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(Sharecast News) - Power Metal Resources updated the market on the progress of its wholly-owned subsidiary Power Arabia on Tuesday.
The AIM-traded firm recently announced the signing of a memorandum of understanding with the Ministry of Investment of the Kingdom of Saudi Arabia during the Future Minerals Forum.
Following that, Power Arabia - established to consolidate all of Power Metal Resources' activities across the Arabian Gulf region - was poised to potentially include projects beyond the gulf through joint ventures with regional entities.
Currently, several binding memoranda for potential joint ventures on existing exploration licences were in the final stages of negotiation.
The company said that, assuming the execution of one or more of those agreements, initial groundwork was anticipated to start in April, after Ramadan and Eid al-Fitr festivities.
Additionally, Power Arabia was in the midst of a pre-initial public offering financing round aimed at funding its activities in the region.
The company said it intends to seek listing on the London capital markets in the foreseeable future.
Conversations with investors, both from the gulf region and internationally, had been ongoing, with Power Metal Resources reporting significant interest among those investors in a regionally-focussed investment vehicle.
"I am very pleased to update shareholders on the progress we are making in this exciting part of our business," said chief executive officer Sean Wade.
"We have now made several trips to the region and are establishing ourselves as a credible partner for a number of existing licence holders.
"We are currently looking at formal arrangements to acquire suitable exploration opportunities with various separate entities, of which several are currently close to execution."
Wade said it was clear that the company's incubator model had resonated with regional investors, adding that it was intending to shortly complete a financing round for Power Arabia with a view to completing transactions in the region and getting started on exploration work.
"As has been the case with previous portfolio transactions, POW is expected to retain a significant shareholding in Power Arabia, giving our shareholders substantial upside potential from discoveries, but without diluting their shareholding in POW and asking them to fund all of the exploration costs.
"Whilst there is never complete certainty of a successful outcome, of either the pre-IPO financing or the listing of Power Arabia on the London capital markets, we are very excited to bring this IPO to London and strongly believe that our model will be successfully replicated across the Arabian Gulf region and will deliver significant value to shareholders."
At 1212 GMT, shares in Power Metal Resources were up 3.81% at 0.8p.
Reporting by Josh White for Sharecast.com.
