Ariana Resources Completes Red Rabbit Joint Venture

12th Jul 2010 08:09

LONDON (Dow Jones)--Ariana Resources PLC (AAU.LN), a gold exploration and development company focused on Turkey, said Monday it completed its joint venture agreement with Proccea Construction Co. on its Red Rabbit Project in western Turkey. MAIN FACTS: -The venture has been established over Ariana's Kiziltepe and Tavsan assets; These have been combined in to a single integrated entity which has become known as the Red Rabbit Project, comprising the Kiziltepe and Tavsan sectors. -The venture will commit $1.4 million to a Feasibility Study, EIA and additional permitting; consulting groups to be engaged and $6.6 million funding to towards plant construction; Drilling results from the recent resource drilling program expected shortly. -Company expects the Kiziltepe sector through to production in two years, and to continue the advancement of the Red Rabbit project area as a whole; Venture partners also intend to grow the venture company beyond its original scope, to include new project development opportunities in the region. -Ariana through its operating subsidiary, Galata Madencilik San. ve Tic. Ltd., entered into a shareholders agreement with Proccea on July 10. -The shareholders agreement provides for the incorporation of a Turkish joint stock company named Zenit Madencilik San. ve Tic. A.S., in which Galata and Proccea may each own a 50%. share holding; Ownership of Galata's licenses and assets, or the properties, within the Red Rabbit Project will be transferred from Galata to Zenit. -From the date of transfer, Zenit will be wholly responsible for funding the development of the Properties. -Proccea has committed to fund the feasibility study and an environmental impact assessment on the Red Rabbit Project during Phase 1 of the project and to commence construction of a gold processing plant during Phase 2, via an earn-in arrangement on the shares to be issued by Zenit; By funding an aggregate of U.S.$8 million, Proccea may earn-in to its 50%. share holding in Zenit; Additional capital requirements for mine construction and start-up have been provisionally estimated at $25 million and the additional funding requirement will likely be completed via a credit facility to be arranged by Zenit. -On the successful commissioning of the gold processing plant, the share of profit within Zenit will be 51% of Galata and 49% of Proccea. -The project development works have been split in to three phases: Phase 1 includes Feasibility Study, EIA, permitting, land acquisition and additional exploration in the vicinity of Kiziltepe; Phase 2 includes construction and commissioning of the mine; and Phase 3 includes production and further investment. -Shares of Ariana at 0707 GMT up 0.13 pence or 5.6%, at 2.4 pence, valuing the company at GBP5.3 million. -By Tapan Panchal, Dow Jones Newswires. Tel +44(0)207-842 9448, [email protected] (END) Dow Jones Newswires July 12, 2010 03:09 ET (07:09 GMT)