Oromin gets more time to drill Senegal project

Vancouver — Oromin Explorations (OLE-V, OLEPF-O) is confident it will find more gold on its Senegal concessions after the government of the West African country agreed to extend an exploration contract that was scheduled to expire next month.

Oromin president Chet Idziszek says the extension is crucial because drilling crews need more time to explore a series of gold deposits on the 230-sq.-km Sabodala concessions before deciding which ones to include in a future feasibility study.

Under an earlier agreement, Oromin and its partners were expected to spend at least US$8 million on exploration by the end of April 2007, before embarking on a feasibility study that was expected to be complete by February 2008.

But following recent talks, the government of Senegal is giving Oromin and its partners a 20 month-extension, allowing them to continue drilling until Dec. 22, 2008, after which they would have another 10 months to complete a preliminary feasibility study.

“For us, this is very good news,” Idzisek says.

Holding a 43.5% stake in the Sabodala concession, Oromin is working in partnership with Saudi-controlled Bendon International, which owns 43.5%, and Badr Investment & Finance Co., which has a 13% carried interest.

The government of Senegal retains a US$6.50-per-oz. royalty on any future production and a free carried interest after repayment of capital.

However, under the new agreement, title to the concession has been transferred on the same terms to the Oromin Joint Venture Group, a private company owned by the entities that were party to the original agreement.

Idzisek says this will make it easier for anyone to come in and acquire the project at a later date.

Oromin has been anxious to gain more time for exploration because the Sabodala concession is located about 30 km south of the border that separates Senegal from Mali, and within a geological horizon that hosts five gold mines in Mali.

Australian company Mineral Deposits (MNLDF-O, MDL-A) has outlined a gold resource of 2.2 million oz. gold that it plans to develop on property that is surrounded by the Sabodala concessions.

“We are in elephant country,” Idzisek says.

Having gained the extension, Oromin and its partners plan to spend at least US$12 million on exploration this year. That money will fund 75,000 metres of core and reverse-circulation drilling in about 450 holes.

Under an agreement, Oromin and Bendon will share equally in future spending on the property, but Oromin will continue to act as project operator.

Oromin shares traded recently at $3.14 on the TSX Venture Exchange. The 52-week range for the stock is $1.30-$4.18.