The Ariana Resources Plc (LSE:AAU) share price is notoriously volatile. The company has been working around a strategy of expanding and developing through joint ventures. The most recent investment of the company’s management is an earn-in agreement for the Slivova gold project in Kosovo¹ with TSX-V-listed Avrupa Mineral via its 75%-owned subsidiary Western Tethyan Resources.

In addition to it, the firm’s managing director is increasing focus on Proactive London Studio to provide an update on the gold exploration, development, and production company’s operations around Turkey. While development work is currently on hold in the Tavsan gold mine, Ariana’s leadership remains confident about its future.

With the expansionary strategy intact, is the Ariana share price expected to explode? Let’s take a look.

Key points

• Ariana Resources is advancing and progressing through joint ventures.
• Ariana’s share price is on a bearish run for more than two years
• I believe, with a good management team behind, the Ariane share price will soon recover.

What does Ariana Resources do?

Ariana Resources is an AIM-listed gold exploration, development, and production company. The business focuses not only on precious metals but also on technology metals. Through joint ventures, it identifies and develops mineral resource sites and then advances them to production.

In the past two years, the company collaborated with the following companies.

• Asgard Metals Fund
• Annamite Resources Holdings Pte Ltd

Ariana aims to advance mineral resource opportunities towards production and commercialisation in the globally significant Tethyan Metallogenic Belt. This region extends across Europe and Asia and hosts some of the world’s largest gold, copper, and silver deposits.

The bull case for the Ariana share price

The Ariana share price enjoyed a bullish run from 2019 till the third quarter of 2020. From a price of 1.595p at the start of 2019, the stock rose to 6.25p in August 2020, representing a massive three-fold increase!

According to analysts, this stock was highly undervalued, and a bullish streak was likely to happen. Moreover, the stock continued to climb after the earnings announcement. And with earnings tripling, this was more than enough to maintain investor interest.

This sort of momentum isn’t uncommon with small mining operations. And it seems shareholders are standing by, waiting for another spike.

The bear case for the Ariana share price

After such an impressive bull run, a bearish trend was bound to emerge. However, the latter seems to have lasted far longer than most investors were seemingly expecting for this mining business.

Since the peak price in August 2020, the Ariana share price has been steadily declining to date. The stock has depleted by a whopping 59% since its peak price. Breaking down its fall, the stock depreciated by 18% in 2021 and 25% in 2022. Meanwhile, since the start of 2023, the Ariana share price has continued to drop, falling by yet another 19% year-to-date.

After hitting a 52-week high, the stock was highly anticipated to pull back, hence the steady decline for the remainder of 2021.

In addition to it, the geo-political factors have been majorly adding towards the risks of mining. This, coupled with supply chain issues, rising inflation and the war in Ukraine, has further intensified the pressure on the company’s operation. And the effect has been seen in the company’s share steady decline over time.

Ariana share price prediction

Today shares of Ariana Resources trade around 2.6p with a market capitalisation of roughly £29m. However, it seems analysts remain largely unimpressed with the group’s recent performance, with a range of share price predictions landing between 1.98p and 2.39p.

If these forecasts are accurate, it would suggest the stock is currently overvalued.

Should I buy Ariana shares today?

The Ariana share has seen good days and bad days. However, the bad days seem to have prolonged much longer, which is not a healthy sign for investment. At least, that’s what I think.

While the company’s management is thoroughly focused on its development and expansion through joint ventures, the company’s share price is nowhere near reflecting the growth.

Personally, I’m cautiously optimistic that this business has the potential to turn things around. And eventually, I believe the Ariana share price could deliver some explosive growth in the long run. However, there remains a long road ahead and plenty of obstacles to overcome. Therefore, despite my optimism, I’m keeping these shares firmly on my watchlist.

Related: How to analyse mining drilling results

Article sources

1. Ariana Resources, “Western Tethyan Completes Slivova Gold Project Agreement“

Saima Naveed does not own shares in any of the companies mentioned. The Money Cog has no position in any of the companies mentioned. Views expressed on the companies and assets mentioned in this article are those of the writer and, therefore, may differ from the opinions of analysts in The Money Cog Premium services.