Ariana Resources (AAU) has announced a Memorandum of Understanding which “proposes a series of interlinked transactions which will enable the company partially to monetise its successful development of the Kiziltepe Mine… and its earlier-stage Salinbas gold project”. Previously updating on Ariana, last week we concluded with its production, plentiful exploration potential and a market cap of only circa £23 million, at up to 2.4p and targeting 3p+, our stance remains buy. The transactions now proposed include…
…“the disposal of… 17% of the Salinbas project (currently Ariana 100%) for US$5 million and jointly with Proccea, 53% of Zenit (Kiziltepe mine and its associated exploration and development operator in which Ariana is a 50% holder) for US$50 million (to be split equally by Ariana and Proccea). Furthermore, the proposed partner (at this stage just described as “a major Turkish construction and engineering company”) will then inject US$8 million of equity into the Salinbas project via an earn-in arrangement… to take the proposed partner to a total 53% to achieve the completion of the feasibility study and environmental impact assessment… and organise the bank finance to enable this project to be brought into production.”
Ariana adds “it is the current intention of the board to consider distributing part of this sum as a special dividend to shareholders… also utilise… to fund… the acquisition of new exploration and development projects either within Turkey or in other regional jurisdictions”, whilst also it will be “responsible for all exploration across the new joint venture, with a reward mechanism of three times the exploration cost for all new projects injected in to the JV in the future”.
The shares have responded positively – but are still available at around 2.6p to buy, a market cap of circa £27.5 million. That currently equates to sub $35.5 million. There is clear deal risk, particularly with it currently “a non-binding Memorandum of Understanding” – but, having considered there good upside anyway, we now upgrade to up to around current levels, buy.
Filed under: Ariana Resources, AIM Clown, Eurasia Mining, Eddie Stobart Logistics, CAP-XX
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