East African focussed gold exploration and development company Nyota Minerals said Monday that the feeder zone drilling programme at its Tulu Kapi Gold Project in Ethiopia was successful, but warned of budget cuts after working capital hit problems, causing operations to be suspended.
The group is facing a shortfall in working capital for the quarter ahead after expenditure on the Feeder Zone drilling and delays to the issue of a large scale mining licence.
Richard Chase, Nyota's Chief Executive Officer said: "Our Feeder Zone drill programme has successfully demonstrated, in a matter of four months, the potential to add significant high grade ounces to the Tulu Kapi resource inventory and to enhance the DFS economics that were based solely on the initial open pit operation.
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"Importantly, the geological model used to assist with the planning of drill holes continues to deliver positive results and based on this same model, we have an estimated minimum 300 metres of strike length to target with future drilling, which we predict will demonstrate the potential to expand the Feeder Zone resource to a size that will have a materially positive impact on the economics of the project.
"With this in mind, it is disappointing to be having to make significant cuts in our prior budget, but we face a shortfall in working capital for the quarter ahead unless we do so. Discussions are at an advanced stage with a number of potential funding parties and we expect to be able to make a further announcement very shortly."
Significant high grade resource at Feeder ZonePositively, the group said that the programme has demonstrated the potential for a significant high grade resource that would be developed via an underground mine.
The new high grade intersections in the feeder zone include 15.04g per tonne gold over 9.45m, 10.55g/t gold over 13.96m, 5.34g/t gold over 12.25m and 5.24g/t gold over 26m.
The inferred resource estimate is currently 1.1m tonnes at an average grade of 5.4g/t containing 188,000 ounces of gold.
Funding problemsWith regards to the company's funding worries, it is currently undergoing discussions with "various parties, including major shareholders" to secure interim funding to enable Nyota to complete its negotiation of the fiscal and legal terms for the issue of the mining licence.
The share price fell 5.45% to 3.90p by 08:50.
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