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(Sharecast News) - Ariana Resources announced on Monday it has entered into a binding definitive agreement with Hongkong Xinhai Mining Services to secure immediate funding and advance feasibility work at its wholly owned Dokwe gold project in Zimbabwe.
The AIM-traded miner said the agreement provided for an initial AUD 8m (3.96m) equity investment by Xinhai at 30 Australian cents per CHESS Depositary Interest, inclusive of a non-refundable AUD 500,000 signing fee already received.
It said the funding would support general working capital and the progression of metallurgical sampling, testwork and a definitive feasibility study at Dokwe.
Under the terms of the agreement, Xinhai is in the process of transferring the remaining AUD 7.5m of the initial investment and will receive 26.7m CDIs as part of the first tranche, which was expected to be completed within five business days of signing.
On completion of the tranche, Xinhai would hold 10.19% of Ariana's issued share capital on an undiluted basis and would be entitled to nominate one director to the Ariana board, subject to customary approvals.
Further tranches are conditional on shareholder and regulatory approvals and the execution of binding services agreements.
Ariana said Xinhai would provide metallurgical sampling and testwork services valued at AUD 1m in exchange for 3.3m CDIs, followed by technical services to complete the definitive feasibility study, valued at up to AUD 2m, in return for up to 6.7m CDIs.
In total, the investment could amount to up to AUD 11m, including the signing fee.
Xinhai would also be granted up to 18.3m options to acquire CDIs, exercisable at 50 Australian cents per CDI until 31 December 2027, subject to shareholder approval. The options will be issued in stages alongside completion of each investment tranche.
Admission of new ordinary shares to AIM to underpin the first tranche of CDIs and adviser fee shares was expected on 30 December.
Following admission, Ariana's issued share capital would consist of 2.62bn ordinary shares, with no shares held in treasury.
"We are very pleased to have been able to fast-track the definitive agreement with Xinhai over the past two weeks since the completion of the term sheet," said Dr Kerim Sener, managing director of Ariana Resources.
"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."
At 1200 GMT, shares in Ariana Resources were up 5.85% at 1.46p.
Reporting by Josh White for Sharecast.com.