TIDMAAU
RNS Number : 4313N
Ariana Resources PLC
09 May 2018
9 May 2018
AIM: AAU
KIZILTEPE QUARTERLY OPERATIONAL UPDATE
Ariana Resources plc ("Ariana" or "the Company"), the
exploration and development company operating in Turkey, is pleased
to announce its operating results for the quarter ended 31 March
2018 for the Kiziltepe Mine ("Kiziltepe" or "the Project").
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").
Operational Highlights*:
-- Gross income for the quarter is US$6.98 million and average
effective gold price (see Table 1, note 2) is US$1,434 per
ounce.
-- Production and sale of 4,866 oz gold during the quarter
ending 31 March 2018 an 8% increase quarter on quarter ("QoQ").
-- Operating cash costs for the quarter are estimated at US$612 per ounce(#) .
-- Operational mill availability running at 98% and utilisation at 96% during March.
-- 44,897 tonnes ore milled during the period ending 31 March
2018; 20% higher than the feasibility forecast, on an annualised
basis and milled grades were 3.85 g/t Au.
-- Approximately 62,200 tonnes of ore at a weighted average
grade of 3.09 g/t Au stockpiled for future use, representing about
four months of production.
-- Process recoveries of gold remain higher than expected at
c.95% for gold at the end of the quarter.
* 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.
Current Developments:
-- Production of ore from the open-pit achieved an average rate
of 20,300 tonnes per month over the period, with a peak rate of
over 28,800 tonnes achieved in February.
-- Gross capital loan repayments by Zenit to Turkiye Finans
Katilim Bankasi A.S. have been made on their scheduled basis and
have amounted to over US$9.5 million as at the end of March 2018;
c. US$1.8 million was repaid in Q1.
-- Second-stage Tailings Storage Facility ("TSF") dam wall
completed during Q1 and Stage 2a TSF liners installation to
commence in Q2.
-- An extension to the current Environmental Impact Assessment
("EIA") and a full environmental operating permit (previously
temporary) were also received during the period.
Dr. Kerim Sener, Managing Director, commented:
"This past quarter has been another successful period of
operation for the Kiziltepe Mine. Due to the strong operational
cash flow from Kiziltepe, we have been receiving intercompany loan
repayments from the JV to our wholly owned subsidiary, Galata
Madencilik San. ve Tic. Ltd. during Q1 2018. These repayments are
continuing and are expected to be made on a monthly basis, enabling
the Company to become self-financing during 2018."
Table 1: Production statistics for the Kiziltepe Mine in Q1 2018
and for the period mid-March 2017 to end-March 2018 (life of mine
to date).
Measure Unit Q1 2018 Total Production
Life of
Mine to
Date
Gold produced Troy Ounces 4,866 15,057
------------- --------- -----------------
Gold sold Troy Ounces 4,866 15,057
------------- --------- -----------------
Silver produced Troy Ounces 30,864 96,464
------------- --------- -----------------
Silver sold Troy Ounces 30,864 96,464
------------- --------- -----------------
Gross income US$'000 6,978 21,016
------------- --------- -----------------
Operating cash cost US$/oz 612 n/a(1)
of production
------------- --------- -----------------
Average realised
gold price US$/oz 1,328.79 1,288.70
------------- --------- -----------------
Average effective
gold price(2) US$/oz 1,433.94 1,395.76
------------- --------- -----------------
(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) Effective gold price 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.
Summary of Project
The Kiziltepe operation is currently expected to deliver
approximately 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)
will continue to make repayments against its loan from Turkiye
Finans Katilim Bankasi A.S. based on a contracted schedule. Major
loan repayments will have been completed by April 2020 and, during
this time, excess cash-flow from the operation will be 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 commenced. The Company 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 following conversion of existing resources to
reserves.
This announcement contains inside information for the purposes
of Article 7 of EU Regulation 596/2014.
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
Adam James / Tom Salvesen
Yellow Jersey PR Limited Tel: +44 (0) 7544 275
882
Tim Thompson / Harriet Jackson arianaresources@yellowjerseypr.com
/ Henry Wilkinson
Editors' Note
About Ariana Resources:
Ariana is an exploration and development company with mining
operations focused on epithermal gold-silver and porphyry
copper-gold deposits in Turkey, the largest gold producing country
in Europe. The Company is developing a portfolio of prospective
licences originally selected on the basis of its in-house
geological and remote-sensing database, which now contain a total
of 1.6 million ounces of gold and other metals (as at end-2017).
Ariana's objective is to cost-effectively add value to its projects
through focused exploration and to develop its operations,
primarily through well-financed joint ventures.
The Company's flagship assets are its Kiziltepe and Tavsan gold
projects which form the Red Rabbit Gold Project. Both contain a
series of prospects, within two prolific mineralised districts in
the Western Anatolian Volcanic and Extensional (WAVE) Province in
western Turkey. This Province hosts the largest operating gold
mines in Turkey and remains highly prospective for new porphyry and
epithermal deposits. These core projects, which are separated by a
distance of 75km, form part of a 50:50 Joint Venture with Proccea
Construction Co. The Kiziltepe Sector of the Red Rabbit Project is
fully-permitted and is currently in production. The total resource
inventory at the Red Rabbit Project and wider project area stands
at c. 605,000 ounces of gold equivalent (as at end-2017). 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.
In north-eastern Turkey, Ariana owns 100% of the Salinbas Gold
Project, comprising the Salinbas gold-silver deposit and the Ardala
copper-gold-molybdenum porphyry among other prospects. The total
resource inventory of the Salinbas project area is c. 1 million
ounces of gold equivalent. A NSR royalty of up to 2% on future
production is payable to Eldorado Gold Corporation.
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.
Glossary of Technical Terms:
"g/t" grams per tonne;
"oz" Troy ounces.
Ends.
This information is provided by RNS
The company news service from the London Stock Exchange
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