Alecto Minerals narrows losses, upbeat about Centamin alliance

3rd Jun 2013 16:19

Shares in Alecto Minerals surged on Monday after the AIM-listed multi-commodity explorer narrowed its full-year loss and hailed a 'transformational' deal with FTSE 250 gold miner Centamin.The company announced last week that it has entered into a new agreement with Centamin to look for opportunities in Ethiopa. If the joint venture (JV) is signed, the FTSE 250 firm will commit $1.8m to earn a 51% interest in Alecto's existing Wayu Boda project in the country, and will invest a further $6.0m for a total 70% stake to implement the second expenditure commitment. If the JV looks to develop Alecto's other project in the region, Aysid-Metekel, Centamin will invest more.Alecto's Chairman Mike Johnson said on Monday: "The alliance will allow both companies to evaluate, and potentially pursue together, opportunities offered by certain mining projects identified within the Federal Democratic Republic of Ethiopia, which is rapidly emerging as a highly prospective gold destination."As part of the new relationship, Centamin is to invest £250,000 in Alecto by way of a share subscription at a price of 1.6p per share, a 74% premium to the share price the day before the announcement was first made (May 28th). Alecto reported a pre-tax loss of £1.10m for 2012, better than the £1.24m reported in the prior financial year which was hit by a £0.27m write-down. No revenues have yet been realised, as is common with miners in the early stages of exploration.The firm's cash position at the end of December was £0.85m, up from £0.72m in 2011.The stock was up 11.1% at 1.5p before the close of trade on Monday. The share price, which has jumped nearly 70% over the past week, values Alecto at £5.74m.