear relationship between known deposits and the metavolcanic and schist zones. The United Nations Development Programme ('UNDP') notes that the metavolcanic-metasedimentary belt is "structurally favoured for the emplacement of other intrusives, granodiorites, some alkaline bodies, and younger granites, some of which are mineralised". In terms of former UNDP reconnaissance, the organisation also states that "numerous gold occurrences that have been noted during surveys are located in these areas". 

Mineralisation in the Wayu Boda licence area currently consists of two minerals:

1. Gold: vein / shear hosted gold in the north of the licence and

2. Emerald: hosted in quartz / pegmatite veins in the south of the licence.

The gold at Wayu Boda is currently being extracted in two locations by artisans from quartz veins and shears at Wayu Boda in the north of the licence area. Alluvial gold has also allegedly been extracted from nearby drainage ditches. Due to the drought conditions in the region little water is available for panning gold. A number of the workings are more than 25 metres deep and follow the steeply westerly dipping quartz veins. 

There are two spatially distinct mine sites; one 270m to the north of the miner's village and the other located some 1,000m to the SSW.

The northern pits occur along a strike length of approximately 70m at a bearing 022 - 202 degrees. The dip direction, when non vertical, is orientated towards 270 degrees. The northern workings are located on the western side of a subdued hill with little outcrop or obvious quartz veins and associated shears. This deposit appears to be open both to the north and south.

The southern pits, located in a small valley, are more extensive, occurring along 140m strike length with a north south strike and again a slight westerly dip when beds are not vertical. The northern extension of the quartz veins disappears under recent alluvial cover. 

The southern extension was observed to be untested by the miners. The quartz veins and shear zone were out cropping in many locations and mineralisation appears to be open to the south. When seen in plain view they appear not to be part of the same structure but faulting may be a factor in this area. The visible gold mineralisation is structurally controlled and appears to be confined to vertical and sub vertical quartz veins and shears. The ore rock was observed to be concordant with the dip and dip directions of the country rock, dipping very steeply westward or vertical. The width of the main quartz vein is approximately 0.5m and the shear zone approximately 1.5m wide. Visible gold is common in the quartz veins but it is not known if the adjacent shear zones or country rock are mineralised.

No rock samples have yet been geochemically analysed using any modern methods and this will be essential to show if they also contain gold mineralisation.

Emeralds

The Degogo emerald mine is located some 43km due south from Wayu Boda gold camp. The emerald is hosted in quartz-mica-fuchsite pegmatites located at the contact between gneisses and ultramafic lithologies.

The pits are spread over a 150m long strike and are actively being worked. The pits are orientated along a strike direction of 030 - 210 with vertical to sub-vertical dips. The pegmatite contacts are undulated / wavy and can be intensely folded in places.

The artisans excavate the friable micaceous wall rock to expose the competent mineralised quartz pegmatite. The quartz pegmatite is then broken and later crushed to extract the emerald.

Future Exploration Strategy

There has been no recent, modern, large-scale exploration or mining within the project area. The Wayu Boda licence has been granted for an initial three year period, which will enable the Company to define targets of merit for more detailed follow up.

The Wayu Boda Licence is not a pure greenfields licence area given the historical and current mining activity, which will enable an initial mapping and sampling programme to be conducted relatively easily. The gold and emerald mines are immediate drill targets in their own right.

A regional stream sediment, soil geochemical programme and rock chip sampling is recommended for initial exploration with follow-up sampling and geophysics where appropriate. Thereafter, it has been assumed that the programme will be determined by results of the initial reconnaissance type exploration.

Background on Gold Mining in Ethiopia

Gold mineralisation has been recorded in three principal mineralising environments/styles: firstly associated with altered syenite intrusions similar to the Tulu Kapi deposit owned by Nyota Minerals; secondly, young igneous bodies intruded into marble country rock generating skarn gold type mineralisation such as MIDROC's Fiti Skarn in western Ethiopia; and thirdly, fault-shear hosted gold mineralisation in metasediments such as the Lege Dembi mine in southern Ethiopia, again operated and owned by MIDROC.

Currently there are a number of multinational and junior mineral exploration companies actively exploring for gold, precious metals and industrial minerals in other regions of Ethiopia. These companies include Nyota Minerals Limited, Canaco Resources Inc, Stratex International PLC, MIDROC, Toro Gold, ASCOM Mining Ethiopia PLC, Allana Potash Corporation, Thani-Ashanti, BHP Billiton and Vale.

Ghana Update

As announced on 5 July 2011, the Company had been pursuing the acquisition of an exploration licence in the Ashanti Gold Belt in Ghana. Despite several extensions being granted to allow the vendor to comply with the conditions precedent included in the sale and purchase agreement, these conditions have still not been satisfactorily completed. As a result, the Company has decided to exercise its right to terminate the agreement. The termination of this proposed acquisition will free up resources to focus on the newly acquired Rift Valley.

**ENDS**

For further information, please visit www.alectominerals.com or contact:

Notes:

Alecto Minerals plc is an AIM listed exploration company focussed on Africa with a diverse portfolio of exploration assets in Mauritania and Ethiopia. In Mauritania, it has three gold and base metal development licences totalling 1,902 sq km and two uranium licences totalling 1,592 sq km in the highly prospective Mauritanide mobile belt. It also holds the 1,953 sq km gold exploration licence in the highly prospective Aysid-Metekel region of north western Ethiopia and the 945 sq km Wayu Boda gold and emerald licence in the mineral-rich central-southern Adola greenstone belt in southern Ethiopia. 

The Company is committed to conducting exploratory work across its portfolio, designed to strengthen its knowledge of the assets and delineate targets for further exploration. In tandem, the Board continues to evaluate a number of synergistic assets to build shareholder value.