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Shares in AIM-listed Ariana Resources (AAU) have been a pain since I recommended them back in February. They duly motored north, only for the steam to be well and taken out by a placing. I still reckon there is excellent value here and continue to look for the 2p mark to be achieved (again).
Today’s news was more results of the company’s work on its Hot Gold Corridor prospects at Salinbas in north-east Turkey which offer more excitement in the form of further gold discovered. Of course, we still need full drilling for certainty but it looks promising.
But what caught my eye in this morning’s announcement was this:
Ample funds available for follow-up work during 2018, with other exploration and development spend across the portfolio expected to be supported from cash-flow.
This looks to be the first official sign that cashflow may be headed Ariana’s way from its joint-venture mine at Kiziltepe. It doesn’t mean no more placings (yet), as there are other costs to meet (PLC costs, for example) but if the company can move forward without the imminent threat of further dilution hanging over it then I sense the shares will re-rate as the market realises it is not rattling the tin.
And all the while, the loans at Kiziltepe are being paid down. Once that is done, Ariana will have some proper income to play with – from April 2020.
I sense that the company knows perfectly well why the shares are where they are, in the light of the quoted statement, and continue to hold firmly with occasional top-ups as funds allow.
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