Arc Minerals Regulatory News (ARCM)

Ortac Resources Ltd / Epic: OTC / Market: AIM / Sector: Mining & Exploration

13 January 2014

Ortac Resources Limited ('Ortac' or 'the Company')

Conditional Subscription Agreement to acquire

up to 27% of Andiamo Exploration Limited

Ortac Resources Limited ('Ortac') is pleased to announce the formation of a strategic alliance with Andiamo Exploration Limited ('Andiamo'), a private UK incorporated mineral exploration company currently developing advanced, exploration stage Volcanogenic Massive Sulphide (VMS), gold-copper projects in Eritrea. Ortac has entered into a subscription agreement to acquire up to 26.7% of the enlarged share capital of Andiamo having conditionally agreed to subscribe for shares, in three equal tranches, totalling US$1.5m ('the subscription'). Completion of the first tranche is expected on or around 17 January 2014. In addition, Ortac has secured the right to acquire an additional 21% shareholding in Andiamo for a further US$2.0m investment, subject to certain terms and conditions set out in the subscription agreement. Further details of the subscription agreement are provided in the Principal Terms of Subscription Agreement, listed below.

Highlights:

· Ortac's initial investment of up to US$1.5m to acquire up to 10,000,000 shares includes a conditional option to acquire a further 10,000,000 shares for US$2.0m for a total interest of up to 42.2% in Andiamo.

· Subscription funds deployed to further advance exploration and technical development:

o Commencement of an initial drilling programme in Q1 2014 targeting the recently discovered high grade copper mineralisation at the Yacob Dewar deposit, where recent drilling intersected 63m of mineralisation from surface at an average grade of 2.4% Cu.

o Second drilling programme to commence later in Q1 to target the known high-grade oxide gold VMS occurrence at Yacob Dewar, with the aim of expanding the deposit along the known 800m strike, where recent drilling has returned intercepts including 9m @ 22.5g/t Au.

o Undertake a review of multiple further targets identified by airborne geophysical surveys along the identified 30km exhalite trend, which is highly prospective for Bisha-style VMS mineralisation.

· Ortac to appoint one director to the Andiamo board and to appoint a technical advisor to the management team.

· Ortac commits to provide full internal support todeliver a Technical and Economic Assessment adequate to support a Mining License application by Andiamo by 30th June 2015.

· Andiamo's existing shareholders will have the right to participate in this subscription on the same terms as Ortac under a rights issue.

Vassilios Carellas Ortac CEO commented, "The investment announced today in Andiamo is the outcome of a long and exhaustive process of project reviews and evaluations conducted by Ortac, across a number of projects. Andiamo has, in our view, a stand out portfolio of very prospective high-grade copper and gold exploration projects, which will broaden our portfolio and deliver an additional margin of investment safety for our shareholders, as we continue to progress our proven Šturec gold project in Slovakia. We now look forward to working closely with the Andiamo team to unlock near term value from these exciting Eritrean projects".

About Andiamo Exploration

Andiamo is a private UK based company that holds the 252km2 Haykota Exploration Licence ('Haykota Licence') in the State of Eritrea. The Haykota Licence is located 50 kilometres to the south west of the producing Bisha Mine, which is a high-grade volcanogenic massive sulphide ('VMS') deposit and one of the highest grade open pit copper mines in the world. The Haykota licence lies along strike from Bisha on the same VMS trend and within the highly prospective, yet under explored, Arabian-Nubian shield. Numerous multi-billion dollar gold and copper VMS deposits have been discovered within the Arabian-Nubian Shield including Bisha (Nevsun Resources, Eritrea); Jabal Sayid (Barrick Gold Corp, Saudi Arabia); Sukari (Centamin, Egypt); and Hassai (La Mancha Resources, Sudan).

Andiamo has held the Haykota Licence since July 2009. Over the last 4 years the company has actively explored the licence block using a range of exploration techniques including: a comprehensive airborne geophysical survey across the whole licence block; ground-based geophysical methods; geochemical sampling; geological mapping and drilling by both Reverse Circulation and Diamond methods. The Haykota area benefits from good infrastructure, including a sealed road from the licence to the capital, Asmara, excellent field camp facilities, and there is expected to be ample process water from the river Gash which crosses the licence area.

The Haykota Licence area is prospective for both of the common mineralisation styles in Eritrea: VMS deposits and later orogenic gold deposits. The southern part of the licence area holds the highest potential for orogenic gold deposits, while the northern part is clearly a target for outcropping and buried VMS mineralisation, including gold-enriched near-surface mineralisation. Significant discoveries of potentially economic mineralisation have been identified at two locations, Yacob Dewar and Ber Gebey, which justify further expenditure. An initial and preliminary mineral resource has been estimated for the oxide gold occurrence at Yacob Dewar and this resource is likely to increase substantially following further exploration both along strike and at depth. The copper deposit at Yacob Dewar has barely been explored beyond the discovery hole. Multiple further targets exist along the 30km of VMS trend that lies within the Haykota Licence block.

In addition to the Yacob Dewar VMS target, further gold mineralization has been identified in a number of shear zones lying within the southern part of the Haykota Licence.

For the year ended 31 December 2012, being the last published annual accounts, Andiamo's loss after tax was US$142,279 and net assets amounted to US$ 8,333,898.

Principal Terms of Subscription Agreement

1. Financial terms

US$1.5m @ 15.0c per share for up to 26.7% (on an undiluted basis and subject to any participation by existing shareholders) to be invested in three tranches as follows:

a) 3,333,333 fully paid ordinary shares of 0.1p each in Andiamo for an aggregate subscription price of US$500,000 ('Tranche 1');

b) at Ortac's sole option and following a site visit, conducting satisfactory legal and geological due diligence and receipt of a title opinion in a form satisfactory form, 3,33,333 fully paid ordinary shares of 0.1p each in Andiamo for an aggregate subscription price of US$500,000 ('Tranche 2'); and

c) at Ortac's sole option and on completion of first round drilling by Andiamo at the Haykota Exploration Project, 3,333,333 fully paid ordinary shares of 0.1p each in Andiamo for an aggregate subscription price of US$500,000 ('Tranche 3').

Ortac can elect not to participate in Tranches 2 & 3 should it wish not to do so following geological and legal due diligence process.

Provided that the Full Subscription is made by 31 July 2014 and a Technical and Economic Study ('TES') adequate to support a Mining Licence application by Andiamo has been completed by 30 June 2015, then Ortac is entitled, at the discretion of Ortac, to subscribe for up to an additional 10 million ordinary shares of 0.1p each in Andiamo at US$0.20 per share, such entitlement to expire, if not exercised, by 31 December 2015.

Completion of Tranche 1 is expected to occur on or about 17 January 2014.

2. Use of proceeds

Andiamo agrees and undertakes that the proceeds from the issue of the shares to Ortac will be applied on the exploration programmes agreed with Ortac including reasonable overhead and administrative costs of Andiamo.

3. Directors & technical advisor

As long as Ortac holds more than 20 per cent of the issued share capital of the Andiamo it has the right to have one director appointed to the board of Andiamo ('Andiamo's Board') and one technical advisor appointed to the management team of Andiamo, maintained as Ortac's discretion.

The maximum number of directors of Andiamo's Board holding office at any one time shall be 5 unless otherwise resolved by resolution of shareholders in a general meeting of Andiamo.

4. Dilution of Shareholding

Any future equity capital raisings made by Andiamo must be first offered to Ortac on the same terms and in proportion to Ortac's existing holding of ordinary shares in Andiamo at that time.

5. Required to make an offer

If, at any time prior to 31 December 2015, Ortac holds more than 40 per cent. of the issued share capital of Andiamo, Ortac agrees to make an offer to acquire all the remaining shares of Andiamo (not held by Ortac) in issue at the highest price paid by Ortac in the 12 months preceding such offer.

**ENDS**

For further information please visit www.ortacresources.com or contact:

Vassilios Carellas Ortac Resources Ltd Tel: +44 (0) 20 7389 9050

Charles Wood Ortac Resources Ltd Tel: +44 (0) 20 7389 9050

Stewart Dickson Cantor Fitzgerald Europe Tel: +44 (0) 20 7894 7000

Catherine Leftley Cantor Fitzgerald Europe Tel: +44 (0) 20 7894 7000

Jeremy Stephenson Cantor Fitzgerald Europe Tel: +44 (0) 20 7894 7000

Jonathan Williams RFC Ambrian Limited Tel: +44 (0) 20 3440 6800

Jen Boorer RFC Ambrian Limited Tel: +44 (0) 20 3440 6800