The London-quoted equity of Ariana Resources (AIM: AAU) gained more than 10% on Thursday after it announced an exploration alliance with the world’s biggest gold producer, Newmont Corp (NYSE: NEM, TSX: NGT).
The alliance will focus on copper and gold exploration in south-eastern Europe via Ariana’s 75%-owned Western Tethyan Resources (WTR) subsidiary, focusing on prospective regions within Bosnia and Herzegovina, Bulgaria, Greece, Kosovo, North Macedonia and Serbia.
The Tethyan Metallogenic Belt is one of the world’s foremost metal-producing regions. It is also one of the longest and most extensive, going through 33 countries, with six significant sub-regions differentiated along the belt.
The western side of the belt is the richest and is known for two main periods of gold and copper-rich magmatism, which occurred during the Cretaceous and Cenozoic eras. The Cretaceous aged deposits are dominantly copper-gold porphyry, high-sulphidation epithermal and volcanogenic massive sulphide deposits, whereas, in the Cenozoic magmatic belt, copper is significant in porphyry systems only.
The Tethyan Metallogenic Belt is one of the world’s foremost metal-producing regions. Credit: Western Tethyan Resources.
Under the exploration alliance agreement, Newmont will invest US$2.5 million in Ariana, based on the 10% premium to the 30-day volume-weighted average price to fund the alliance’s activities. Newmont will also open its regional database to Ariana.
The alliance will use the teams established by WTR and Ariana.
The alliance is set to run for an initial five-year period, with Newmont retaining an option to continue its investment in Ariana.
Should the alliance succeed in identifying a project of merit, it will initially be held 100% within WTR, and Newmont will have the option of investing a further US$1 million in the project over a subsequent two-year period to earn up to 60% interest.
Further expenditures of US$15 million on a pre-feasibility study, which establishes a Joint Ore Reserves Committee or National Instrument 43-101 resource of over two million ounces gold, will enable Newmont to earn-in to 75%.
Should Newmont decide to develop a mining project, funding will be on a pro-rata basis unless WTR chooses not to contribute, in which case Newmont will earn-in to a maximum of 85%.
If either party withdraws from a given project or dilutes below 10%, the party will relinquish its interest in return for a 2% net smelter return royalty.
Ariana has also renewed through to 2031 an existing data licence agreement with Newmont for prospects in Turkey.
Ariana’s MD, Dr. Kerim Sener, believes the partnership will benefit from Newmont’s deep understanding of the region.
“We are exceptionally pleased to partner with Newmont on the exploration for large-scale copper-gold deposits across south-eastern Europe, via Western Tethyan Resources. This area was previously explored primarily in the 1980s and 1990s by entities since absorbed into the Newmont group, such as Normandy Mining. Newmont is also providing significant exploration expertise, including the potential deployment of several proprietary exploration technologies,” said Sener in a media release.
WTR MD Mentor Demi described the region as one of the world’s last underexplored and prospective area plays. “With our extensive expertise in the region and Newmont’s significant capabilities, database and exploration technologies, we are confident that we will make several new copper-gold discoveries and consequently extend our cooperation beyond the initial five-year period,” said Demi.
Ariana shares closed 7.03% higher at 3.96p apiece in London on March 24, easing the 12-month loss to just more than 16%.
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