Last checked at 25 Oct 2010 07:00
Medavinci plc
("the Company")
Update on Issue of Exploration Licence
The Board is pleased to announce today that the Exploration Licence in respect of the Deli Jovan Gold Project has been re-issued to Deli Jovan Exploration d.o.o.
In the circular to shareholders dated 9 August 2010, relating to the Company's investment in Orogen Gold Limited ("Orogen"), it was stated that a licence held by Reservoir Capital Corporation ("Reservoir") needed to be re-issued in the name of the joint venture party, Deli Jovan Exploration d.o.o. Under Serbian law this Exploration Licence cannot be transferred and therefore Reservoir agreed to relinquish the Exploration Licence back to the Ministry of Mining and Energy and simultaneously application was made to the Ministry of Mining and Energy for a new exploration licence to be re-issued. The Directors noted in the Circular that whilst there was a risk that this new exploration licence would not be granted they believed, after consideration, that such risk was minimal.
The Board, later today, intends to publish the following newsletter on its website www.medavinciplc.com. In addition, the Board intends to publish on its website a copy of a background presentation on the Company's gold strategy.
Contact details:
Medavinci plc
Paul Foulger Tel: +44 (0) 207 245 1100
Zeus Capital Limited:
Ross Andrews
Tom Rowley Tel: +44 (0) 161 831 1512
NEWSLETTER - OCTOBER 2010
Orogen Gold Limited and the Deli Jovan Gold project in Serbia.
Medavinci plc recently announced an investment of £370,000 to acquire a 49% interest in Orogen Gold Limited ("Orogen"). Medavinci has an option to acquire the remaining 51 percent of Orogen by September 2011 for equity.
Medavinci is changing its strategy to become a European focussed gold exploration and production business. Orogen is a mineral exploration company formed initially to acquire a majority holding in the Deli Jovan Gold Project, ("Deli Jovan") with an area of 69sq km in eastern Serbia covering two shallow underground gold mines, Rusman and Ginduša. These two mines were last in production just prior to World War II. There was some exploitation from Latova which is also within the project-area during the 1930's. Under an Earn-in Agreement, with TSX listed Reservoir Capital Corporation ("Reservoir"), Orogen has the right to earn up to a 75% interest in Deli Jovan, made up of a Phase I earn-in to achieve 55% by spending C$ 1.5million on exploration by June 2012, and a Phase II earn-in to achieve a further 20% by additional exploration expenditure of C$2 million by December 2013, a total investment of C$3.5M.
In the event that Medavinci exercises the option to acquire the 51 percent of Orogen that it does not currently own, under the rules of AIM, in such an event a readmission of the Company's shares on AIM would be required.
The Deli Jovan Opportunity
Deli Jovan is an historic gold mining district with mining and exploration activity dating from Roman to pre-World War II times. There is mention in historical accounts of mining in Serbia that some 600,000 ounces of gold may have been produced from the Deli Jovan district but this is unverifiable. A multiple of this potential may still be left in the ground at the old Rusman and Ginduša mines and at prospects along strike between these mines. Exploration programmes planned by Orogen will focus on establishing continuity in mineable width and economic grade along a reef complex of some 10 km in strike-length that is open at depth. Orogen's management believe that the mineralised structures have potential for several million ounces of gold.
The phased exploration programme is based on a fast track approach to resource delineation and early production where it is hoped to demonstrate an initial 100,000 oz inferred resource at Rusman and Ginduša sufficient to establish an initial two to three year life-of-mine. Orogen has a target to take the project to initial production within three years of commencement of exploration activities and components of the exploration programme are designed to discover substantial further resources at additional targets along the mineralised belt.
Status of regulatory position in Serbia
Deli Jovan Exploration d.o.o. ("DE") now holds the Deli Jovan exploration permit and will operate the Deli Jovan project in Serbia and is a joint venture company controlled by Orogen and Reservoir under the terms of an agreement between these companies. Orogen commenced initiation of Phase I of the exploration earn-in programme at end of October 2010. Phase I of the exploration programme involves reopening, dewatering and securing the Rusman and Ginduša underground workings to facilitate detailed structural mapping and sampling.
The Directors of Orogen and MeDaVinci, acknowledge the opportunity afforded by the exploration earn in agreement with Reservoir but also appreciate the risks involved in mineral exploration. In addition the public domain information available on the project is based on the relatively recent work of Reservoir and work of operators prior to the Second World War. This project information and data provides useful context, but has not been verified or confirmed by Orogen or Medavinci. This verification and validation of prior results will form part of the exploration programme.