Ortac Resources Ltd / Epic: OTC / Market: AIM / Sector: Mining & Exploration

25 August 2015

ORTAC RESOURCES LTD 

("ORTAC" OR THE "COMPANY")

Investment into Zamsort Limited, Zambia

Exercise of Call Option by way of Secured Convertible Loan Note

Ortac Resources Ltd ("Ortac"), the AIM listed exploration and mine development company, is pleased to announce that it has today exercised the call option agreement (the "Option"), detailed in the 30 March 2015 announcement, with Zamsort Limited ("Zamsort"), a private company registered in Zambia that holds a prospective Cu-Co mining and exploration licence in the Zambian Copper Belt.

On 30 March 2015 Ortac subscribed for secured convertible loan notes, convertible into a 10.71% stake in Zamsort Limited ("Zamsort") and entered into the Option. The exercise of the Option by way of a further US$600,000 secured convertible loan note (the "No.2 Loan Notes"), takes the total invested by Ortac in Zamsort to $1.2 million and, upon conversion of the loan notes,  Ortac's potential shareholding in Zamsort would be 19.35% of the issued share capital of Zamsort. 

Recent milestones achieved by Zamsort include:

·    Renewal of the Small-Scale Mining Licence ('SML') of 4km² for a further period of 10 years commencing from 1 July 2015;

·    As part of a programme to confirm the metallurgical assumptions made, representative samples from the Kalaba Cu-Co deposit ('Kalaba') grading on average 1.83% Cu and 0.23% Co have been collected and are at present undergoing testwork at the Copperbelt University laboratory in Kitwe, Zambia;

·    A survey of the mine site including open pits, stockpiles, camp and roads has been completed;

·    A drilling contractor is in the process of being engaged to commence a combined diamond ('DD') and reverse circulation ('RC') drill programme in the area where mining activities are proposed to be carried out over the next two years, in order to increase confidence in the mineral resource;

·    A preferred mining contractor with a fleet of equipment based close to the Kalaba deposit has submitted contracting terms, which are currently under review; 

·    A preliminary design for a demonstration processing plant has been costed and, pending the outcome of the metallurgical testwork in the coming weeks, construction of this plant is planned to commence in Q3 2015; and

·    A geochemical sampling and drilling programme has been designed to test and confirm the targets previously identified by former operators in the Large-scale Prospecting Licence ('LPL') area.

Vassilios Carellas, Ortac's CEO, commented, "A significant amount of ground has been covered by Zamsort since our initial investment in March and Zamsort's aim to establish a plant at Kalaba by year end is coming to fruition.  Zamsort has also put in motion a programme to explore the rest of this highly prospective licence area which continues to extract interest from third parties re-confirming the prospectivity of this licence area. 

The Company has worked well with Zamsort, providing technical support, particularly through my appointment to the board and is now in discussions with Zamsort to potentially increase its interest in Zamsort further. We look forward to further developing our relationship and providing an update in due course."

About Zamsort Limited

Zamsort is a private Zambian registered company that is the 100% owner of the Kalaba Cu-Co Project located approximately 1,000 km from Lusaka, in Mwinilunga, North Western Province, well within the trending arm of the major geological structure known as the Lufilian Arc (copper belt), on the western flank of the Kabompo Dome. 

The project consists of a 4km² Small-Scale Mining Licence ('SML') over the Kalaba Cu-Co mineral resource enclosed within a 999.28km² Large Scale Prospecting Licence ('LPL'), which was previously explored by Equinox Minerals Limited ('Equinox') and Anglo American Prospecting Services ('AAPS') by way of the Zambezi Joint Venture ('JV') through AAPS's affiliate Zamanglo Prospecting Ltd ('Anglo American') during the late 1990s as part of the Kabompo Property. The current LPL encompasses 7 of the top 10 high priority exploration targets identified through the JV prior to Anglo American exiting the country in 2001.

The SML was officially renewed on 1 July 2015 for a period of 10 years. The LPL was officially issued on 16 October 2014  and is issued for an initial two year period, allowing for two renewals for two additional years each plus one more year and can be held on this basis for a maximum total of seven years.

In order for Zamsort to maintain the SML in good standing it has undertaken seasonal mining from the oxide copper resource exposed on surface. Zamsort has estimated that approximately 70,000 tonnes of material has been mined to date from Kalaba. In order to satisfy the commitments that Zamsort have made for the renewal of the licence, Zamsort is obliged to construct a processing plant at Kalaba by the year end, so that the ore mined from Kalaba can be beneficiated on site. At present, Zamsort has estimated that it has approximately 33,000 tonnes of screened ore grading at 3.5% ASCu stockpiled on site and ready to be shipped and toll treated at one of the local facilities in the copper belt where non-exclusive off-take agreements are already in place.

The estimated Kalaba Cu-Co oxide resource of 16.59Mt @ 0.94% Cu equivalent is exposed on surface and has been generated in-house by Zamsorts' Chief Geologist and although it has been registered by Zamsort with the Geological Survey and Ministry of Mines in Zambia, at present it is not considered to be code compliant.

Terms of the Convertible and Call Option Agreement

The convertible loan notes are repayable on the first anniversary of drawdown and have an annual interest rate of 8 per cent which is payable on the redemption or conversion of the notes.  The Company is entitled to convert the notes into ordinary shares of Zamsort equal to 10.71 per cent of the issued share capital of Zamsort. In addition, the loan note instrument incorporates an anti-dilution mechanism in the event that Zamsort raises capital from other sources. 

While the notes remain in issue, Ortac and its advisers have the right to carry out detailed due diligence on Zamsort.  

Subject to further due diligence and at Ortac's sole discretion, pursuant to the Option, Ortac has the right to apply for, and Zamsort shall issue, the No.2 Loan Notes.  The Option may be exercised at any time before the expiration of one year from the date of the agreement.  The No.2 Loan Notes are also repayable on the first anniversary of drawdown and have an annual interest rate of 8 per cent which is payable on the redemption or conversion of the notes.  The Company is entitled to convert the notes into ordinary shares of Zamsort equal to a further 8.64 per cent of the issued share capital of Zamsort. In addition, the instrument also incorporates an anti-dilution mechanism in the event that Zamsort raises capital from other sources. 

The Company will make further announcements as appropriate.

For additional information please visit - www.ortacresources.com

Appendix

ASCu                                        Acid Soluble copper

Co                                            Cobalt

Cu                                            Copper

Lufilian Arc/copper belt          The Lufilian Arc / copper belt is a region of Central Africa running through northern Zambia and the southern Democratic Republic of Congo known for copper mining

Not Code Compliant                Not compliant to any internationally recognised method for estimating and calculating ore resources, such as JORC or National Instrument 43-101