TIDMAAU
RNS Number : 5610U
Ariana Resources PLC
25 November 2019
25 November 2019
AIM: AAU
NON-BINDING MoU FOR SALINBAS JOINT VENTURE
Ariana Resources plc ("Ariana" or "the Company"), the
exploration and development company operating in Turkey, is pleased
to announce that it has entered into a non-binding Memorandum of
Understanding ("MoU") with a major Turkish construction and
engineering company (the "Proposed Partner"). The MoU proposes a
series of interlinked transactions which will enable the Company
partially to monetise its successful development of the Kiziltepe
Mine, held via a 50:50 joint venture with Proccea Construction Co.
("Proccea") through Zenit Madencilik San. ve Tic. A.S. ("Zenit"),
and its earlier-stage Salinbas Gold Project, targeting the funding
of the Salinbas asset to production.
Cautionary Statement
THE FINAL TERMS OF THE ARRANGEMENTS CONTEMPLATED BY THE MOU ARE
NOT FINALISED AND THERE IS NO CERTAINTY THAT THE MOU WILL RESULT IN
A BINDING AGREEMENT.
Dr. Kerim Sener, Managing Director, commented:
"This MoU represents a major development in the evolution of the
Company, once the definitive agreements are implemented. It
recognises the considerable value of our assets and the
track-record and success of our exploration and development team.
In particular, the contemplated joint partnership between Ariana,
Proccea and the new partner, will create a formidable exploration,
development and production group focused on Turkey. This will
combine the unique skill-sets of each Partner in a mutually
beneficial and synergistic manner. We look forward to advancing the
proposed MoU in to a joint venture capable of unlocking the full
value of our assets in Turkey, which will also target the
development of a future pipeline of high-value production projects.
It is the goal of the Partners to become one of the premier gold
mining companies operating in Turkey."
Summary of Transaction
The MoU contemplates the disposal of various interests to the
Proposed Partner, including 17% of the Salinbas Project for US$5
million and jointly with Proccea, 53% of Zenit for US$50 million
(to be split equally by Ariana and Proccea). Furthermore, the
Proposed Partner will then inject US$8 million of equity into the
Salinbas Project via an earn-in arrangement and organise the bank
finance to enable this project to be brought into production. The
proposed joint venture would be subject inter alia to due
diligence, entering into binding agreements and shareholder
approval, no later than the end of February 2020.
Ariana currently holds:
1. 50% of Zenit Madencilik San. ve Tic. A.S. ("Zenit"), which
operates the Kiziltepe Mine and its associated exploration and
development properties, notably the Tavsan Project; and
2. 100% of Greater Pontides Exploration B.V. ("Greater
Pontides"), which holds the Salinbas Project, upon which
preliminary exploration work has defined a JORC Indicated and
Inferred Resource of c. 1 million oz gold.
Under the terms of the MoU, once the Proposed Partner has
acquired 17% of Greater Pontides a further budget of US$8 million
will be made available by way of earn-in to take the Proposed
Partner to a total 53% to achieve the completion of the Feasibility
Study and Environmental Impact Assessment ("EIA") of the Salinbas
Project and its associated works (to which Proccea will be
contributing). This budget will be subdivided into the following
major work programmes:
-- Additional drilling and resource estimation
-- Definitive Feasibility Study
-- EIA and permitting
-- Freehold land acquisition, public relations, new licences
In parallel to the above earn-in arrangements, the Proposed
Partner will acquire 53% of Zenit, which will, at the appropriate
time, absorb Greater Pontides, such that on the successful
completion of the earn-in on Salinbas by the Proposed Partner,
Ariana will:
1. hold 23.5% of Zenit which will hold the Kiziltepe Mine,
associated exploration and development properties and the Salinbas
Project;
2. be free-carried on further costs associated with the development of the Salinbas Project;
3. be party to a shareholder and joint operating agreement,
retaining representation on the Zenit board;
4. 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;
and
5. will have received payments totalling US$30 million to
reflect the reduction in ownership percentages.
The Proposed Partner will ultimately hold 53% of Zenit, with
Ariana and Proccea holding 23.5% each.
It is the current intention of the Board to consider
distributing part of this sum as a special dividend to
shareholders, once the mechanics for doing so are established. The
Company will also utilise its enhanced capital position to fund
further growth of Ariana's business. The latter activity will
involve the acquisition of new exploration and development projects
either within Turkey or in other regional jurisdictions and provide
for the advancement of the Company through the development of other
assets held in whole or in part outside of the arrangements
contemplated within the transaction.
Further to the completion of the proposed joint venture, Ariana
will continue as a mineral exploration and development company in
accordance with is core strategy.
Shareholder approval
In the event that the MoU progresses to binding legal
agreements, the Company intends to announce full details of the
Arrangements and seek approval from Shareholders.
This announcement contains inside information for the purposes
of Article 7 of EU Regulation 596/2014.
Contacts:
Ariana Resources plc Tel: +44 (0) 20 7407
3616
Michael de Villiers, Chairman
Kerim Sener, Managing Director
Beaumont Cornish Limited Tel: +44 (0) 20 7628
3396
Roland Cornish / Felicity Geidt
Panmure Gordon (UK) Limited Tel: +44 (0) 20 7886
2500
Atholl Tweedie / James Stearns
Yellow Jersey PR Limited Tel: +44 (0) 20 3004
9512
Dom Barretto / Harriet Jackson arianaresources@yellowjerseypr.com
/ Henry Wilkinson
Editors' Note
About Ariana Resources:
Ariana is an exploration and development company with mining
operations focused on epithermal gold-silver and porphyry
copper-gold deposits in Turkey, the largest gold producing country
in Europe. The Company is developing a portfolio of prospective
licences originally selected on the basis of its in-house
geological and remote-sensing database, which now contain a total
of 1.6 million ounces of gold and other metals (as at end-2017).
Ariana's objective is to cost-effectively add value to its projects
through focused exploration and to develop its operations,
primarily through well-financed joint ventures.
The Company's flagship assets are its Kiziltepe and Tavsan gold
projects which form the Red Rabbit Gold Project. Both contain a
series of prospects, within two prolific mineralised districts in
the Western Anatolian Volcanic and Extensional (WAVE) Province in
western Turkey. This Province hosts the largest operating gold
mines in Turkey and remains highly prospective for new porphyry and
epithermal deposits. These core projects, which are separated by a
distance of 75km, form part of a 50:50 Joint Venture with Proccea
Construction Co. The Kiziltepe Sector of the Red Rabbit Project is
fully-permitted and is currently in production. The total resource
inventory at the Red Rabbit Project and wider project area stands
at c. 605,000 ounces of gold equivalent (as at end-2017). At
Kiziltepe a Net Smelter Return ("NSR") royalty of up to 2.5% on
production is payable to Franco-Nevada Corporation. At Tavsan an
NSR royalty of up to 2% on future production is payable to
Sandstorm Gold.
In north-eastern Turkey, Ariana owns 100% of the Salinbas Gold
Project, comprising the Salinbas gold-silver deposit and the Ardala
copper-gold-molybdenum porphyry among other prospects. The total
resource inventory of the Salinbas project area is c. 1 million
ounces of gold equivalent. An NSR royalty of up to 2% on future
production is payable to Eldorado Gold Corporation.
Panmure Gordon (UK) Limited are broker to the Company and
Beaumont Cornish Limited is the Company's Nominated Adviser.
For further information on Ariana you are invited to visit the
Company's website at www.arianaresources.com.
Ends.
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END
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