Alamos’ $470m Turkish sale shines light on Ariana’s undervalued gold

• Alamos’ sale of its Turkish assets to Tumad equates to US$220/oz ($330/oz) gold-equivalent for 1.9Moz gold and 20Moz silver
• Even halving that benchmark, Ariana’s ~470,000oz equity ounces in Turkey alone imply a value significantly above its current enterprise value
• Implies little to no value assigned to Ariana’s 1.4Moz Dokwe project with a Net Present Value (NPV) of US$354m, currently in bankable feasibility study (BFS)

Special Report: Canadian mid-tier Alamos Gold’s US$470 million sale of its Turkish subsidiary to Tumad has highlighted the strong valuations being paid for undeveloped gold ounces – and it puts a spotlight on ASX newcomer Ariana Resources

What does the sale of some of the $19 billion Canadian miner’s assets to a Turkish conglomerate mean for one of the ASX’s newest goldies? In the case of Ariana Resources (ASX:AA2), it means a lot.

Hot Turkish assets

Canadian mid-tier Alamos Gold’s decision this week to offload its Turkish subsidiary to Tumad, owned by the Nurol Corporation, for US$470m has sent a clear message to the market: undeveloped Turkish gold ounces command premium valuations.

The deal—to be paid in three bank-guaranteed tranches—sees Tumad acquire the Kirazlı, Agi Dagi and Çamyurt projects from Alamos.

Tumad is owned by Ankara-based Nurol Holdings which has interests in construction, defence and tourism. It also operates two producing gold and silver mines in Turkey, according to its website.

Together the assets acquired by Tumad hold proven and probable reserves of 1.9Moz of gold at 0.68g/t plus 20Moz of silver or a total of 2.1Moz gold-equivalent at current metal prices.

Based on those reserves, the purchase price equates to roughly US$220/oz (A$330/oz) per gold-equivalent reserve ounce.

That’s a powerful valuation benchmark for Ariana Resources (ASX:AA2), which, amongst other assets, has a Turkish portfolio of ~470,000oz equity ounces held through a 23.5% stake in the 2Moz Zenit Mining operations.

Whilst Ariana’s Turkish ounces are in the measured, indicated and inferred resource categories they are of much higher grade – up to 1.63g/t gold – than Tumad’s newly acquired ounces.

More importantly perhaps, they are already in production. The Zenit operation is expected to produce 25,000oz in 2025 and yield cashflow net to Ariana of $8m a year for the next seven years.

Even if investors ignore the developed nature of Ariana’s resources and haircut the Alamos transaction metric by 50% to allow for the lower resource classification, the valuation this would imply for Ariana’s ounces in Turkey alone is still well above its current enterprise value of ~A$54m, or about A$29 EV/resource ounce.

But Ariana has a much bigger portfolio than just its Turkish mine.

A free option on Dokwe?

Based on the Alamos transaction metrics, investors could be getting exposure to Ariana’s 100% owned 1.4Moz Dokwe project in Zimbabwe, currently going through a BFS, for less than zero. Dokwe is Zimbabwe’s largest undeveloped gold project and has strong economic credentials.

Based on Dokwe’s pre-feasibility study (PFS), its NPV at a US$2750 gold price, roughly $1000 an ounce below recent levels, is a whopping US$354m.

It envisages a 65,000oz per annum operation, an AISC of only US$1,144 per ounce, maximum capital drawdown of only US$82m and delivers an IRR of 75%.

The BFS, due for completion in 2026, is examining multiple opportunities to increase output to 100,000oz per annum for 10 years.

However, the ounces are sliced and diced, the Alamos sale is a timely reminder that premium prices are being paid for quality undeveloped ounces, including in Turkey which is not often high on the radar of Australian investors.

Ariana’s combination of Turkish equity ounces and full ownership of the advanced Dokwe project offers material re-rating potential well beyond its recent ASX debut price.

This article was developed in collaboration with Ariana Resources, a Stockhead advertiser at the time of publishing.

This article does not constitute financial product advice. You should consider obtaining independent advice before making any financial decisions.