TIDMAAU
RNS Number : 8269N
Ariana Resources PLC
26 May 2020
26 May 2020
AIM: AAU
KIZILTEPE QUARTERLY OPERATIONAL UPDATE
Ariana Resources plc ("Ariana" or "the Company"), the AIM-listed
exploration and development company operating in Europe, is pleased
to announce its operating results for the quarter ended 31 March
2020 for the Kiziltepe Mine ("Kiziltepe" or "the Project") in
Turkey. Kiziltepe is part of the Red Rabbit Joint Venture ("JV")
with Proccea Construction Co., and is 50% owned by Ariana through
its shareholding in Zenit Madencilik San. ve Tic. A.S.
("Zenit").
Highlights:
-- Gross quarterly income of US$8.84 million at an average
realised gold price of US$1,599 per ounce, against an average
revenue per gold ounce of US$1,724 (due to silver credit)*.
-- Production and sale of 5,129 ounces of gold during the quarter ending 31 March 2020.
-- Operating cash costs for the quarter are estimated at US$533 per ounce(#) .
-- 31,421 ounces of silver was not sold during the period due to
adverse price conditions and has been retained in stock.
-- Operational mill availability running at 99% and utilisation at 99% during March.
-- 53,840 tonnes ore milled during the period ending 31 March
2020 at an average head grade of 3.22 g/t Au.
-- Process recovery of gold remains high at 92.5%.
-- Kiziltepe Mine currently remains on track to deliver on the
2020 production target of 18,000 ounces of gold.
Dr. Kerim Sener, Managing Director, commented:
"Production during the first quarter of 2020 has provided
another pleasing result, which was delivered in part during the
current pandemic. Our business, being considered an essential
industry, was allowed to continue and operations remain largely
unaffected despite the introduction of various risk mitigation
procedures at the mine site and an overall reduction of active
staff levels. Indeed, our operations in to the current quarter are
continuing in accordance with the mine plan.
"It is also important to note that the average monthly
production from Kiziltepe during Q1 and in to the current quarter
is currently running above target. This is in part due to higher
material movements and the consequent accessibility of optimal
grade ore feed throughout the period. Assuming production is able
to continue uninterrupted through the current quarter, we remain on
track to deliver on our production target for the year."
This announcement contains inside information for the purposes
of Article 7 of EU Regulation 596/2014.
Current Developments:
-- Production of ore from the open-pits achieved an average rate
of 30,827 tonnes per month over the period, with a peak rate of
over 31,891 tonnes achieved in February.
-- Operations in the Arzu North and Derya areas are continuing
as planned, with mining undertaken primarily from Arzu North during
the period.
-- Following the repayment of the US$33 million construction
capital loan to Turkiye Finans Katilim Bankasi A.S., the JV is
largely free of debt but maintains a separate working capital loan
balance with the bank of approximately US$8.5 million which is
expected to be repaid in full by October 2021.
* All production figures are quoted gross with respect to the JV
in this announcement.
(#) Operating cash costs are inclusive of on-site costs and
off-site charges and royalties specific to the project. It also
includes adjustments for stockpile balances at the end of each
quarter, in addition to an adjustment for by-product silver. They
exclude finance costs, taxes and development capital. The
definition used to derive the cash costs is essentially the same as
that used within the feasibility study. This cash cost was
calculated based on unaudited figures obtained from Zenit.
Table 1: Production statistics for the Kiziltepe Mine in Q1 2020
and for the period mid-March 2017 to end-December 2019 (life of
mine to date).
Measure Unit Q1 2020 Q4 2019 Total Production
Life of
Mine to
Date (#)
Plant feed grade g/t Au 3.22 4.42 4.15
------------- --------- --------- -----------------
Gold produced Troy Ounces 5,129 7,318 70,377
------------- --------- --------- -----------------
Silver produced Troy Ounces 67,459 107,074 738,356
------------- --------- --------- -----------------
Gross income US$'000 8,844 12,784 105,754
------------- --------- --------- -----------------
Operating cash cost
of production US$/oz 533 500 n/a(1)
------------- --------- --------- -----------------
Average revenue per
gold ounce(2) US$/oz 1,724.24 1,736.30 1,502.68
------------- --------- --------- -----------------
Average realised
gold price US$/oz 1,598.90 1,484.07 1,342.00
------------- --------- --------- -----------------
(1) Cash costs are not provided for the purposes of the life of
mine due to the operation having been in ramp-up during part of the
period. Costs incurred during the ramp-up period are not reflective
of estimated operating costs over the longer term.
(2) Average revenue per gold ounce accounts for both the gold
and silver sold during the period and is calculated by dividing the
gross income by only the gold ounces sold in the period.
(#) Re-stated following year-end mine and mill
reconciliation.
Summary of Project
The Kiziltepe operation is currently expected to deliver
approximately an average of 20,000 oz* gold equivalent per annum
over eight years of initial mine life, for a total of up to 160,000
oz* gold equivalent based on current resources. The operating
company, Zenit Madencilik San. ve Tic. A.S. (50:50 JV between
Ariana and Proccea) is making remaining repayments against a
working capital loan from Turkiye Finans Katilim Bankasi A.S. based
on a contractual schedule. Construction capital loan repayments
totalling US$33 million were completed in April 2020, with excess
cash-flow from the operation used to make proportional repayments
of loans provided by Ariana and Proccea jointly to the JV for
exploration and development respectively. After the repayment of
all loans, profits from the operation will be shared on a 51:49
basis between Ariana and Proccea respectively.
Commercial production was initiated at Kiziltepe during July
2017 and formal quarterly production reporting commenced. The
Company has also completed a new resource estimate for the project
based on recent drilling and geological interpretation. Detailed
technical and economic assessments will be completed on several
satellite vein systems which are not currently in the mining plan,
in anticipation of these being developed in future years. The
Company is currently targeting a minimum ten-year mine life, which
will require the addition of a further 40,000 oz* gold equivalent
in reserves outside of the four main pits (Arzu South, Arzu North,
Banu and Derya) that are currently scheduled to be mined.
Management is confident that this can be achieved assuming the
conversion of existing resources to reserves.
Contacts:
Ariana Resources plc Tel: +44 (0) 20 7407
3616
Michael de Villiers, Chairman
Kerim Sener, Managing Director
Beaumont Cornish Limited Tel: +44 (0) 20 7628
3396
Roland Cornish / Felicity Geidt
Panmure Gordon (UK) Limited Tel: +44 (0) 20 7886
2500
James Stearns / Atholl Tweedie
Yellow Jersey PR Limited Tel: +44 (0) 20 3004
9512
Dom Barretto / Joe Burgess / Henry arianaresources@yellowjerseypr.com
Wilkinson
Editors' Note
About Ariana Resources:
Ariana is an AIM-listed mineral exploration and development
company operating in Europe. It has interests in gold production in
Turkey and copper-gold assets in Cyprus. The Company is developing
a portfolio of prospective licences in Turkey, which contain a
depleted total of 1.5 million ounces of gold and other metals (as
at April 2020).
The Red Rabbit Project is comprised of the Company's flagship
assets, the Kiziltepe and Tavsan gold projects, and is part of a
50:50 Joint Venture with Proccea Construction Co. Both assets are
located in western Turkey, which hosts some of the largest
operating gold mines in the country and remains highly prospective
for new porphyry and epithermal deposits. The Kiziltepe Sector of
the Red Rabbit Project is fully permitted and is currently in
production. The total depleted resource inventory at the Project
and its wider area is c. 500,000 ounces of gold equivalent (as at
April 2020). At Kiziltepe a Net Smelter Return ("NSR") royalty of
up to 2.5% on production is payable to Franco-Nevada Corporation.
At Tavsan an NSR royalty of up to 2% on future production is
payable to Sandstorm Gold.
The 100% owned Salinbas Gold Project is located in north-eastern
Turkey and has a total resource inventory of c. 1 million ounces of
gold equivalent. The project comprises three notable licence areas:
Salinbas, Ardala and Hizarliyayla, all of which are located within
a multi-million ounce Artvin Goldfield. The "Hot Gold Corridor"
contains several significant gold-copper projects including the
4Moz Hot Maden project, which lies 16km to the south of Salinbas
and 7km south of Hizarliyayla. A NSR royalty of up to 2% on future
production is payable to Eldorado Gold Corporation on the Salinbas
Gold Project.
Ariana is also earning-in to 50% of UK-registered Venus Minerals
Ltd ("Venus"). Venus is focused on the exploration and development
of copper-gold assets in Cyprus.
Panmure Gordon (UK) Limited are broker to the Company and
Beaumont Cornish Limited is the Company's Nominated Adviser.
For further information on Ariana you are invited to visit the
Company's website at www.arianaresources.com .
--Ends--
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END
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