Ariana Resources PLC (AIM:AAU, ASX:AA2) has struck a binding deal with a Chinese mining services group that will inject an initial A$8 million of fresh cash into the company and fund key technical work on its Dokwe gold project in Zimbabwe.
The AIM-quoted miner said the agreement marks an important step towards completing a full feasibility study at Dokwe, which it owns outright, and brings a strategic partner onto the register.
Under the deal, Hongkong Xinhai Mining Services, part of Shandong Xinhai Mining Technology & Equipment Inc, will take a 10.19% stake in Ariana once the first tranche completes.
Xinhai has already paid a non-refundable A$500,000 signing fee and is in the process of transferring the remaining A$7.5 million.
The equity investment is priced at A$0.30 per CHESS Depositary Interest, or CDI. CDIs are the form in which Ariana shares trade on the Australian Securities Exchange and are economically equivalent to ordinary shares.
As well as the cash, Xinhai has agreed to carry out metallurgical sampling and testwork worth A$1 million and to complete the definitive feasibility study, the detailed technical and economic blueprint lenders and partners look for before backing a mine, for up to A$2 million. Both would be paid for in shares, subject to shareholder approval.
In total, the package could be worth up to A$11 million to Ariana.
Dr Kerim Sener, managing director, said the agreement had been concluded quickly following an earlier term sheet.
“We are very pleased to have been able to fast-track the definitive agreement with Xinhai over the past two weeks,” he said.
“This sets the scene for our positive relationship and understanding with Xinhai and bodes well for our interactions going forward on the advancement of the Dokwe Gold Project through its feasibility programme.”
Xinhai will also receive options giving it the right to buy more shares at A$0.50 each, exercisable until the end of 2027, and will be entitled to nominate a director to Ariana’s board once certain conditions are met.
The first batch of new shares is expected to be admitted to trading on AIM around 30 December. .