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13 May 2009 11:56
Ovoca Gold plc
("Ovoca" or the "Company")
Operational update
Ovoca (London (OVG.L), Dublin (OVX.IR)) is pleased to announce an operational update.
Highlights
Ongoing planning of development activities in Pellapakh, the Company's recently discovered world-class molybdenum/copper ore body in the Kola Peninsula.
Drilling on Oleninskoye target completed with results due in June.
Continuing to review acquisition opportunities in Russia and certain other jurisdictions.
Strong liquidity position with approximately US$ 34 million in cash and Polymetal shareholding currently valued at US$ 19 million.
Kola Properties
Ovoca holds two exploration licenses in the Kola Peninsula, Russia, which are the Company's key exploration assets. The licenses are located relatively close to infrastructure being 50 km from a hydropower station, 160 km from a large year-round seaport and 80 km from the nearest railroad station. In 2008 the Company announced the discovery of a world-class molybdenum/copper ore body named Pellapakh on one of its licenses. Ovoca is currently evaluating different development options for Pellapakh in the current low molybdenum and copper price environment. On Oleninskoye, a high-grade gold target similar in geology to active gold mines in neighbouring Finland (Suurikuusikko), 780 meters was drilled this year and the Company expects to receive back analysis of its core samples by the end of June. An announcement of these results will be made in due course.
Corporate Development
The management of Ovoca is examining acquisition opportunities for the Company. Management's acquisition strategy is to leverage the current cash shortage among the junior mining sector to the maximum benefit for Ovoca's shareholders. Management is targeting low execution risk, late development stage assets. Additionally, management is also looking at various exploration opportunities that are present in Russia in areas where the Company has expertise. These opportunities require modest current capital outlay but have world-class potential in the future. The Company is fully utilizing the strengths that it has built up over the last several years: such as a highly qualified technical team including geologists, engineers and metallurgists.
The Board and management are focused on keeping administration costs low to preserve the maximum amount of financial resources the Company has it its disposal for its exploration and development activities and for corporate development. The next stage of the Company's growth will be done from a corporate platform that is as efficient and lean as possible.
Ovoca expects to issue its preliminary results for the year ended 31 December 2008 and announce a date for its Annual General Meeting by the middle of June 2009. At the Annual General Meeting a full Company presentation will be made to shareholders. The Company's annual report and AGM materials will be posted to shareholders in due course.
Cash and Equity Investments
In January Ovoca completed the sale of its 100 percent interest in Ayax, the owner of the Goltsovoye exploration and production licence, to JSC Polymetal ("Polymetal"). Upon completion, the disposal proceeds of US$ 11 million cash, 7.5 million Polymetal common shares and a cash payment for certain other ancillary assets and machinery equivalent to their book value of US$ 0.7 million were received in full.
Polymetal is Russia's second largest precious metals mining company and its common shares are traded on the RTS and MICEX exchanges in Russia and its global depository receipts are traded on the main market of the London Stock Exchange.
Currently, Ovoca has circa 3 million Polymetal common shares and approximately US$ 34 million in cash.
Management is exploring different ways to efficiently manage the value of its cash and securities positions and will continue to review options for its cash and equity positions to ensure returns to shareholder are optimised.
Board Composition
Ovoca is pleased to announce that Mr Mikhail Mogutov has become executive Chairman with immediate effect and in this role will actively assist the CEO in strategic and operational matters in this current exciting phase of development and opportunity for the Ovoca.
Mr. Leonid Skoptsov CEO of Ovoca commented
"The market is extremely volatile right now, and although the precious metals sector in which we operate is one of the few areas of optimism, we feel that it makes sense to err on the side of caution. Ovoca will not rush to "do something" for the sake of being active, and we will carefully consider all options available to the company before making any decision."
Further information is available on the Company's website at www.ovocagold.com
For further information contact
Ovoca Gold plc
Mr. Leonid Skoptsov CEO
+7 495 916 60 29
Davy (Nomad)
John Frain
+353 1 679 6363
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