Ocean Equities praises Nyota’s flagship Tulu Kapi gold project, bullish on step-out exploration

Ocean Equities believes Nyota Minerals (ASX, LON: NYO) is set to become a major player in an emerging gold district as its flagship Tulu Kapi gold project in Ethiopia was “rapidly shaping up to become a significant gold project” and could have a 2 Moz (million ounce) resource as soon as in 9 months, which could then go up to 3 Moz.

In a note, the broker has summed up the progress made by Nyota since it initiated coverage in November 2009. This included the receipt of the results of a pre-scoping study that showed that Tulu Kapi could support an economic mine, the investment of the IFC in the project, a resource increase to 1.38 Moz of gold, the confirmation of a third mineralised body beneath the current resource envelope and the acquisition of additional highly prospective exploration ground in the country.

“The progress made by the company since November 2009 has exceeded our expectations, and we believe that this pace of development / news flow is set to continue over the next 6-9 months primarily driven by the aggressive drilling programme which is currently underway at Tulu Kapi and is to commence shortly on other regional targets in Ethiopia,” Ocean Equities said in its note.

Ocean stated that the area surrounding Tulu Kapi controlled by Nyota was considered under-explored and “extremely prospective,” noting that the company has recently acquired 4,500 sq km (square kilometres) to the north of the project.

Tulu Kapi was acquired by Nyota as part of the acquisition of Minerva Resources in 2009 and is a development stage gold project with an inferred resource that has recently been increased from 690,000 oz gold grading 1.58 g/t (grammes per tonne) gold to 1.38 Moz at 1.68 g/t gold.

The broker valued Tulu Kapi’s resource at US$65 per ounce, also attributing US$7/oz to Nyota’s other assets, compared to a US$67/oz for its peer group of African gold developers.

In its report Ocean Equities reminded that exploration spend was no guarantee of success, though this traditional risk was diminished for Nyota’s ongoing infill drilling programme in additional to step-out exploration on new targets. The Ethiopian government’s support for the company and the mining industry in general was also noted as a positive.

Ocean Equities is now anticipating a news flow from further drilling and assay results from the ongoing exploration campaign at Tulu Kapi and in the surrounding area.