This week promises to be an exciting one for us shareholders in Turkish gold-miner and AIM-listed Ariana Resources (AAU). Quite apart from Q4 results from the Kiziltepe joint venture which are due shortly (though perhaps not this week) and news from the satellite gold deposits near Kiziltepe as well as further news from Salinbas to the east, all of which could drop at any time, there is the small matter of the proposed part-sale of the Salinbas and Kiziltepe projects and the announced deadline of the end of February to get shareholder approvals……if a final deal is struck. And I believe that means news this coming week...
The proposed deal involved Ariana reducing its stake in the Kiziltepe joint venture from 50% to 23.5% and dropping its 100% ownership of Salinbas also down to 23.5%. For that, the proposal was for Ariana to get a big fat cheque to the tune of $30 million, some of which will be handed back to shareholders in the form of a much-prized dividend, and the Salinbas project will be free-carried to production, even if some of the cost is in the form of bank lending. My back-of-an-envelope calculation reckons that this all values Ariana at around 4p per share – a decent move up from recent levels as low as 1.8p in mid-October 2019 (before the proposal was announced) and below 2.4p since the new year. But as the end of February approaches, the shares have taken off and now sit at 2.95p, valuing the company at a still modest £31 million.
To get approval for the deal, Ariana will have to hold a General Meeting and according to my read of Ariana’s Articles of Association and the Companies Act (2006), it has to give two weeks’ notice for a GM. Well, February 29th (it is a leap year) falls on a Saturday, so I guess that means a GM on February 28th. Roll back two weeks and it means that notice will have to be given by Thursday (or perhaps Friday, at a push) of this week. There has been some debate on the bulletin boards as to whether the deal is good for Ariana shareholders. The point seems to be that given time, Ariana can get it all up and running by itself and shareholders would make far more cash. But that comes at a cost, it seems to me, of the whole exercise taking far longer and I suspect it would also entail major dilution if Ariana wanted to hurry it up by raising more cash. Ariana’s history on that score is not a happy one!
On the other hand, getting a fat $30 million payoff which allows cash to flow back to shareholders and leave plenty in the kitty for new projects (such as the recently announced acquisition of up to a 50% stake in Venus Minerals which has been busy in Cyprus) and retaining a 23.5% stake in Kiziltepe and Salinbas looks like a shrewd move from head honcho Kerim Sener. He, of course, will want to spend the cash exploring but Chairman Michael de Villiers is known to be eying a dividend. The proposed deal ticks both boxes. Due diligence by Ariana and the new partner commenced back in early December, since when we have heard nothing. If something had gone wrong at that stage Ariana would, I am sure, have been keen to come clean – even with the worst Nomad in London, Roland “fatty” Cornish – in tow. So one has to assume that the deal got past that stage and it now comes down to what is announced this week. I wouldn’t like to call it, but it seems to me that there are three options: it is going ahead, it is not going ahead or a decision has been delayed for whatever reason. With the stock pushing 3p, my advice continues to be to top-slice a little bit at 3p or above if the stock continues to gather strength ahead of news and that is what I intend to do. Whilst the deal looks a good one to me, it is not yet in the bag and bad news on that front would surely hit the shares. In any case, those who have followed this stock since I first covered it have had plenty of opportunity to buy as low down as nearly 1p and being a bit old-fashioned I take the view that it is always better to leave a little something on the table for the next guy and my holding is currently far too high as a proportion of my portfolio. Those with stronger stomachs may take a different view, but I like to top-slice as it locks in profits whilst leaving me in the game. But if news hits and the deal is all-go then I will be looking for 4p, subject to a look at the details of what is going to happen and even then it will be a top-slice rather than selling out. If you are tempted as I am to cash in a bit ahead of news on the proposed deal, I would hang on to a good slug of the stock (I will be holding on to the majority of my holding), for I fancy there is much more to come in the longer term. Meanwhile, it is fingers crossed for a cracking announcement this week!
Filed under: Ariana Resources, Gervais Williams, Versarien, NMC Health, Finablr, Dr Shetty, Burford
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