Ariana Resources (LSE:AAU) was trading at 2.32p on Monday after announcing that due diligence work has kicked off for a major joint venture (JV) over its Turkish assets.

Groundwork led by Ariana’s existing partner Proccea Construction and its currently-unnamed proposed JV partner has begun at the Salinbas gold project in north-east Turkey. Global Magnet Sondaj has been contracted to complete around 600m of reverse circulation drilling that will twin certain existing holes previously drilled by Ariana. The programme is expected to complete in just one week due to favourable weather conditions, and an independent laboratory in Izmir will analyse subsequent samples.

Elsewhere, Ariana’s proposed partner – currently referred to as a ‘major Turkish construction and engineering company’ - has commissioned an independent review of Ariana’s Kiziltepe, Tavsan, and Salinbas projects. The work programme forms part of a due diligence period announced as part of the non-binding memorandum of understanding (MoU) agreed between Ariana and the proposed partner towards the end of last month.

The MoU proposes that Ariana will offload 17pc of its wholly-owned Salinbas Project to the firm for an initial $5m and a subsequent $8m injection of equity into the asset. This second payment would take the proposed partner - who would also organise the bank finance needed to bring Salinbas into production – to a 53pc position in the property. This money would be used to complete additional drilling and resource estimation across Salinbas as well as a definitive feasibility study, permitting, public relations, and an environmental impact assessment.

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. Specifically, the partner would take on 53pc of the JV in exchange for a $50m payment that would be split between the Red Rabbit firms.

Elsewhere on Monday, Ariana said that definitive legal agreements concerning the proposed JV are now underway. The company’s managing director Dr Kerim Sener added:

‘We are very pleased to host the due diligence and drilling teams on site at Salinbas and look forward to seeing the results of their work. Fortunately, weather conditions are expected to be reasonable through the period of drilling and the programme will likely conclude within one week. In the meantime, detailed technical, environmental and financial due diligence is underway by the designated independent consultant of the Proposed Partner on the Kiziltepe and Tavsan Projects. Two separate teams are being sent out to the sites during the current week and will be conducting their independent assessments of each of the projects.’

The Salinbas project is wholly-owned by Ariana and consists of the Salinbas gold-silver deposit and the Ardala copper-gold-molybdenum porphyry among other prospects. The total resource inventory of the project area is around 1 million ounces of gold equivalent, and an NSR royalty of up to 2% on future production is payable to Eldorado Gold Corporation.

Meanwhile, the Red Rabbit JV contains a series of prospects within two prolific mineralised districts in the Western Anatolian Volcanic and Extensional province of western Turkey. This region hosts the largest operating gold mines in Turkey and remains highly prospective for new porphyry and epithermal deposits. Kiziltepe is fully-permitted and in production and the total resource inventory across the Red Rabbit project area currently stands at c.605,000 ounces of gold equivalent.

Monday’s update comes during a busy time for Ariana. Alongside the proposed JV over its Turkish projects, the firm announced on 2 December its acquisition, through an earn-in agreement, of up to 50% of Venus Minerals.  Venus is focused on the exploration and development of copper and gold assets in Cyprus and intends to develop a series of prospects as a single entity known as the Magellan Project. The Magellan Project contains a total historical resource of c. 9.5Mt @ 0.6% copper.

Author: Daniel Flynn

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