Wednesday saw Ariana Resources (LSE:AAU) reveal that a detailed assessment of its portfolio of Turkey-based gold assets has now completed with respect to a potential joint venture (“JV”). The £26.7 million explorer and developer said technical consultants to its proposed partner have completed an initial draft due diligence report covering its Kiziltepe, Tavsan, and Salinbas projects.
A memorandum of understanding (“MoU”) for the JV has now been extended to 30 April to enable the firm – currently identified as a “major Turkish construction and engineering company" – to review the information. Elsewhere, Ariana said that draft definitive legal agreements for the partnership are being reviewed by all parties involved.
Joint venture discussions for the project began last November when Ariana revealed the terms of the non-binding MoU, prompting a 30% increase in its share price at the time. If the JV goes ahead, the firm will sell a 17% stake in Salinbas to its proposed partner for $5 million. The third-party will then inject a further $8 million of equity into the asset via an earn-in arrangement and organise the bank finance to enable it to be brought into production. This would take its total position to 53%.
Alongside the Salinbas deal, the MoU also lays out some transactions for the Kiziltepe and Tavsan projects – currently held in a 50:50 JV called Red Rabbit between Ariana and Proccea Construction. Specifically, the partner would take on 53% of the JV in exchange for a $50 million payment that would be split between the Red Rabbit firms.
On Wednesday, Ariana’s managing director Dr. Kerim Sener said:
"We are pleased to report the completion of the due diligence work of the technical consultants. A period of internal review will now be conducted by the Proposed Partner and Proccea. In addition, draft definitive legal documentation has been prepared and is being reviewed by the Parties. We look forward to reporting further on the proposed deal in due course."
The Salinbas gold project is based in north-east Turkey and has a total resource inventory of around 1 million ounces of gold equivalent. The asset is made up of three licence areas - Salinbas, Ardala and Hizarliyayla – and is based in an area known as the "Hot Gold Corridor". This contains several significant gold-copper projects including the 4 million ounce Hot Maden project, which lies 16 kilometres to the south of Salinbas.
Meanwhile the Kiziltepe Sector of the Red Rabbit Project is fully permitted and is currently in production. The total resource inventory at the project and its wider area is around 605,000 ounces of gold equivalent.
Author: Daniel Flynn
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