AIM-listed gold producer in Turkey Ariana Resources (AAU) has announced completion of the corporate action bringing Ozaltin into its joint venture with Proccea, under which Ariana has reduced its ownership to 23.5% of its assets at and around its producing Kiziltepe plant and at Salinbas in Eastern Turkey in return for $37.75 million. It has taken over a year, but finally we are there. So what will Ariana spend the resulting £25 million on?
Well first up is the long-standing commitment to pony up a special dividend, described as being substantial to reward loyal shareholders such as myself. My expectation is that around $10 million will be handed out, around 0.7p per share, and with a GM due later this month to allow a spot of capital restructuring to allow its payment, my hope is that the cheque will be in the post before too long, although there remain a few hurdles including a trip to the High Court so a little more patience is needed. But that still leaves around £18 million – less costs and tax, so perhaps £15 million or so to spend on other things. We know that Ariana is earning in to Venus Minerals in Cyprus and it should be up to 50% later this year. But that only accounts for €2.4 million and that started at the back end of 2019. So there is plenty of cash still left over. CEO Kerim Sener tells us that Ariana is also engaging in further exploration and development across Turkey and the wider region but that is on behalf of the JV and one would hope that it will be rewarded via the existing deal to sell assets into the JV. But we are also now told that: Separately, we are progressing our assessment of several gold and copper-gold projects elsewhere in Eastern Europe, for which we expect to announce further developments during H1 2021……We look forward to updating the market on these and other high-impact initiatives that will be advanced by the Company during the coming months.
OK, so Kerim Sener is still holding his cards close to his chest but it is clear that he has identified some assets which are of interest and now that he has a pile of cash my hope is that a high-impact deal will be done fairly soon……..watch this space! Well, so much for the jam tomorrow, more pressing is the processing plant expansion which is ongoing at Kiziltepe. We are told that it is well underway and due for completion in the second half of this year. My hope is that this will bring gold production up to around 30,000 oz per year and with the ongoing programme, which includes extensions at the now depleted Arzu South pit which was of a higher grade than the currently mined Arzu North and Derya pits and on which there was further positive news today, then that 30,000 oz could head northwards. We should also get news on what is proposed at Tavsan, where a 30,000 oz per year gold facility is planned. My earlier hopes were that we would see it later this year but with Covid restrictions and the JV deal having taken a fair while there has obviously been a delay. However, with a capital repayment plan of just over a year, it does seem that the plan is robust and now that the JV deal has been settled I hope for news on that before too long.
But the prize with the biggest potential is Salinbas. It already has over a million ounces of gold booked but Ariana has only scratched the surface. Even so, there is already a plan for a 50,000 oz per year gold facility but if exploration goes well that figure could move to more like 100,000 oz a year. As part of Ozaltin’s buy-in deal to the JV it is to pony up $8 million which will pay for additional permitting, an Environmental Impact Assessment and a Feasibility study – and presumably more drilling. Clearly at the moment it is another jam-tomorrow story but we should hear rather more on this in the months ahead as we find out whether the Hot Gold Corridor lives up to its name. Ozaltin CEO Mr Muzaffer Ozdemir tells is that we are ready to get off to a flying start – let’s hope so! Ariana’s shares are up to 4.9p on the news, despite Gold continuing to dribble south but with the deal now completed and clearly much to look forward to I am sticking with my 7.5p target and continue to rate the stock, at up to 5.5p, a clear buy.
Filed under: Ariana Resources, Zenith Energy, Zoetic, Barclays, essensys, Nigel Somerville
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