Shares of exploration company Oriole Resources (LON: ORR) are rallying on Tuesday.
The AIM-listed company revealed that Thani Stratex Resources Limited, of which it has a 24.92% interest, has signed a binding Heads of Terms agreement with private investment company Red Sea Resources Ltd.
Oriole's share price has climbed 10.8% to 0.97p per share.
Thani Stratex holds a 100% interest in the Hodine exploration licence in Egypt through its subsidiary Thani Dubai Mining.
Red Sea has made an initial payment for the outstanding fees and charges connected with the renewal of the Hodine licence, gaining them an initial 7% interest.
They will then fund exploration activities by providing $1.2 million within 12 months of the Hodine licence renewal in return for a 51% interest before investing another $1 million over a further 12 months for an additional 34% shareholding to acquire 85%.
If Thani Stratex's shareholding falls below 10% at any time, its interest shall be converted to a 1.5% net smelter return royalty on future gold production from Hodine, payable quarterly.
Oriole's shareholding in Thani Stratex has been diluted down to 24.92% from 26.10%.
“We are very pleased to support this agreement, it will bring immediate funding, a new team and exploration programme to the licence, which I will be reviewing and supporting through my role as the TSR Board representative,” said Oriole Resources CEO, Tim Livesey.
“Having an existing JORC Inferred Resource of 209,000 ounces of gold at Anbat and a non-JORC Inferred Resource of 520,000 ounces of gold at Hutite, there is ample evidence of the prospectivity within the area,” added Livesy.
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