Ariana Regulatory News (AAU)

7 December 2020

AIM: AAU

JOINT VENTURE CONDITIONAL AGREEMENTS COMPLETED

Ariana Resources plc ("Ariana" or the "Company"), the AIM-listed exploration and development company operating in Europe, is pleased to announce the completion of conditional agreements on its joint venture with Özaltin Holding A.Ş. ("Joint Venture" or "JV"), via its subsidiary, Özaltin Insaat, Ticaret and Sanayi A.S. (collectively "Özaltin") and with Proccea Construction Co. ("Proccea") (collectively "the Parties"). Özaltin will be acquiring 53% of both Pontid Madencilik Sanayi ve Ticaret A.Ş. ("Pontid"), the owner of the Salinbas Project ("Salinbas") and the existing Zenit Madencilik San. ve Tic. A.Ş. ("Zenit") joint venture which is currently owned by Ariana in a 50:50 partnership with Proccea.

The Joint Venture with Özaltin and Proccea involves the partial disposal of the interests of the Company in Zenit and Pontid in exchange for US$35.75 million in cash ("the Transaction"). On completion, Ariana will retain a 23.5% interest in the Joint Venture, as will Proccea. The Parties have also agreed to the sale of Ariana's remaining projects, under its subsidiary Galata, to Zenit for an additional US$2 million in cash (as announced on 2 December 2020).

Highlights:

· JV to continue the development of the 0.6Moz Red Rabbit Project and to advance the 1.5Moz Salinbas Project.

· JV to be owned 53% Özaltin, 23.5% Ariana, 23.5% Proccea, with Proccea as Manager.

· Cash payment to Ariana of US$37.75 million, before costs and taxation, inclusive of the sale of Ariana's remaining projects to Zenit.

· US$8 million to be committed by Özaltin to fund a Feasibility Study, EIA and additional permitting on Salinbas.

· Ariana to continue exploration across the JV projects with the aim of defining additional resources and in the pursuit of new project opportunities elsewhere.

· The Transaction remains conditional inter alia on Ariana shareholder approval, following the publication of a Circular to Shareholders and the satisfactory completion of a General Meeting of the Company. The Transaction is also conditional on the necessary regulatory approvals in Turkey.

Dr. Kerim Sener, Managing Director, commented:

"In preparing this announcement, I have chosen to repeat and reflect on the comments made when we entered into our original JV with Proccea in 2010, much of which is wholly relevant to the present:

{"This JV […] has created a solid set of foundations to spur the growth of your Company. We are delighted to be in partnership with a strong and competent JV partner and we look forward to adding further value to our assets via this JV. The partners are aiming to see the Kiziltepe Sector through to production in approximately two years, and to continue the advancement of the Red Rabbit project area as a whole. Indeed, the partners also intend to grow the JV company beyond its original scope, to include new project development opportunities in the region."}

While it took our original JV four more years to bring Kiziltepe into production, jointly navigating the associated permitting and financing hurdles had the effect of adding significant strength, resilience and trust to our partnership. Furthermore, the closing line of our 2010 statement was particularly prophetic, and it is upon these solid foundations that we have chosen to further enhance our JV with the addition of Özaltin into our proven partnership with Proccea. Özaltin brings significant expertise and capacity in infrastructure development in Turkey and has been responsible for several large-scale government funded projects in recent years. We look forward to working with Özaltin and with our original partners, Proccea, to continue to develop a successful and profitable mining business in the years ahead".

Muzaffer Ozdemir, CEO, Özaltin Holding A.S., commented:

"We are excited to be entering into a partnership with Ariana and Proccea. We recognise the capabilities demonstrated within their existing JV and can see the opportunities to grow their active mining portfolio. In particular, we are keen to see the Tavsan Mine developed as the second operation within the JV, while we collectively work towards bringing the Salinbas Project through feasibility and into development. We are now poised to become a substantial gold producer in Turkey, demonstrating capabilities spanning exploration, process design, construction and mining. There are few companies, either nationally or internationally that have this level of full-spectrum capability in the gold mining industry."

Conditions Precedent to Completion

Remaining significant conditions precedent to completion of the Transaction include:

· Approval for the Transaction through the Competition Authority in Turkey.

· Ariana shareholder approval to be sought for the Transaction at a General Meeting, for which a Circular is expected to be sent to Shareholders during the week commencing 7 December.

Details of the Joint Venture

The Company, through its operating subsidiary, Ariana Exploration and Development Ltd and Galata Madencilik San. ve Tic. Ltd. ("Galata"), entered into two separate share purchase and shareholders agreements ("Shareholders Agreements") with Özaltin and Proccea on 4 December 2020. One shareholders agreement relates to the acquisition of 53% of Zenit by Özaltin for US$50 million, to be split equally between Ariana and Proccea against the transfer of 26.5% shares each in Zenit. The second agreement relates to the acquisition of an initial 17% of Pontid for US$5 million. Under the terms of this latter agreement, Özaltin commits to injecting a further US$8 million of equity into Pontid in order to increase its shareholding to 53% of Pontid from the outset. This will be mirrored by a commitment from both Proccea and Galata to acquire 23.5% each of Pontid for US$5.75 million each in cash. The Company has also entered into a licence transfer agreement between Galata and Zenit, concerning the sale of three peripheral licences, which include the Kizilcukur Project ("Satellite Projects") to Zenit for US$2 million in cash.

The Shareholders' Agreements govern the principles of the new Joint Venture and the operation of the JV company prior to and following the merger of Pontid into Zenit. On final completion of the Transaction, all interests in the projects by the parties will be held through Zenit. Zenit will be owned 53% by Özaltin, 23.5% by Ariana and 23.5% by Proccea. Ariana and Proccea will maintain board representation on Zenit, with one director each, and Özaltin will be able to appoint two directors. Management control will remain with Proccea, and both the Ariana and Proccea shareholdings are free-carried (up to a development decision) in respect of the feasibility stage development of Salinbas, and are subject to minority protection rights through the Turkish Commercial Code. Control of Zenit will be based on agreement of 75% of the voting shares, equivalent to three out of the four directors, except in special cases, such as amendments to the company's articles of association, where unanimous approval is required.

Prior to the Transaction Ariana holds:

1. 50% of Zenit, which operates the Kiziltepe Mine and its associated exploration and development properties, notably the Tavsan Project; and

2. 100% of Pontid, which holds the Salinbas Project, upon which preliminary exploration work has defined a JORC Measured, Indicated and Inferred Resource of c. 1.5 million oz gold.

3. 100% of the Satellite Projects held via Galata.

Following the Transaction Ariana will:

1. hold 23.5% of Zenit which will hold the Kiziltepe Mine, Tavsan Project and associated exploration and development properties (including the Satellite Projects), in addition to the Salinbas Project;

2. be free-carried on further costs associated with the feasibility-stage development of the Salinbas Project, up to a development decision;

3. be party to a shareholder and Joint Venture agreement with Ozaltin and Proccea, retaining representation on the Zenit board;

4. be responsible for exploration across the Joint Venture, which will be reimbursed at cost plus a bonus of two times the exploration cost for increases to project resources of over 10% or following the vend-in of new projects; and

5. have received payments, before costs and taxation, totalling US$30 million from Ozaltin for the dilution in its interests in Zenit and Pontid, and US$5.75 million from Proccea to reflect the reduction in ownership percentage in Pontid.

6. be receiving US$2 million from Zenit for the transfer of the Satellite Projects.

The Company intends to utilise its enhanced capital position to fund further growth of Ariana's business. The latter activity may involve the acquisition of new exploration and development projects either within Turkey or in other regional jurisdictions and provide for the advancement of the Company through the development of other assets held in whole or in part outside of the arrangements contemplated by the Transaction. In order to advance its active and advanced development projects in Turkey, Ariana will obtain the services of Proccea for the ongoing development of the Joint Venture over a period of two years, while the Salinbas Project is being advanced through feasibility. Further to the completion of the proposed Transaction, Ariana will continue as a mineral exploration and development company in accordance with is core strategy.

It is the intention of the Board to distribute a special dividend amounting to approximately 50% of net proceeds, after costs and taxation, to shareholders, once a capital reorganisation is completed, Court approval is obtained and a General Meeting (separate to the general meeting to approve the Transaction), can be convened; the dividend distribution will also be dependent on the payment of an intercompany dividend from Turkey.

Further Financial Information on Zenit and Pontid - Financial Effects of the Transaction

The audited 31 December 2019 statutory accounts and the unaudited Interim accounts to 30 June 2020 for Ariana reported £7.9 million and £3.0 million respectively, as their 50% share of the profits of Zenit, and £7.8 million and £10.0 million respectively, as their 50% share of Zenit's net assets.

With regard to Pontid, the audited 31 December 2019 statutory accounts and the unaudited Interim accounts to 30 June 2020 for Ariana, consolidated losses of £0.1million and £0.0 million respectively, and had consolidated net assets of £1.5 million and £1.4 million. In the unaudited Interim accounts to 30 June 2020 for Ariana, Pontid (and hence the Salinbas Project) is carried at a value of £15.5 million within Intangible Exploration Assets.

In summary, the Company will receive US$37.75M before costs and taxation and will now continue to equity account for its ongoing 23.5% share of the profit and net assets of Zenit, which in turn will consolidate 100% of the assets and liabilities of Pontid going forward.

About Özaltin Holding A.S.

Özaltın Holding A.Ş. (www.ozaltin.com.tr) is a privately-owned conglomerate active in Turkey and several other countries, in the construction, transportation, energy, tourism and agriculture sectors. The company was initially established as Özaltın Construction in 1965 by Nuri Özaltın, who originated from Artvin Province in Turkey. The company has been involved in the construction of major mass housing, hospital, hotels and industrial buildings, dams and hydroelectric power plants, irrigation and drainage systems, drinking water and water treatment plants, highways, tunnels, power distribution infrastructure, oil and gas pipelines as well as pumping and regulator stations. Recent large-scale construction projects include hydroelectric dams, with installed annual power production capacity of 5.5 billion KWh and the Gebze-Orhangazi-İzmir Motorway Build-Operate-Transfer Project of which it is a 22-year consortium partner.

About Proccea Construction Company

Proccea Construction Co. (www.proccea.com) is an engineering, procurement, construction and management company providing construction, infrastructure and industrial services to public and private clients. The company maintains a network of offices in Turkey, Saudi Arabia, Afghanistan, Iraq and Libya. Proccea specialises in turn-key solutions for a variety of business sectors ranging from the development of gold processing plants to the construction of major hotels. The mining industry service is provided by CH Engineering & Consultancy ("CH"), a business division of Proccea. CH provides engineering, installation and technical services for such precious-metals processing routes as heap leach, carbon-in-leach ("CIL") and carbon-in-pulp ("CIP"). In Turkey, they are the joint venture partners with Ariana in the Kiziltepe gold mine, and its other activities include the engineering, procurement and construction management ("EPCM") of the Kişladag gold mine (Eldorado Gold) and the Oksut gold mine (Centerra). Other projects in Turkey include the Copler gold mine (Anatolia Minerals), Mastra gold mine (Koza Gold) and the Gümüşköy silver mine (Eti Gümüş). Internationally, CH processing plant commissions have included Chovdar gold mine in Azerbaijan, the Zarcan gold mine in Iran, the Knelson gold mine in Kazakhstan, the Amesmessa gold mine in Algeria, the Kitila gold mine in Finland, the Minera Triton gold mine in Argentina and the Maaden gold mine in Saudi Arabia.

This announcement contains inside information for the purposes of Article 7 of EU Regulation 596/2014.

Contacts:

Editors' Note:

About Ariana Resources (details as current and before completion of the JV):

Ariana is an AIM-listed mineral exploration and development company operating in Europe. It has interests in gold production in Turkey and copper-gold assets in Cyprus. The Company is developing a portfolio of prospective licences in Turkey, which contain a depleted total of c. 2.1 million ounces of gold and other metals (as at July 2020) in JORC resources.

The Red Rabbit Project is comprised of the Company's flagship assets, the Kiziltepe and Tavsan gold projects, and is part of a 50:50 Joint Venture with Proccea Construction Co. Both assets are located in western Turkey, which hosts some of the largest operating gold mines in the country and remains highly prospective for new porphyry and epithermal deposits. The Kiziltepe Sector of the Red Rabbit Project is fully permitted and is currently in production. The total depleted JORC resource inventory at the Project and its wider area is c. 500,000 ounces of gold equivalent (as at April 2020). At Kiziltepe a Net Smelter Return ("NSR") royalty of up to 2.5% on production is payable to Franco-Nevada Corporation. At Tavsan an NSR royalty of up to 2% on future production is payable to Sandstorm Gold.

The 100% owned Salinbas Gold Project is located in north-eastern Turkey and has a total JORC resource inventory of c. 1.5 million ounces of gold. The project comprises three notable licence areas: Salinbas, Ardala and Hizarliyayla, all of which are located within the multi-million ounce Artvin Goldfield. The "Hot Gold Corridor" contains several significant gold-copper projects including the 4 million ounce Hot Maden project, which lies 16km to the south of Salinbas and 7km south of Hizarliyayla. A NSR royalty of up to 2% on future production is payable to Eldorado Gold Corporation on the Salinbas Gold Project.

Ariana is also earning-in to 50% of UK-registered Venus Minerals Ltd ("Venus") and has to date earned into an entitlement to c. 12%. Venus is focused on the exploration and development of copper-gold assets in Cyprus, which includes the Magellan Project on which a JORC resource of 8.5Mt @ 0.63% Cu (+ Au, Ag, Zn) has been defined.

Panmure Gordon (UK) Limited is broker to the Company and Beaumont Cornish Limited is the Company's Nominated Adviser and Broker.

For further information on Ariana you are invited to visit the Company's website at www.arianaresources.com.

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