Ovoca to take control of Russian deposit

Listed exploration company Ovoca Resources is to take control of a Russian silver deposit in a shares and cash deal valued at over €16 million at last night's closing prices.

The company said yesterday that it has agreed to buy 74 per cent of CJSC Ayax Prospectors Artel Company, which owns a silver deposit in eastern Russia, for $1 million (€840,000) in cash and 110 million new shares in Ovoca.

Ovoca shares were quoted at 9 pence sterling (13.2 cent) at the close of business in London last night. This would value 110 shares at €15.4 million.

The Irish-headquartered company has an issued capital of 113 million shares. Once it is completed, the deal will give Ayax close to 50 per cent of Ovoca.

Ovoca will have the option to buy up the remaining 26 per cent of Ayax any time within a year of completing the deal.

Ayax will have the right to appoint three directors to the Ovoca board.

The company said in a statement that the deal was subject to any approval required from the Dublin and London stock exchanges, where it is traded, and on the completion of due diligence over the next four months.

Ayax owns the Goltsove silver deposit in a geological formation known as the Magadan oblast in eastern Russia. Its potential resources have already been assessed by drilling and underground exploration.

The most recent calculation estimates the deposit could hold silver ore of up to 150 grammes per tonne of rock. According to Ovoca, this indicates that it holds 74.3 million ounces (2 billion grammes) of silver.