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Alara Resources Ltd finalises raising, progresses copper-gold financing

Published: 11:00 09 Aug 2016 AEST

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Alara Resources Ltd (ASX:AUQ) has completed its rights issue having closed the offer oversubscribed.

A Total of 72,287,857 shares were offered to eligible shareholders at an issue price of $0.02 per share to raise up to $1.45 million before costs.

The company has not been able to fill the full demand for the shortfall shares and has opted not to issue additional shares at this stage.

Alara recently finalised its latest drilling program at the Al Hadeetha copper-gold project in Oman, with the objective of increasing the confidence of the resource into the Indicated category from Inferred.

During drilling, Alara discovered additional high grade copper and gold mineralisation which sits on top of the existing JORC resource.


Background


Alara has a portfolio of projects in the Middle East and was focused on an infill drilling program during the June quarter at the Al Hadeetha Copper-Gold Projects in Oman.

The company has completed an advanced scoping study on both the Daris and Al Hadeetha Copper-Gold Projects in Oman.

Most recently it completed a feasibility study for the Washihi deposit within the Al Hadeetha project.

The company has completed a definitive feasibility study on the Khnaiguiyah Zinc-Copper Project in Saudi Arabia, which is the subject of legal proceedings.

The company is transitioning to establish itself as a base and precious metals mine development and production company.


June quarter focus

Alara has now completed an infill drilling program for Al Hadeetha Copper-Gold Project, with
additional high grade copper and gold mineralisation being identified on top of existing mineral resources at Washihi.

Highlights from the recent drill results include:

- 61 metres at 0.48% copper, 0.18 g/t gold;
- 6 metres at 1.22% copper, 0.25 g/t gold;
- 7 metres at 2.93% copper, 2.71 g/t gold, 22.37 g/t silver;
- 34 metres at 1.19% copper, 0.27 g/t gold;
- 88 metres at 0.72% copper; and
- 11 metres at 4.69 g/t gold, 0.31% copper and 17.85 g/t silver.

The Washihi JORC Resource estimates have been updated to comply with the 2012 code and are now being revised to incorporate the results of the recent drill program.

The current Washihi resource contains 14.1 million tonnes at 0.80% copper and 0.18 g/t gold.

Project finance is progressing well with the company receiving indicative terms from debt financiers.

Total project costs are estimated at $78.6 million and forecast capital expenditure to complete construction of project is $66.6 million, including contingency and working capital.

The company has received expressions of interest, including indicative terms for debt finance of up to $53 million.


Al Hadeetha Copper-Gold Project

Alara holds a 70% stake in the Al Hadeetha Copper-Gold Project through a joint venture with Al Hadeetha Investment Services.

Alara's partner, Al Hadeetha Investment Services, are associated with the well-known Al Naba group, owned by Sayyid Khalid Al Busaidi and his family.

Al Hadeetha is comprised of 3 exploration licences totalling 105 square kilometres, known as Washihi, Mullaq and Al Ajal.

A feasibility study at Al Hadeetha was recently completed and found the project would return free cash flow of A$109.5 million over 10 years in a conservative base case scenario.

The study forecast the project would generate an internal rate of return of 21% with a A$66.6 million capex cost.

The Washihi mining license application has received approvals from the Ministry of Housing and Ministry of Water and Electricity as part of the overall process.

 

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