Exploration Update on Mokopane Iron Ore Project

RNS Number : 4751L

Obtala Resources Limited

01 August 2011

 



Obtala Resources Limited

("Obtala" or the "Company")

(AIM: OBT)

Exploration Update on Mokopane Iron Ore Project, South Africa

The Board of Obtala Resources Limited, the natural resources investment and development company is pleased to announce an update on the recently acquired Mokopane Iron Ore Project in South Africa.

In March 2011 Obtala entered into a conditional agreement to acquire a 50% interest in the issued share capital of Bushveld Resources Limited ("Bushveld") and a resulting 32% and 34.25% interest in the underlying subsidiaries that hold the licences over the Mokopane Iron Ore Project, covering an area of 7,409 hectares. The completion of this acquisition is pending some minor legal administration and is expected to complete in Q4 2011.

Highlights:

·     21 drill holes completed since acquisition

·     The P-Q Magnetite Zone is consistently developed along a strike of 4,200m on only the one farm tested.

·     Provisional assay results indicate a 39-82m true width of magnetite in the P-Q Zone with an Fe₂O₃ content varying between 37% and 42% and TiO₂ content between 8% and 10%.

·     The Main Magnetite Layer tested has been drill tested over a strike of 6,000m, and is expected to continue northwards from the tested area for a further 2,000m.

·     Corrected mineralised widths for the Main Magnetite Layer intersections are 8.2m and 8.4m respectively.

·     Targeting a JORC compliant resource in Q4 2011.

Bushveld has been undertaking a drill programme on the project with the objective of defining a JORC compliant Inferred and Indicated Resource for the P-Q Magnetite Zone on one of the farms that makes up the project, and to extend the known strike of the P-Q Magnetite Zone southwards. The secondary objective is to test a series of well defined aeromagnetic anomalies, which the Company believes form the northern strike extension of the P-Q Magnetite Zone and to provide further intersection data of the Main Magnetite (Vanadium-rich Magnetite) Layer on neighbouring farms.

The work programme completed to date has consisted of diamond drilling with follow-up core logging, sampling and assaying at the independent Setpoint Laboratory in Johannesburg. Drilling started on 4th April 2011 with the programme expected to be completed early August. 21 boreholes have been drilled for 3,606m, with 13 boreholes drilled into the P-Q Magnetite Zone with a drill spacing of 500-550m for the shallow holes (<220m depth) and 1,000-1,100m for the deep holes (250-400m depth) to provide data for the shallow Indicated Resource and deeper Inferred Resources respectively.

The Main Magnetite Layer was tested with 2 boreholes, with an effective drill spacing of 2000m, with both intersecting the Main Magnetite target. 6 exploration boreholes have been drilled to test the aeromagnetic targets, however only two 2 boreholes reached their planned drilling depths and the remaining 4 boreholes were abandoned due to poor drilling conditions.

To date 1,724 samples have been submitted to Setpoint Laboratory with the results returned for 8 boreholes including the 2 boreholes for the Main Magnetite and 6 boreholes for the P-Q Magnetite Zone.

Provisional summary intersections for 6 boreholes intersecting the P-Q magnetite zone:

From the results of the current phase of work the following observations have been made by the Bushveld management team:

·      The P-Q Magnetite Zone is consistently developed along a strike of 4,200m on the one farm tested, and down to drilled depths of 322m and 381m in the deep boreholes. The mineralised borehole intersections, based on visual estimates of the magnetite content, vary between 41-87m thick (corrected to 39-82m true width).

·      The P-Q Magnetite Zone continues southward with similar mineralised widths

·      The Main Magnetite Layer tested is developed for a strike of 6,000m, with some possible minor displacements. It continues northwards from the tested area for a further 2000m. Corrected mineralised widths for the 2 new boreholes were 8.2m and 8.4m respectively.

·      The central area of the tested aeromagnetic anomalies overlies a regional fault zone characterized by extensive fracturing and broken ground which makes drilling difficult. No significant magnetite zones were intersected but the area should be considered as a incompletely tested exploration target area

Project Work Plan

Once the outstanding assay results have been received, the management team will proceed with compilation and detailed interpretation of the data, and preparation of a Competent Persons Report. A JORC compliant Indicated Resource is expected by Q4  2011.

Additional drilling is also planned to test the extension of the mineralisation on other farms in the project area.

Francesco Scolaro, Chairman of Obtala, commented "The Mokopane Iron Ore deposit is located in one of the most advanced mining regions in the world with the potential to grow into a world class asset. We are pleased to see the progress being made on this asset and the reports confirm the quality of the Bushveld management team and the potential of the asset which was the basis for our investment decision. Mokopane has growth potential to become a significant iron mine that can deliver its end products to customers from within a country that already has an advanced infrastructure framework established for the natural resource industry."

Obtala Resources Francesco Scolaro - Chairman Simon Rollason - Managing Director www.obtalaresources.com	[phone]
ZAI Corporate Finance Ltd	[phone]
Marc Cramsie Sarang Shah
Threadneedle Communications
Beth Harris Laurence Read	[phone]

In accordance with the AIM Rules, the information in this announcement has been compiled by Richard Viljoen and Morris Viljoen, both qualified geologists with over 50 years' combined experience in the mining industry, and has been reviewed by Simon Rollason, a qualified geologist with over 20 years' experience, and who is the Managing Director of Obtala Resources Limited.

Additional Information

Description of the assets

Bushveld Resources Limited is a private Guernsey registered company focused on evaluating and developing iron ore projects in sub Saharan Africa. BRL is the holding company of two subsidiary companies in South Africa which hold 64% and 68.5% interests respectively in two prospecting licences over the Mokopane iron ore project. The remaining 36% and 31.5% is held by Black Empowerment partners in South Africa.

Geology of the Project Area

Bushveld is exploring a new, potentially world‐class magnetite-hosted iron ore deposit in the Limpopo Province, South Africa. The Mokopane iron ore portfolio, comprise two prospecting licences covering a total of approximately 7,409 hectares (74.09 km2). The project is located, approximately 60km from Polokwane and is in close proximity to several large scale mining operations and associated mining infrastructure.

The main resource is contained within two outcropping magnetite layers. These two distinct magnetite layers, 8m and 70m thick respectively, are amenable to opencast mining, initially along a consistent identified strike length in excess of 10 km. The stratigraphically lower Main Layer ("ML") is comparable to the Main Magnetite Layer mined within the Bushveld Complex for vanadium and iron, although at Mokopane the layer is 8m thick compared to the average of 2m as found in layers within the Bushveld Complex. Average vanadium (V₂O₅) content is in the range of 0.9% ‐ 1.4%. Crushing and milling procedures are expected to be similar to those used by other producers operating in the region where pyro‐metallurgical treatment of ore to produce V₂O₅ and in some cases pig iron, is already being undertaken.

The Upper Layer ("UL") is primarily a magnetite iron ore resource with titanium (~9.55% TiO₂) and lesser amounts of V₂O₅ (~0.09% V₂O₅). This layer is exceptionally thick at ~70m, with a weathered zone down to +/‐20m, which is more amenable to metallurgical treatment without the need for fine milling.

 

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