Shares digital

Metals producer European Goldfields (EGU:AIM) has secured first right of refusal for any discoveries made by exploration group Ariana Resources (AAU:AIM). The agreement is part of a joint venture to develop Ariana’s properties in north-eastern Turkey.

European Goldfields is to take a 20% stake in the group through a £890,000 share placing. It is using the venture as a low-risk entry point to Turkey, with particular interest in the Ardala porphyry copper-gold project acquired by Ariana last year. ‘It is a costly exercise to enter a new country on your own,’ says chief executive David Reading. ‘You need to set up an office, form a local company, buy vehicles and so on. Through Ariana, we are already up and running.’

European Goldfields chose not to acquire Ariana outright, saying it didn’t want to explore all of the junior’s assets. Turkey is dominated by junior exploration companies who are part owned by major producers, holding strategic stakes in case of world-class discoveries.

Two years ago, European Goldfields was worth £200 million and had limited production on one project. Today, with its shares at 312.5p it is valued at £550 million with two producing sites and one development project in Greece, and advanced exploration in Romania. The company is also considering a move into Serbia.

Shares says: The Turkish expansion is a logical progression.

by: Dan Coatsworth