Orca Gold taps Resolute for Sudan project financing

Orca Gold Inc. [ORG-TSXV] said Monday May 28 that it has moved to fund feasibility work on a gold project in the Republic of Sudan by arranging a $22 million strategic investment from Australian company Resolute Mining Ltd. [RSG-ASX]. Under the agreement, Resolute has agreed to subscribe for 32.3 million common shares of Orca at 67.5 cents a share. Following completion of the private placement, Resolute will own 15% of Orca on a fully diluted basis.

Orca is a Canadian resource company with a focus in exploration and development opportunities in Africa. The company is working to complete a feasibility study on its 70%-owned Block 14 gold project in the Republic of Sudan, near the border with Egypt.

Access to the project is by sealed road along the eastern embankment of the River Nile to the town of Abu Hamad, and then via a well-used desert road to the project area. Orca acquired the right to purchase a 70% interest in the property from a local partner, Sheikh Osman Khider.

In February, 2017, Orca reached a deal to acquire all of Kinross Gold Corp.‘s [K-TSX, NYSE] property rights and interests the West African country of Cote d’Ivoire. Under the deal, Kinross agreed to take an 8.6% interest in Orca.

“This strategic investment by Resolute demonstrates and supports a rapidly growing international mining interest in Sudan,” said Orca CEO and director Richard Clark. “Resolute is a well-credentialed Australian gold producer that has been successfully developing and operating gold mines in Africa for more than 20 years and has recognized the scale and quality of our Block 14 gold project,” he said.

“The placement is the first major investment by an international gold mining company into Sudan and we are extremely pleased and excited to be aligned with Resolute in our vision of gold exploration and development in this incredibly prospective jurisdiction.”

Clark said Orca is now fully funded to deliver a feasibility study on Block 14, expand the company’s exploration endeavours on the 2,170 km² license and the concessions in Cote d’Ivoire.

“I would like to congratulate Resolute on its investment decision and with this stamp of approval, we look forward to continue advancing and demonstrating the value of our projects,” he said.

A Block 14 preliminary economic assessment (PEA) prepared by SGS Time Mining of South Africa was published in July, 2016.  The study showed a strong economic project at a gold price of US$1,200/oz, with an in-pit indicated resource of 1.2 million ounces and inferred resources of 140,000 ounces.

The prefeasibility study included further metallurgical test work, environmental studies, mining and geotechnical work and critically a new water exploration program aimed at increasing project water supply.

The water exploration program, which was comprised of a 5,000-km airborne geophysical survey and follow-up drilling has discovered a large, previously unknown aquifer system 85 km southwest of Galat Sufar South, now called “Area 5.”

The company is currently advancing a feasibility study with metallurgical variability test work and a 25,000-metre drill program to extend resources below the current design pits, which are restricted due to lack of drilling.

Meanwhile, on Monday, Orca shares fell 1.61% or $0.01 to 61 cents. The 52-week range is 78 cents and 36 cents.