Australian minerals exploration and mine development firm Alara Resources has agreed to increase its stake in the Khnaiguiyah zinc-copper project in Saudi Arabia.
The company has entered into a heads of agreement (HoA) with joint venture (JV) partner United Arabian Mining Company, to acquire a further 10% interest in the project, increasing its stake to 60%.
A 2013 definitive feasibility study (DFS) found that the project may require a capital expenditure of $257m and deliver 1.4 million tonnes of zinc concentrate and 210,000t of copper concentrate over its 13 year mine life.
Alara said that although the initial equity arrangement was suitable for a resource development and the DFS work, the JV partners recognised that the equity arrangement would be problematic for the next stages of development.
The HoA, which will allow United Arabian Mining to acquire shares in Alara Resources, includes the agreement to restructure the Khnaiguiyah mining company board and settle all historic claims.
Alara Resources CEO and managing director Philip Hopkins said the agreement between the parties is a milestone for the JV relationship and the Khnaiguiyah project.
"Once the HoA has transitioned into the final amended shareholders' agreement and is approved by Alara shareholders, the company will work closely with the Manajem executive team to take this project into the next stages of finance, development and ultimately production," Hopkins said.
"It is exciting to have such a robust zinc-copper project with so much upside associated with it within what might be the best fiscal and technical regime in the world, and as the zinc metal price cycle is forecasted to reach new high levels."
In addition to the Khnaiguiyah project, Alara owns Daris/Washihi copper-gold projects in Oman.