Last checked at 19 Aug 2020 07:00
Oriole Resources PLC
('Oriole Resources' or 'the Company' or 'the Group')
Update on Turkish Operations
Oriole Resources PLC (AIM: ORR), the AIM-quoted exploration company focused on West Africa, is pleased to provide an update on its wholly-owned Turkish subsidiary, Stratex Madencilik Sanayi ve Ticaret Limited Şirketi ('Stratex Madencilik'), which has continued to trade profitably during 2020 and has started to realise value across the portfolio (announcement dated 17 August 2020).
Highlights
Year to date cashflows of approximately £162,000 from the Company's Turkish consultancy work have exceeded the Company's G&A in Turkey during the same period;Asset realisation continues with the recent US$300,000 sale of Karaağac net smelter returns ('NSR') royalty to local partner, Anadolu Export Maden Sanayi ve Ticaret Limited Şirketi ('Anadolu'); Discussions to recover an outstanding US$425,000 success-based payment at Karaağac have commenced;Initial instalment of US$30,000 now received from local partner, Bati Toroslar Madencilik Sanayi ve Ticaret Ltd. Ști ('Bati Toroslar') in respect of Hasançelebi and Doğala royalty sale agreement (announcements dated 30 July 2020 and 10 August 2020);Company is well placed to attract new buyers for the remaining royalties, including the EIA-stage Muratdere copper-gold porphyry project, and to benefit from the recent rises in the gold and copper prices respectively;Positive cash flows have enabled the settlement of historic employment liabilities.
Oriole Resources CEO, Tim Livesey, said: "We are extremely pleased to see our Turkish entity continuing to be financially self-sufficient, enabling the repayment of significant inherited employment liabilities whilst still generating net cash inflows. This has been an excellent effort by our Turkish manager, Bahri Yildiz, and his team.
"Meanwhile, the significant efforts to realise value from the Turkish royalty portfolio has been met with modest success so far, following the recent withdrawal of a portfolio deal with a quoted royalty company after the right of first refusal ('ROFR') was exercised by some of our Turkish partners.
"The receipt of the initial instalment from Bati Toroslar in respect of its right of first refusal means we have now raised US$80,000 in immediate funds from the sale of two early stage projects, with US$470,000 to follow upon satisfaction of the contingent consideration.
"We also note the recent rise in the copper price, and its significance in relation to our 1.2% post-tax NSR royalty at the Muratdere copper-molybdenum-gold deposit, as per our announcement dated 29 October 2019."
Further details
Despite in-country COVID-19 restrictions, the Company is pleased to report that its Turkish team has continued to operate as a consultancy business during 2020, generating consulting fees of approximately £162,000 in the 6 months to 30 June 2020. This has enabled the Turkish team to trade profitably, to settle £56,000 of outstanding employment liabilities that had built up since the inception of operations in Turkey under Stratex International PLC, and to generate positive cash flow through the year to date.
As previously announced, the Company has been focused on monetising its non-core assets and, in particular, its royalty positions in Turkey (announcement date 24 March 2020). Most recently, the Company reported the sale of its royalty on the Karaağac project to its former Turkish partner Anadolu, and is now progressing discussions to recover an outstanding US$425,000 owing from Anadolu in respect of the success-based payment due under the terms of the original contract (announcement dated 17 August 2020).
A similar sale in respect of the Company's royalties on the Hasançelebi and Doğala projects was announced on 30 July 2020. We are pleased to have now received the initial instalment but reserve the continuing right to cancel this agreement in the future.
Both of the above transactions were initiated following the receipt of an offer from a quoted third-party royalty company, on the basis of a portfolio deal covering all of our Turkish royalty positions. This offer was initially received in February 2020 and the Company has been working through the ROFRs granted to each of the respective partners in the event of incoming third-party offers. The exercise of the ROFR by Bati Toroslar and Anadolu resulted in the withdrawal of the portfolio deal by the royalty company and so the Company will now seek alternative buyers for its remaining Turkish royalties and interests.
Further to the above developments, the Company's royalty portfolio now comprises the following assets:
· A 1.2% post Turkish tax NSR royalty in the Muratdere copper-molybdenum-gold deposit, where the Company has previously announced a positive Feasibility Study that reported a net income after tax of US$57 million[1] over a 16 year mine life (announcement dated 11 March 2015). The project is operated by Lodos Maden Yatırım Sanayii ve Ticaret A.Ş. ('Lodos'), a wholly-owned mining investment company of Turkish investment company Pragma Finansal Danışmanlık Ticaret A.Ş.. Application for an Environmental Impact Assessment is underway. Subject to a successful outcome, construction is expected to be completed within two years.;
· A 1.5% NSR royalty relating to the Konya-Doğanbey-Karacaӧren porphyry gold project with Esan Eczacıbașı Endüstriyel Hammaddeler San. Ve Tic. A.Ș..;
· A 1.0% NSR royalty relating to the future production of antimony from the Muratdagi Project, operated by Kucuk Kral-Antimon Kursun Maden Metal Trioksit Hurda Metals San. Tic. Ltds. Şti
The Company looks forward to providing further updates with respect to its ongoing asset realisations.
At the Șehitler and Enez projects, an agreement between Oriole and a local group, Yildizim Makine, with regards to ongoing exploration and mining of bentonite, failed to complete. As such, there is no longer a royalty attached to the licence, with the projects being returned to Oriole in their entirety. The Company is in communication with a number of local groups with regards to an outright sale.
Finally, the Company continues to pursue the repayment of an outstanding liability from former Turkish partner NTF İnşaat Ticaret Limited Şirketi ('NTF') (announcement dated 27 February 2018). In 2017, the Company was required to pay back-taxes and interest of £0.7m on behalf in NTF and has been seeking repayment through the Turkish legal system since then. Review of the Company's claim is pending the outcome of an antecedent case involving NTF, scheduled for September 2020. Updates on the matter will be made as soon as they become available.
The information communicated within this announcement is deemed to constitute inside information as stipulated under the Market Abuse Regulations (EU) No. 596/2014. Upon the publication of this announcement, this inside information is now considered to be in the public domain.
[1] Based on an optimised resource, calculated using metal prices of US$5,580/tonne copper, US$1,290/oz gold, and US$18/oz silver.
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For further information please visit www.orioleresources.com, @OrioleResources on Twitter, or contact:
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Notes to Editors:
Oriole Resources PLC is an AIM-listed exploration company, focussed on West Africa. It is focused on early-stage exploration in Cameroon (Bibemi and Wapouzé projects) and the more advanced Senala gold project in Senegal, where IAMGOLD has the option to spend US$8m to earn a 70% interest. Year 2 commitments have been met at all three projects. The Company has several interests and royalties in companies operating throughout Africa and Turkey that could deliver future cash flow, and it continues to assess new opportunities in both regions.