Last checked at 27 Oct 2010 07:00
Ovoca Gold plc ("Ovoca" or the "Company")
Positive drill results for Stakhanovsky
Ovoca is pleased to announce drill results from its ongoing exploration effort at Stakhanovsky, a gold project in the Northwestern part of the Magadan Region, Russia.
108 holes totaling over 6,300 metres of reverse circulation drilling to a depth of 150 metres has been completed to date in 2010 on Stakhanovsky. Drilling is likely to continue until early November or until weather conditions force an end to operations for 2010.
Ovoca has received analytical results for 63 holes. Additionally, Ovoca has collected from the site a 15 ton representative bulk sample that will be used for metallurgical test work to be included in a future feasibility study.
To date significant drilling results for 2010 include:
| Bore hole ID number | Target | Interval, m | True thickness, m | Gold grade g/ton | ||
| from | to | length | ||||
| RCZ1-3 | Zabolocheniy-1 | 125.0 | 143.0 | 18.0 | 18.0 | 4.48 |
| RCZ1-6 |
| 118.0 | 121.0 | 3.0 | 3.0 | 2.87 |
| RCZ1-8 |
| 86.0 | 89.0 | 3.0 | 3.0 | 12.78 |
| RCZ1-9 |
| 88.0 | 110.0 | 22.0 | 22.0 | 0.64 |
| RCZ1-23 |
| 39.0 | 51.0 | 12.0 | 12.0 | 0.82 |
| RCZ1-27A |
| 58.0 | 71.0 | 13.0 | 12.0 | 3.09 |
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| RCBU-8 | Burovaya | 17.0 | 22.0 | 5.0 | 5.0 | 16.27 |
| RCBU-9 |
| 26.0 | 31.0 | 5.0 | 5.0 | 3.82 |
| RCBU-11 |
| 65.0 | 73.0 | 8.0 | 8.0 | 0.69 |
| RCBU-12 |
| 88.0 | 94.0 | 6.0 | 6.0 | 1.54 |
| RCBU-15 |
| 65.0 | 70.0 | 5.0 | 5.0 | 0.56 |
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| RCBR-15 | Berezitoviy | 24.0 | 32.0 | 8.0 | 8.0 | 0.76 |
| RCBR-20 |
| 29.0 | 37.0 | 8.0 | 8.0 | 1.74 |
| RCBR-27 |
| 3.0 | 11.0 | 8.0 | 8.0 | 0.61 |
| RCBR-30 |
| 12.0 | 14.0 | 2.0 | 2.0 | 0.95 |
Geology
Geologically the Stakhanovsky gold project comprises a number of gold-bearing altered diorite - porphyry dykes with quartz veins and veinlets. Gold mineralisation is for the most part, coarse, "free gold" with significant amounts of gold particles larger than 10-12 mm in diameter. In total there are over 20 km of dykes with the potential to host gold mineralization on the Stakhanovsky license area although the current exploration focus is on 10 of these dykes over an area 5.6 km long. Two bulk samples of 164.7 tons from Zabolocheniy and 89.9 tons from Berezitoviy taken last year showed an average grade of 1.8 g/t and 2.1 g/t respectively.
Ownership
The Stakhanovsky license is owned by ZAO Magsel, a wholly-owned subsidiary of Ovoca. The license is an exploitation license valid to 7 May 2027. Ovoca is required to make payments to the previous owners in accordance with the acquisition agreement under the following conditions:
(i) Subject to a maximum amount of US$10 million, the vendors will receive US$30 for each troy ounce of gold falling within the JORC Code measured and indicated resource categories of resources, as calculated and reported by independent consultants appointed by the Company. The amount of gold resources will be calculated following each of the three exploration seasons ending in December 2010, December 2011 and December 2012.
(ii) Once gold production starts, Ovoca shall pay to the vendors a further amount equal to the difference between US$15 million and any payments made under (i) above. Note that in order for payment of either (i) or (ii) there must be established 300,000 ounces gold in JORC Code measured and indicated resource categories.
Location and infrastructure
Stakhanovsky is situated in the Northwestern part of the Magadan Region and is 40 km directly north of the region's second largest town, Susuman (population 7,500). The site is accessible by year-round gravel road and the national power grid extends to the site with a power substation on site. Additionally, there is a small settlement (Udarnik) with year-round buildings on the site.
Metallurgy
The metallurgical characteristics of the ore are amenable to conventional crushing and gravity separation. In 2009 Ovoca tested a 260 ton bulk sample from the site and achieved a 60% gold recovery by gravitation alone. Management believes that with further testing gravitation recoveries can be raised higher.
Future Exploration
Despite the lower than expected drilling volume completed in 2010, Ovoca management believes that current steps being taken will make it possible to complete the entire drill campaign as originally planned (24,000 metres reverse circulation drilling) by end-2011. Management feel they are still on course to put Stakhanovsky into production by 2013.
Tim McCutcheon, CEO, comments: "Although we are disappointed in the volume of drilling completed this year, there are significant results which give us optimism for next year's drilling season. Zabolocheniy is yielding good results and it appears that the mineralization is what our geologists expected. Berezitoviy has so far proven to be more complicated than anticipated and will require further study and drilling next year. However, smaller targets on Stakhanovsky, such as Burovaya, have shown above expected positive results. In addition to drilling, our geologists have taken a large bulk sample from the site that will be sent to an independent laboratory for metallurgical test work. Ovoca is committed to fast-tracking Stakhanovsky's development and putting our financial resources to work to get the Company from an explorer to a producer as soon as possible. "
Notes to Editors
Ovoca Gold PLC ("Ovoca" or "the Company") is a mineral exploration and mine development company listed on the AIM market of the London Stock Exchange (Ticker: OVG) and on the ESM market of the Irish Stock Exchange (Ticker: OVX). The Company's principal activity is gold exploration in the Magadan Region of the Russian Federation. Previously Ovoca acquired, developed and sold to JSC Polymetal the Goltsovoye silver project located in the Magadan Region. Currently, Ovoca is aggressively exploring and developing its 100 per cent owned Stakhanovsky, Rassoshinskaya and Nevsko-Pestrinskoye licenses.
Stakhanovsky is located approximately 40 kilometres north of Susuman, the second largest city in the Magadan region. It is accessible by year-round road and there is power infrastructure on site. Internal preliminary estimates suggest a gold resource (non JORC code of Russian standard compliant) of over 700,000 ounces. The Company intends to put Stakhanovsky into production by 2013.
Rassoshinskaya is in the North Eastern part of the Magadan Region about 200 kilometres from the town of Simchan. There is no nearby infrastructure. Rassoshinskaya hosts an epithermal gold deposit named Olcha, which is the focus of Ovoca's exploration program. Olcha and nearby satellite deposits have the potential to host a high grade multi-million ounce gold resource.
Nevsko-Pestrinskoye is located in the central part of the Magadan region near the town of Omsukchan. A year-round road and powerline are near the site. The license completely surrounds the Goltsovoye silver deposit, which was owned by the Company from 2006 - 2009 and sold to JSC Polymetal for US$47.7 million at the time of closing. Ovoca intends to investigate and explore known mineral occurrences that extend beyond the Goltsovoye license area onto Nevsko-Pestrinskoye.
Glossary of Technical Terms
| "deposit" | coherent geological body such as a mineralised body;
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| "diorite - porphyry dykes"
| type of rock structure; |
| "exploitation licence" | the right to extract a natural resource from a land area, which is granted in the form of a licence by the State;
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| "feasibility study" | extensive technical and financial study to assess the commercial viability of a project;
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| "gold production" | extracting gold in either pure form or as an intermediate product from an ore body by industrial means;
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| "grade" | relative quantity or the percentage of ore mineral content in an ore body;
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| "JORC Code" | The Joint Ore Reserves Committee (JORC) Code is a Code of practice which sets minimum standards for public reporting in Australia and New Zealand of Exploration Results, Mineral Resources and Ore Reserves. It provides a mandatory system for classification of tonnage / grade estimates according to geological confidence and technical/economic considerations in reports prepared for the purposes of informing investors, potential investors and their advisors. These standards, recommendations and guidelines are widely used across the world and are broadly consistent with other international resource-reserve reporting codes. The latest edition was published in December 2004;
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| "mineralisation" | process by which valuable minerals are introduced in to a rock;
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| "ore" | rock that can be mined and processed at a profit;
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| "quartz veins" | tabular or sheetlike body of quartz deposited in fissures, joints or faults;
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| "reverse circulation drilling" | Method of rotary percussion drilling using compressed air which creates a large diameter drill hole of 14 - 17 centimetres from which crushed material is collected for analysis; and |
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| "veinlets" | small bands or sheets. |
Ovoca Gold Plc
Timothy McCutcheon +7 495 916 6029 tim.mccutcheon@ovocagold.com
Davy
John Frain / JJ Cahill +353 1 679 6363
The above information has been reviewed and verified by Mr. Gareth O' Donovan for the purposes of the Guidance Note for Mining, Oil and Gas Companies issued by the London Stock Exchange in March 2006. Mr. O' Donovan, with 25 years of mining engineering, management and consulting experience, graduated as Ba Hons from Keele University, has an MSc from Rhodes University, is a Fellow of both the Geological Society and the Institute of Materials Minerals and Mining and is a Chartered Engineer.