Noricum Gold LON:NMG Managing Director Greg Kuenzel said, “With first gold ore production set firmly in our sights for Q3 2016, our vision to generate cash flow to help fund our broader development of the significant resources already identified at the Bolnisi gold and copper project in Georgia is getting ever closer to being realised. The commencement of mining at a very small area within the greater Bolnisi tenure, which benefits from defined resources across 17 initial target areas, will prove to both our partner and the market that we have the expertise and capabilities to deliver production at low cost on a much larger scale in the future. Important to note is that in tandem with our production activities, we will be focused on developing and converting the historic Soviet resources across our licence area.
“The acquisition completed in July 2015 has provided us with access to an exciting project with major resources and significant discovery potential in a proven gold region. Additionally, thanks to the support from our local partner, we expect both the near term small scale ore production and the larger scale operation we will be aiming to deliver in the future to be achieved at low cost due to the infrastructure they own nearby, which has excess capacity. I look forward to this time next year when we expect our balance sheet will be significantly strengthened by our forthcoming activities.”
Noricum Gold Limited LON:NMG, the European focused base and precious metals exploration and development company, has given DirectorsTalk its final results for the 12 months ended 31 December 2015.
Highlights
— Actively progressed towards Q3 2016 low cost gold mining following the transformational acquisition of 50% of the Bolnisi Copper & Gold Project in Georgia
-- Noricum Gold now positioned as a near term gold ore producer and major resource developer
o Total non-JORC resources of 980,000 tonnes of contained copper; 6.6 million ounces of gold; and 22 million ounces of silver
o Work to convert these to JORC standards and identify new high grade target areas to build on current resource providing significant news flow potential and value upside
o Funding for broader work programme expected to be delivered via cash flow from mining
-- Fully funded for production following raising of GBP1 million post period end -- Strengthened Board with Martyn Churchouse appointed as Executive Director
— Loss for the 12 months ended 31 December 2015 of GBP653,854 (2014: GBP1,372,756), which is in line with budget
Chairman’s Statement
The year under review has been a transformational period for your Company. Twelve months ago, Noricum Gold was a grass roots explorer with an Austrian focused portfolio of highly prospective licences that were years away from first production. Today, we are a late stage developer of a major resource in Georgia focused on delivering high grade, low cost, gold ore production in Q3 2016.
For all aspiring mining companies, it goes without saying the commencement of first production is a key milestone. It is therefore significant that, thanks to the July 2015 acquisition of a 50% interest in an operatorship of the Bolnisi gold and copper project in Georgia, we have brought forward the date at which Noricum Gold commences production and generates material revenues by years. The 861 sq km Bolnisi project contains multiple large and scalable copper and gold non-JORC resources. It has an excellent address, being located in the prolific Tethyan Belt regional trend, which hosts well-known mines and resources such as Murgul, 14.5Mt @ 3.0% Cu, Ceratepe, 4Mt @ 5% Cu & 1g/t Au and 5.5Mt @ 4.3g/t Au & 148g/t Ag, Kadjaran, 1.76bnt @ 0.27% Cu & 0.006% Mo and Teghut, 460Mt @ 0.36% Cu. In addition, the licence area surrounds the nearby Madneuli VMS Camp (‘Madneuli’), which is a producing mine reported to contain a sulphide resource of approximately 80Mt @ 1.0% Cu & 0.80g/t Au. Importantly, Bolnisi has more than just a great address; it is a late stage development project in which over US$30million has been invested by Caucasian Mining Group (‘CMG’), our joint venture partner which also owns Madnelui. This historic work has gone a long way to establishing that the high grades found in nearby mines extend to Bolnisi. With total non-JORC drill defined resources of 980,000 tonnes of contained copper; 6.6 million ounces of gold; and 22 million ounces of silver delineated at Bolnisi so far, we have acquired a significantly de-risked project with multiple mature target areas that we believe can be brought into production in the near term at relatively low cost.
Of course in order to join the ranks of producing miners, it is not enough to have a defined commercial deposit: appropriate infrastructure; mining permits; a skilled workforce; and sufficient funds all need to be in place before operations can commence. The Bolnisi Project has all of these. Thanks to our strong and supportive local partner, which owns mining operations on adjacent licence areas, existing infrastructure is already in situ, including mill, heap leach operations, tailings, core shed, a state of the art assay laboratory and surface equipment; as well as a local and highly experienced workforce including geophysical and drilling teams. Finally, 30 year mining permits have already been granted.
On completion of the acquisition, we successfully prioritised the 17 target areas at Bolnisi, each of which host individual resources. We immediately identified the potential to deliver near term production from two target areas, which benefit from near surface mineralisation meaning that there is no need for stripping while processing requires a simple low cost heap leach operation. Considering the access we have to existing infrastructure, we are focusing our near term activities on bringing these target areas or starter pits at Bolnisi into production as quickly as possible. This will allow cash flows generated from ore production to be reinvested into the multiple development opportunities we have already identified across the broader licence area. Furthermore, having successfully completed a GBP1m placing in February 2016, and with no debt or short-term capex requirements, Noricum Gold is fully funded to commence ore production.
I am pleased to report that, thanks to the work we have carried out since the acquisition in July 2015, gold and copper ore production from two of these starter pits, Kvemo Bolnisi and Tsitel Sopeli, is on track to commence in H2 2016. Combined, the two targets have an existing resource (non-JORC, C1 & C2 Soviet Reserves) of 450,000 tonnes of copper at an average grade of 1.31%; 900,000 oz of gold at an average grade of 1.11 g/t; 20 million ounces of silver at an average grade of 23.71 g/t; 22,000 tonnes of lead at an average grade of 1.23%; 52,000 tonnes of zinc at an average grade of 2.9%; and 1.5 million tonnes of Barite at an average grade of 27%.
Kvemo Bolnisi is the most advanced gold starter pit at Bolnisi, which is located less than 5km from an existing heap leach operation and where ore production is targeted for Q3 2016. While Kvemo Bolnisi has a larger overall resource, the initial production will focus only on the near-surface mineralisation for the reasons outlined above. A drill programme was recently completed to define the resource here and to facilitate mine planning and pit design and our detailed plans for this area will be announced shortly.
Across the broader Kvemo Bolnisi area, 304 holes have been drilled historically covering 60,000 metres. Despite this, the resource has only been partially delineated and extension testing at depth and strike has yet to be completed. We recently carried out a shallow IP survey, which defined large anomalies over a small area, while the area between East and West Kvemo Bolnisi has yet to be explored. In addition to gold, drilling has also resulted in the discovery of a new copper ore body, which provides us with a third near term production target. Here drill results include: 40m at 2.11% Cu from 69m (including 5m at 9.95% Cu); 83m at 0.71% Cu from 23m (including 15m at 1.17% Cu); 7m at 4.02% Cu from 39m; and 13m at 1.52% Cu from 2m.
Production at Kvemo Bolnisi is expected to be closely followed by ore production from Tsitel Sopeli, our second starter pit, in Q4 2016. Having now completed drilling at Kvemo Bolnisi, we will shortly commence drilling at the shallow mineralisation present at this target, with the same purpose in mind. Across the broader Tsitel Sopeli target area, 361 holes have been drilled to date and a drill defined C1/C2 gold and copper resource has already been defined. As with Kvemo Bolnisi, the Tsitel Sopeli resource remains open at both depth and strike. A shallow survey has recently identified several IP anomalies, two of which are related to sulphidation: one runs down the valley East to West; while the second is a very large anomaly situated to the NNE of Tsitel Sopeli, which could potentially extend the strike length of the deposit by a further 1,800m. On completion of the acquisition, we confirmed the presence of widespread near surface high-grade copper and gold mineralisation through a shallow drilling programme at Tsitel Sopeli. Results included 15m @ 2.07g/t Au, 2.39 % Cu and 2.97% Zn all from surface.
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Outside these initial target areas, we believe there is much more to go for at Bolnisi as the identified resources are spread across multiple targets, while the geology and extensive work conducted to date indicate further discoveries are likely. Over the next 12-36 months, we intend to explore the wider licence area using geophysics and remote sensing, applying modern techniques to identify new high grade opportunities in the volcanic massive sulphide (‘VMS’) setting as well as porphyry deposits, which are proven to exist distal to the VMS camp but have yet to be followed-up. Using the vast and extremely detailed Soviet era databases we have access to, the results of the initial work we have carried out and those of our future campaigns, we are developing a new geological model for Bolnisi. Our technical team believes the potential to uncover additional large and high grade targets across the 861 sq km project is high.
Since we acquired Bolnisi, our focus has been very much on advancing the project towards production. However, this has not meant activity has halted across our Austrian portfolio of licences, which we continue to actively manage. Most notably in March 2015 we acquired the Walchen Copper Gold Project VMS Project, which is understood to be one of the largest and most promising polymetallic ore deposits in Austria. Importantly, Walchen’s excellent prospectivity has been highlighted by the historic mining and exploration data that exists. These demonstrate the VMS deposit comprises two main ore horizons with a horizontal extension of 3-4 km and an average thickness of 0.5-4m. Encouragingly, the work we have undertaken since we completed the transaction is consistent with this view.
Financial Results
As an exploration and development company which has no revenue we are reporting a loss for the twelve months ended 31 December 2015 of GBP653,854 (2014: GBP1,372,756), which is in line with our budget.
The Group’s cash position at the end of the period was GBP281,671. Post period end, the Company successfully raised GBP1 million by way of a placing of 1,250,000,000 new ordinary shares of no par value in the capital of the Company. The funds raised will enable the Company to bring two starter pits at Kvemo Bolnisi and Tsitel Sopeli into early stage production in H2 2016.
In July 2015, Noricum Gold acquired 100% of GMC Investments Limited (‘GMC’), which owns 50% of Georgian Copper & Gold Limited (‘GCGL’), for GBP2.6 million in exchange for the issue of new ordinary shares in the Company. The remaining 50% of GCGL is owned by our local partner, CMG. We have a commitment to spend US$6 million over two years at Bolnisi; at this point CMG will either contribute to the ongoing operations or have its interest diluted. Also in 2015, we acquired Walchen for a consideration of GBP360,000 comprising of GBP10,000 cash and the balance through the issue of new ordinary shares in the Company.
Outlook
With funds secured, infrastructure and permits in place and the results of our own work confirming the prospectivity and commerciality of the starter pits which had previously been highlighted by the vast historic database, first production at Kvemo Bolnisi is on course to commence in just a matter of months. In tandem with this work we will continue to explore the ever-increasing number of development opportunities across the 861 sq km licence area which we have always believed will prove to be a company maker. Having made the jump from grass roots explorer to developer during the period under review, in 12 months’ time I am confident that I will be reporting on another transformational year for Noricum Gold, one in which we have made the transition from a development company to a cash generative gold ore producer.
I would like to thank our team and advisers for their hard work over the last twelve months and the shareholders for their continued support during what has been an exciting year for the group. The year ahead promises much of the same, and I look forward to providing updates on our progress.
Michael Hutchinson
Chairman
19 April 2016
