ORR Oriole Resources Plc

Oriole Resources PLC

('Oriole Resources', 'Oriole', 'the Company' or 'the 'Group')

Interim Results for the six-month period ended 30 June 2024

Oriole Resources (AIM:ORR), the AIM-quoted exploration company focussed on West and Central Africa, announces its unaudited Interim Results for the six-month period ended 30 June 2024 (the 'Period').

Operational Highlights:

·     Earn-in Agreements with BCM International Limited

In January, the Group signed two agreements with BCM International Limited ('BCM') in respect of the Group's Bibemi and Mbe projects.  The Group received US$1.5 million on signing ('Signature Payments'), which gave BCM a 10% interest in each licence and the opportunity to earn up to a 50% interest by funding up to US$4 million in exploration expenditure per licence.

In addition to these payments, BCM's commitment includes success-based payments at each project.  At Bibemi, the Company will receive a cash payment of $1 million on the release of a 1 million ounce ('Moz') JORC-classified Resource, with a further $1 million being paid for every addition 1Moz up to 3Moz.  At Mbe, a maximum of 10 resource payments are payable on the release of JORC Inferred Resources milestones, $1 million will be paid on the release of every 1Moz JORC-classified Resource up to 5Moz with increased payments per 1Moz thereafter, up to a maximum cumulative Resource Payment of $20 million, upon delivery of a 10Moz resource at Mbe.

·     Portfolio Development

Bibemi gold project ('Bibemi'), Cameroon

In January, the Company announced an increase in the published inferred JORC-compliant Mineral Resource Estimate ('MRE') to a contained 375,000 Troy ounces ('oz') in 5.1 million tonnes ('Mt') grading 2.30 grammes per tonne ('g/t') gold ('Au') for Bakassi Zone 1 ('BZ1') at a gold price of US$2,000 per ounce.  Subject to the outcome of ongoing feasibility studies, Bibemi offers good potential for the development of an open pit gold mine at BZ1, plus possible additional satellite open pit operations. 

In Q2, Oriole commenced the Phase 5 diamond drilling programme at BZ1, with infill and extensional drilling focussed on upgrading and expanding the existing MRE.  This will be followed by drilling at the BZ1-NE and BZ1-SW targets that are prospective for additional near-surface resources within some 2 kilometres ('km') of the MRE.

In June, the Company submitted an application for an exploitation licence ('ELA') to the Cameroon government, supported by various technical studies, including an Environmental and Social Impact Assessment and preliminary economic studies.  The ELA was lodged post Period and marks the start of an iterative negotiation process to define and formalise the terms of a Mining Convention for the project with the Government of Cameroon.

Central Licence Package ('CLP'), Cameroon

In Q1, infill soil sampling programmes were completed over the main MB01 prospect ('MB01', encompassing MB01-N and MB01-S targets) and a second infill soil sampling programme over the wider Mbe licence, both programmes generating in highly encouraging results.

In Q2, a 7,055 metre ('m') trenching programme commenced at MB01-N and MB01-S which was completed post Period-end.  Initial results were announced on 3 September 2024 with highlighted results showing 50m at 1.11g/t including 20m at 2.23g/t gold found at MBT001, 38m at 0.55g/t gold at MBT002, and 68m at 0.77g/t including 12m at 1.00g/t and 24m at 1.18g/t gold at MBT003. These intersections correlate with previously reported gold-in-soil anomalism and supports the Company's learned opinion that Mbe is a potentially significant gold discovery.

On 1 July 2024, the Company reported that it had received confirmation of the two-year licence extensions for each of the five Eastern-CLP licences.

Senala gold project ('Senala'), Senegal

In February of this year, Managem Group ('Managem') completed its earn-in at Senala and confirmed that it had spent approximately US$5.8 million on exploration, giving it an approximate 59% interest.  The remaining 41% interest is held by Oriole's 85% owned subsidiary, Stratex EMC SA, giving Oriole an effective 35% beneficial ownership.   A discussion on the next steps is still ongoing but, given that Senegal remains a highly attractive country for gold exploration and development projects, the Senala licence remains of considerable value to the Company.  During the period, the licence was also renewed for a further three year term.

·    Legacy assets

The potential value of the Company's legacy assets was demonstrated with the receipt of US$300,000 from the sale of its remaining interest in the Hasançelebi and Doğala mining projects in Turkey.  Work continues to monetise the remaining legacy assets.

Financial Highlights:

·    The Group's pre-tax profit for the six months to 30 June 2024 was £1.15 million (2023: loss of £0.86 million), with significant gains on the amount receivable from Lanstead under the agreement announced 1 August 2023 ('Lanstead Agreement') and a profit recognised in relation to the Signature Payments received from BCM;

·    Administrative expenses increased to £0.67 million in the period to 30 June 2024 (2023: £0.52 million) due to the expansion of the Cameroon team to reflect the increased levels of activity required by the expanded exploration programmes;

·    Exploration expenditure of £1.13 million (2023: £0.22 million) in Cameroon, mainly related to commencement of a fifth phase of drilling at Bibemi and soil sampling and trenching programmes at Mbe;

·    The cash balance of the Group as at 30 June 2024 was £0.84 million (31 December 2023: £0.11 million).

Eileen Carr, Chair of Oriole, said: "The year started on a high note with confirmation of the BCM deals on both the Bibemi and Mbe licences.  As suspected, this news positively impacted the share price, which in turn significantly increased the monthly proceeds received from Lanstead.  Despite the initial market misgivings surrounding this financing, it has, in fact, proved beneficial at a time when raising finance in the junior mining sector was all but impossible.   We reached the first anniversary of the Lanstead transaction in August and the amount received to date is the equivalent of 0.24p per share, significantly higher than could have been achieved in the market in mid-2023, and despite the low share price experienced at the end of last year.

"In May, we welcomed Martin Rosser as CEO and said farewell to Tim Livesey.  As long-term shareholders will know, Tim introduced Cameroon to the Company back in 2018 and he has played a significant role in getting the Company to this exciting point.  I would like to thank Tim personally for his contribution to the development of the Company and for the help he extended to me since my joining and we all wish him well in his next endeavour.

"Turning next to the work programme at Bibemi, this has suffered a little from the fact that Cameroon is not yet an established gold mining country, and therefore most equipment and consumables must be shipped in from abroad.  This has led to some teething problems but the team has put in place various measures to allow for the drilling to continue throughout the rainy season and the programme is progressing well.  The recovery of the drill core has been excellent and we are awaiting results from the first set of drill holes which we will release in batches as and when the results have been fully analysed.

"The areas surrounding BZ1 have the potential to add ounces to the primary open pit, and work is underway to better understand the metallurgy and mineral processing aspects of the ore in order to determine the processing method for gold recovery.  The submission of the application for a gold exploitation permit is the first such submission in Cameroon and I am hopeful that Bibemi will be the first commercial gold mine in country, although further work is required to prove up various technical and financial feasibility aspects of the development.

"At Mbe, work is progressing towards a maiden drilling programme in the next field season.  The first set of results from trenching were released post Period end with further results from the remaining trenches  due shortly, which will assist with finalising this plan.  Both Oriole and BCM are excited by the potential of Mbe as the results to date from soil sampling and trenching have been extremely positive.

"Earlier this year, Dave Pelham, our Independent Non-Executive Director, and I visited Cameroon to attend the CIMEC exhibition in the capital, Yaoundé, and to visit both the Bibemi and Mbe projects.  We were both extremely impressed with the welcome we received in-country by the Government, our High Commissioner, who continues to help our efforts, the populace and our teams on the ground.  The desire to develop Cameroon's mining sector is palpable and the enthusiasm shown by the Prime Minister and Minister of Mines was plain to see.  I was encouraged to see that Canyon Resources, an ASX-listed company, received its Mining Licence last month, and this can only bode well for Oriole and the mining sector in general.

"In Senegal, our licence was renewed earlier in the year and we are working together with our partners Managem and EMC to assess the best way forward to add value to the licence.  We expect to be able to give more clarity on the work programme over the coming months. 

"Our partnership with BCM goes from strength to strength, as do our relationships with both BEIG3 in Cameroon and EMC and Managem in Senegal.  Finally, we are starting to see results from both the Bibemi and Mbe exploration programmes coming through, and I am hopeful that the wait will have been worthwhile."

Interim Management Report

During the first six months of 2024, which covered the second half of the 2023/24 exploration field season in Cameroon, significant progress was made at the Company's flagship prospects and projects. Importantly, at Bibemi, this led to an updated JORC-Resource announced on 15 January 2024 and preparation for the ELA application to the Cameroon Mines Ministry ('Ministry'), which was submitted post Period.  The application is in a pending status whilst the current Phase 5 drilling programme and associated project technical and economic studies progress.  The Company is optimistic that the project has good potential to become the first industrial-scale gold mine in Cameroon.  Moreover, it would be a definitive step for establishing Cameroon as an important gold mining country given its now demonstrated geological endowment.

At Mbe, in the Eastern CLP, following the strong surface sampling results, Oriole conducted extensive trenching work; an important step towards the intended maiden drilling programme later in the year.  Mbe holds significant potential to become an exciting gold deposit.  The Board believes this potential could be replicated across the remainder of the Eastern CLP as regional exploration work continues to test the gold corridor identified to date.

At the Senala gold project in Senegal, Managem has concluded its earn-in to take 59% ownership.  The property includes the resource-stage Faré prospect, where the Company has completed an MRE at Faré South for a maiden JORC-compliant Resource of 3.85Mt grading 1.26g/t Au for 155,000oz Au contained in the Inferred category, based on a 0.3g/t Au cut off and within a US$1,800/oz pit shell.  Finalisation of the ownership percentage is nearing completion and discussions are ongoing regarding the next steps at the project, with all parties committed to exploring the full potential of the project.

Funding

The Company started the Period with considerably improved finances, following execution of the BCM earn-in agreements for the Bibemi and Mbe licences and supported by the ongoing monthly receipts under the Lanstead Agreement.  For Bibemi and Mbe, the Company received Signature Payments from BCM of US$0.5 million and US$1.0 million respectively.

As a result, the Board have decided to terminate the initiative to bring in possible project level funding from a Canadian Investment Bank (announcement dated 11 April 2023).  

The Company was pleased to have received total cash payments of US$300,000 in relation to its interest in the Hasançelebi and Doğala mining projects in Turkey (per the Company's announcement dated 22 May 2024).   Efforts to realise value from the remaining legacy assets continue but, in all cases, progress is outside of the Company's control.  

Bibemi

An updated Inferred JORC-compliant MRE was announced on 15 January 2024 for the BZ1 prospect.  It was prepared by independent consultant Forge International Limited ('Forge') as part of the ongoing technical studies to support the application for an ELA.

The pit-constrained Resource is estimated to be 5.1Mt grading 2.30g/t Au for approximately 375,000 oz Au in the JORC Inferred Resources category, reflecting a 23% increase in the resource inventory, predominantly the result of an improved gold price.  The entire MRE was within the limit of a US$2,000/oz gold price pit shell and modelled over a strike length of approximately 1.3km to a depth of 263m below surface, using a lower cut-off grade of 0.45g/t Au and a higher-cut-off of 20g/t Au.  Importantly, the updated MRE is open at depth and along strike to the northeast and there exists significant potential to identify additional resources at BZ1, and also at the other three prospects on the licence, namely Bakassi Zone 2, Lawa West and Lawa East, which are all located within a few kilometres of BZ1. 

Subsequently, a Phase 5 diamond drilling programme was designed for a total of 7,060m in 62 holes, with the new locations being based on a combination of surface exploration and ground magnetics data. A total of 4,560m in 37 holes were planned as infill and extensional drilling at the existing BZ1 MRE zone, focussed on upgrading and expanding the current MRE.  A further 2,500m in 25 holes was planned largely to test two areas, BZ1-NE and BZ1-SW, which are proximal to two geophysics targets that are along-strike extensions to BZ1 and have coincident gold anomalism and quartz veining at surface.  These shallow holes are focussed on identifying additional, near-surface resources within 2km of the existing MRE. 

Drilling commenced in early June (announcement 11 June 2024), somewhat later than scheduled due to third party logistical challenges, largely related to the Red Sea shipping crisis.  However, provisions were put in place to enable the programme to continue during the rainy season.  First results are expected in Q3 2024.

Separately, the Company announced, post Period, that SGS South Africa had been engaged to undertake the next phase of mineralogical and metallurgical test work on representative mineralised material from Bibemi and that it had submitted an ELA to the Ministry (announcement dated 17 July 2024).  The ELA is required to secure the tenure of the licence as exploration and development activities continue.  The intention is to progress the ELA with the Ministry alongside the ongoing exploration drilling programme, metallurgical test work and project feasibility studies. 

Central Licence Package (CLP)

Mbe

Over the Period, the Company reported further highly encouraging surface exploration results at the Mbe licence, which supports the objective of planning and starting a maiden drilling programme in the 2024/25 field season.  Notably, as part of BCM's due-diligence review over the main, 3km-long MB01 target, results of up to 256.74g/t Au were reported from outcrop sampling and up to 25.16g/t Au from pit sampling (announcement dated 22 January 2024).  Structural mapping of the pits was completed and the results compiled to determine the controls on gold distribution.  Infill soil sampling was also undertaken at MB01 to better-define the anomalism prior to designing the subsequent trenching programme. 

Results from the infill soil sampling work significantly improved the definition of previous regional gold-in-soil anomalism, with results from 4,537 samples (including quality assurance and quality control ('QAQC') samples), delivering up to 8,174 parts per billion ('ppb') Au.  The increased data resolution from this infill programme identified three key zones, including the previously defined MB01-N and MB01-S targets, for more detailed follow-up.  At MB01-S, an equal to or greater than ('≥') 100 ppb Au soil anomaly extends over 1.15km by up to 0.75km, marking a significant zone of pervasive gold deposition.  A second >50 ppb Au soil anomaly (0.95km by up to 0.75km) was defined at MB01-N, with results highlighting the importance of intersecting structural controls and a third, more diffuse, zone was outlined along strike of MB01-N, to the northeast, extending over an area of 0.50km by up to 0.50km. 

Additional pit sampling also delivered best results of 260g/t Au from 556 samples (including QAQC), with 160 samples (31%) grading over 0.5g/t Au.

During the Period, a trenching programme commenced over the anomalies at MB01-N and MB01-S for an initially planned 5,500m at a 200m spacing between trenches, designed to provide three-dimensional data by mapping and sampling the rocks underpinning these soil anomalies.  This programme was completed post Period, with an increased total length of 7,055m, with the additional metres reflecting infilling of the fence lines to a 100m spacing. 

A second infill soil sampling programme over the broader regional soil anomalism (100m x 50m spacing) was also carried out and completed post Period.  This generated further encouraging results over the wider Mbe licence area and has identified three new zones of gold anomalism to the east of MB01, being MB02, MB03 and MB04, with results up to 0.28g/t Au in soil samples.  All three zones present attractive targets for potential satellite deposits to the main MB01 prospect.

Other Eastern CLP licences

Oriole retains a 90% interest in the other four Eastern CLP licences (Tenekou, Niambaram, Pokor and Ndom), which share a similar geological setting and potential to Mbe. During the Period, we were delighted to announce that we had received two-year renewals for all five gold exploration licences in the Eastern CLP, including Mbe (announcement dated 1 July 2024).  The five licences, including Mbe, represent a contiguous, district-scale land package covering 2,266km² of highly prospective geological terrane.

Wapouzé

The Company has previously submitted a formal request for a change of substance at the Wapouzé licence area from gold to industrial minerals and, whilst this has reportedly been approved by the Presidency, confirmation of the licence renewal is still awaited.  Once approved, the Company will look to secure an industrial minerals partner to develop the Wapouzé project through to exploitation on an expedited basis.

Senala

On 19 February 2024, the Company announced that Managem, through its wholly-owned subsidiary AGEM Senegal Exploration Suarl ('AGEM'), had completed a six-year earn-in period at the Project.  Oriole's interest in Senala is held via its 85% interest in Stratex EMC Sarl ('Stratex EMC'), the holding vehicle for the Senala exploration licence.

Managem has confirmed to the Company that, since the 2018 Option Agreement was signed, AGEM has spent approximately US$5.8 million on the Project.  Accordingly, AGEM's beneficial ownership position in the Senala Exploration Licence is estimated to be 59%, and Oriole is nearing completion of an expenditure review to confirm this percentage ownership.

The Company was pleased to announce a renewal of the exploration licence for Senala.  In accordance with the Senegalese Mining Code, the surface area of the licence has been reduced by 25% and now stands at 354.5km², retaining tenure over the key prospects identified to date, in particular Faré and Madina Bafé (announcement dated 8 April 2024).  The new licence is valid for a period of three years from 17 February 2024.

A discussion on the next steps is currently ongoing with Managem, including the formation of a joint-venture company, the next phase work plan and budget.

Senegal remains a sought-after country by mining companies in the gold sector.  As such, the Senala licence remains of considerable interest to Oriole.

Legacy Assets

The Company was pleased to demonstrate the latent potential of its legacy assets with the May and June announcements that it has received a total of US$0.30 million in relation to its interest in the Hasançelebi and Doğala mining projects in Turkey.  The proceeds will primarily be used to fund further exploration work in Cameroon.

This consideration cleared all outstanding amounts due to Oriole under both the exploration agreement and the royalty sale agreement signed with Bati Toroslar in 2020.  The outstanding amounts under the two agreements had no carrying value in the financial statements of the Company.

At the Muratdere copper-gold porphyry project ('Muratdere') in Turkey, the Company has a 1.2% royalty interest.  As reported in the 2022 Annual Report the Muratdere Environmental Impact Assessment ('EIA') was approved in August 2022.  However, further news on potential mine development at Muratdere is pending the outcome of a local appeal that is still ongoing.  The project's initial mine plan covered 16Mt (of a total 51Mt resource) and, once in production, is expected to deliver 68,000 tonnes ('t') of copper, and a significant multi-year royalty for the Group.  The Company regularly updates royalty groups that have expressed an interest in acquiring the royalty and, assuming a resolution to the legal challenge to the EIA, the Board is confident that there will be ready buyers for this asset.

Results

The Group has posted a profit before tax for the Period of £1.15 million (2023: loss of £0.86 million).  The two main components of this improvement in results are the recognition of a profit on disposal in relation to BCM's Signature Payments, and realised gains and a revaluation uplift in respect of the amounts due under the agreement with Lanstead.

The Signature Payments of US$1.5 million secured BCM a 10% interest in both Bibemi and Mbe, and a £0.77 million post-tax profit has been recognised on these transactions.

A £1.0 million gain has been recognised on the amounts due from Lanstead, reflecting a revaluation of the receivable from the 31 December 2023 closing share price to the 30 June 2024 closing share price (0.17 pence ('p') to 0.36p).  Overall, £0.53 million has been received from Lanstead in the first six months of the year, and the average price on each settled share during the half year was 0.28p, against the agreement reference price of 0.2533p.  

At the administrative expenses level, costs increased from £0.52 million to £0.67 million, reflecting a number of factors but primarily an expansion of the Cameroon team, a direct result of increased activities at Bibemi, Mbe and the other Eastern CLP projects, and a return to contractual salaries for the Directors, following long term salary sacrifice initiatives during 2023.

The Group reports a profit after tax of £1.13 million (2023: loss of £0.71 million).

At 30 June, the Company had £0.84 million in cash, having spent £1.13 million on exploration work and having received £0.87 million from BCM under the earn-in agreements.

Drivers for Growth

The early-stage results at Mbe in the Eastern CLP have been excellent and confirm the Board's faith that this region has the potential to become a new gold district.  Fully funded maiden drilling at Mbe is the Company's top priority and is being targeted for the 2024/25 field season.  Results from the recently-completed trenching programme, and commencement of maiden drilling should be a significant driver of growth in the share price.

The same is expected for Bibemi, with the ongoing Phase 5 drilling programme results supporting the lodged ELA and associated negotiations with the government.

The Company also looks forward to the Ministry renewing its Wapouzé Licence, located to the north of Bibemi, where commercial quality limestone has been identified.  Once received it shall endeavour to secure an industry partner and generate an economic return for the efforts to date.

At the Senala licence in Senegal, the Board looks forward to discussing the next steps with Managem and maximising the value of this quality asset.

The Board remains focussed on and determined to realise value from the Group's legacy assets.  Pleasingly, this was demonstrated with the receipt of US$300,000 in relation to the Company's interest in the Hasançelebi and Doğala mining projects in Turkey.  Notwithstanding this progress, the remaining legacy assets are currently in non-producing development projects and, as such, the list of potential buyers is limited.  However, as these projects progress, such as Muratdere with its EIA process, that list will expand and the potential for monetisation will increase.

The Board's priority is to maximise the potential of the Company's assets to grow the share price and thus the market capitalisation of the Company.  If successful, this would also have the added benefit of increasing the value of future monthly funds received from the Lanstead Agreement.

The Board is convinced that the assets of the Company are significantly undervalued by the market and that the exploration work due to be reported on during the remainder of 2024, and in to 2025, has the potential to materially address the status quo.  

Martin Rosser

Chief Executive Officer

On behalf of the Board

4 September 2024