Ariana Resources PLC (AIM:AAU)'s all-paper acquisition of Rockover Holdings offers 'compelling value'.
That, at least, is the conclusion of WH Ireland Capital Markets (WHI), which has taken a closer look at the 'value accretive' transaction.
Not only does it shift the geographical focus of the business from Turkey, but it also introduces a gold asset of significant scale.
While the Dokwe project is in Zimbabwe, which historically, has been a difficult jurisdiction to navigate, there is expertise at Rockover that will help expedite progress, WHI said.
"Zimbabwe has its day-to-day operating difficulties obviously, but these can be, and are, managed," the UK broker said.
"Rockover comes with its own management team who are well-versed and immersed in Zimbabwe.
"It has navigated permitting, exploration licensing, drilling and project planning to come up with a compelling investment proposition.
"And Ariana has bought it at a price which reflects its own historic discovery cost and comparable peer transactions – in our view representing great value for Ariana."
The Dokwe project, described by WHI as a low-risk opportunity with high returns, involves an established open-pit mining setup with a JORC resource and a positive pre-feasibility study (PFS).
The merger integrates Rockover's assets, including the promising Dokwe North deposit, which boasts an established resource of 1.2 million ounces of gold and an annual production potential of 60,000 ounces of gold, with prospects of increasing to 100,000 ounces.
The current gold price recalibration in the PFS from $1,650 to $2,000 per ounce augments the project's future profitability, ensuring a robust reserve base and improved project economics despite rising capital and operational costs.
Moreover, the potential for further exploration and resource expansion at Dokwe Central, which is not yet factored into the mine plan, could substantially enhance the project's output and lifespan.
WHI hasn't updated its fair value for Ariana shares (yet), which stands at 5.5p. That's still more than double the current price of 2.6p.