ALO.L Share News (ALO)

Alecto Minerals has formed a strategic alliance with Centamin to pursue gold projects in Ethiopia. The two have entered into a non-binding heads of terms agreement for a proposed joint venture for opportunities within the Federal Democratic Republic of Ethiopia. Alecto owns gold projects Wayu Boda and Aysid Metekel in Ethopia. Following a joint venture agreement, Centamin will inject an initial $1.8m over the initial expenditure commitment and a further $6.0m if they elect to implement the second expenditure commitment in order to earn a 51% and 70% interest respectively.Centamin will invest £0.25m in Alecto by way of a share subscription at a price per share of 1.6p, a 74% premium to the share price at close of business Tuesday. "This is a potentially transformative deal for Alecto that endorses the work we have completed and the quality of our portfolio in Ethiopia," said Alecto's Managing Director, Damian Conboy."If the joint venture agreement is signed, with Centamin's investment and technical input, we believe we can rapidly advance the Wayu Boda gold project, and potentially our Aysid Metekel Project, to create value for our shareholders. We look forward to working with Centamin to explore our land package in Ethiopia and potentially develop further interesting projects."Broker SP Angel said: "We believe the Wayu Boda and Aysid Metekel prospects offer good potential for significant discovery and can see why Centamin are interested to look further at these projects. "Joseph El-Raghy, Centamin's CEO, has always had an interest in the geology and potential of the Nubian Shield, eg Ethopia, and it is good to see the company follow this interest at low cost but with the offer of potential discovery."And added: "Centamin has all the more reason to look to expand outside Egypt with a number of challenges to its ownership of the Sukari gold mine since the Mubarak government fell. We are not intimating any connection with the Mubarak government but Egypt has become a less certain place since the change of regime."Shares in Alecto rose 36.8% to 1.3p at 12:25 on Wednesday while Centamin increased 1.69% to 39.21p.RD