Aziana Limited (ASX:AZK) has scored a coup, reaching an agreement to sell its Louisiana Oil and Gas Project in the Gulf of Mexico to local operator Triumph Energy I for US$12.5 million ($14.8 million).
Shares in the company should trade higher today on the news.
This consists of a US$250,000 cash consideration upon closing on or before 4 December 2014 and a 3.5% Over Riding Royalty Interest (ORRI) from production capped at US$12.25 million.
Triumph Energy is a financially capable local operator with production facilities on the nearby Main Pass Block 35 field.
It has secured a funding package to develop the Louisiana Oil and Gas Project and expects to commence development drilling during February 2015.
Triumph has also demonstrated its familiarity with the geological setting and operational and service logistics in the Main Pass area.
As a result, Aziana is confident that upon encountering producible hydrocarbons that Triumph will commence ORRI payments.
The company is on the lookout for further oil and gas opportunities.
The area, known as Main Pass, has seen significant production of hydrocarbons since initial development in the 1950's and 1960's by numerous US oil and gas majors.
Evidence of the prolific production of hydrocarbons is clearly demonstrated on the adjacent Main Pass Block 35 that was developed by Chevron in the 1960s.
This field has produced more than 100 million barrels of oil and remains in production.
Triumph is believed to have secured funding for nine wells, which provides potential for the faster flow of royalties to Aziana.
Madagascar Mineral Projects
Besides its search for oil and gas opportunities, Aziana is currently preparing to carry out drilling at the Anosivola Copper Project in Madagascar on targets refined by geophysics.
The company has already completed drill pads and is currently constructing access roads. It expects to start drilling in the first quarter of 2015.
Aeromagnetic surveys show evidence of a major shear zone coinciding with elevated gold and copper geochemistry.
The company is focused on a 600 metres wide shear zone at least 6 kilometres in length between Anosivola East and Bevomanga.
Trenching over the shear zone has returned some exceptional grades of copper, gold and silver mineralisation within the oxide horizon.
Surface trenches returned continuous channel intersections including 3 metres at 6.72% copper, 5.49g/t gold and 224g/t silver.
Previous shallow drilling at Bevomanga intersected malachite- bearing weathered gneiss from 2 metres to 12 metres and strongly quartz-epidote-chlorite-magnetite altered gneiss to a total depth of 50 metres.
Assays of half-core from the hole returned 10.2 metres at 3.66% copper, 0.02g/t gold, and 5.8g/t silver from 1.85 metres.
A gradient array IP survey with follow-up dipole-dipole IP has highlighted eight potential primary sulphide anomalies lying from 70 metres to 150 metres deep as targets for a further drilling campaign.
There is limited in-country drilling capability to test these targets and the company is evaluating the option of either bringing in a rig or partnering with another explorer.
During the September quarter the company granted access to an online data-room to a qualified third party.
Aziana is also looking to increase its graphite holdings in Madagascar and has identified license areas that could offer early exploration success and subsequent production.
Exploration works to date at its Antanisoa Graphite Project have revealed extensive seams of graphitic schists up to 10 metres in thickness with up to 25.7% graphitic carbon.
Manantenina Bauxite Project
Discussions are also underway with a number of interested parties regarding its flagship Manantenina project in Madagascar .
This renewed interest is due to the ban on the export of bauxite from Indonesia.
Aziana has discovered new bauxite (gibbsite) occurrences over a defined area of over 90 kilometres.
The bauxite is typically a 6 metre surficial blanket deposit draped over rolling stratigraphy with available alumina within 2mm screened product of 30-45% and reactive silica RxSiO of less than 2.5%.
Screen product yields have varied between 30 & 50% gibbsiferous bauxite.
Manantenina has the potential to be a 120 to 160 million tonne resource with high available alumina and low reactive silica qualities.
The high available alumina content and low reactive silica and the location next to the Indian Ocean makes it ideal for development of direct shipping of ore trade to new and existing trade to new and existing.
The sale of the Louisiana Oil and Gas Project to Triumph Energy provides Aziana with an immediate cash consideration of US$250,000 and potential continued royalty income of up to US$12.25 million.
That the company is currently capitalised at just A$3.3 million is an indicator that it is undervalued.
It also paves the way for further share price growth from further development on its Madagascar mineral projects and other potential opportunities.
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