Marjan Project
(Alara - 50%, United Arabian Mining Company (Manajem) – 50%, of “Marjan Mining Company LLC” (MMC) (to be incorporated))
Background
Alara has recently secured a 50% interest in the Marjan Project in Saudi Arabia.
Project Summary
- Predominantly gold prospect with associated silver, zinc and copper
- Historical drilling in the Marjan Project area has returned values up to 7g/t Au, 31.3 g/t Ag, 4.7% Zn, and 1.6% Pb over 3m
- Grab samples from the Marjan Project area have returned values of up to 0.7% Cu, 22.4% Zn, 100g/t Ag , 2.18g/t Au and 5.4% Pb
- The Marjan Project is located within trucking distance approximately 30kms south south-west of Alara’s flagship Khnaiguiyah Zinc Copper Project
The Marjan Project comprises three Exploration Licences that have a combined area of approximately 260km2. Based on limited historic exploration work, the Company believes these licences are prospective for gold, silver, copper and zinc.
They are located close to the Khnaiguiyah Project as illustrated by Figure 4.
Joint Venture Agreement Terms
Alara Saudi Marjan Operations Pty Limited (a wholly owned subsidiary of Alara Resources Limited) (Alara) entered into a Shareholders Agreement (dated 17 April 2011) with United Arabian Mining (“Manajem” in Arabic) Company (Manajem) for Alara to acquire a 50% interest in the Marjan Project licences via the formation of a new joint venture company (JVCo), which will receive transfer of the licences from Manajem and in which Alara will have a 50% shareholding.
Alara will fund (as loan capital to JVCo repayable out of JVCo’s net profits) all exploration, evaluation and development costs up to a “decision to mine” (supported by a BFS). Thereafter, the parties will contribute to all cash calls in proportion to their respective interests in JVCo or be diluted in accordance with an industry standard dilution formula whereby the initial base value shall be set at the capital costs defined under the DFS.
The Marjan Project exploration licences will be transferred from Manajem into JVCo upon Alara completing a minimum US$1 million funding into JVCo (within a 2 year term). A ‘Resource Bonus’ is also payable to Manajem calculated at the rate of US$0.50 per ounce of contained gold (or gold equivalent of copper, zinc and silver) within a JORC Code compliant Indicated Resource determined at a cut-off grade of 0.5g/t gold (or equivalent) and with a minimum average grade of 3g/t gold (or equivalent) delineated within the Project area.
JVCo will be managed by a Board of Directors with 2 nominees from each of Alara and Manajem and with a Saudi Arabian independent Director to be appointed by agreement of the parties. A condition precedent to the Shareholders Agreement is the incorporation and registration of JVCO, which is expected to be completed within the next one to two months, and the execution of ancillary agreements arising therein.
Alara has also completed payment of US$200,000 in February and April 2011 to Shahayd Trading Establishment (Saudi Arabia) pursuant to a Consultancy Agreement (dated 19 October 2010) for the introduction of the Marjan Project to Alara.
