TIDMAAU
RNS Number : 4646Z
Ariana Resources PLC
20 May 2019
20 May 2019
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
2019 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$10.86 million and at an
average realised gold price of US$1,311 per ounce, against an
average revenue per gold ounce of US$1,489 (due to silver
credit).
-- Production of 7,296 ounces of gold during the quarter ending 31 March 2019.
-- Operating cash costs for the quarter are estimated at US$399 per ounce(#) .
-- Operational mill availability running at 99% and utilisation at 95% for the period.
-- 46,825 tonnes ore milled during the period ending 31 March
2019 at an average head grade of 4.83 g/t Au.
-- Process recoveries of gold remain high at 93.7% at the end of the quarter.
* All figures are given gross with respect to the JV.
Dr. Kerim Sener, Managing Director, commented:
"These first quarter results for the Kiziltepe Mine reflects a
solid start to 2019 and continues to demonstrate the efficiency of
our JV operations. Operating cash costs per ounce continue to
remain low, despite the high strip ratios incurred during the
pushback of the southern pit wall at Arzu South. This was helped by
the planned draw down on stockpiles, maintenance of significant
by-product silver credit and high grades through the plant during
the period.
"As at the end of the quarter, 60% of the JV construction
capital loan of US$33 million had been repaid, and by the end of
the June quarter we are expecting to be almost 70% repaid. Monthly
intercompany loan repayments and dividends from the JV to our
wholly owned subsidiary, Galata Madencilik San. ve Tic. Ltd.,
reached approximately US$2.7 million by the end of Q1 2019."
Current Developments:
-- Production of ore from the open-pit was 24,686 tonnes (dry)
over the period, with a peak rate of over 10,987 tonnes achieved in
March.
-- Gross capital loan repayments by Zenit to Turkiye Finans
Katilim Bankasi A.S. have been made on their scheduled basis and
have amounted to US$19.6 million in aggregate as at the end of
March 2019 (c. US$13.4 million remaining); c. US$3.2 million was
repaid in Q1 2019.
-- Ore production from the open pit will remain restricted
during Q2 and Q3 2019 due to the continuation of work on the
pushback of the southern wall of the Arzu South pit, although this
is not expected to impact output significantly.
* All production figures are quoted gross with respect to the JV
in this announcement.
(#) Operating cash costs are inclusive of on-site costs and
off-site charges and royalties specific to the project. It also
includes adjustments for stockpile balances at the end of each
quarter, in addition to an adjustment for by-product silver. They
exclude finance costs, taxes and development capital. The
definition used to derive the cash costs is essentially the same as
that used within the feasibility study. This cash cost was
calculated based on unaudited figures obtained from Zenit.
Table 1: Production statistics for the Kiziltepe Mine in Q1 2019
and for the period mid-March 2017 to end-March 2019 (life of mine
to date).
Measure Unit Q1 2019 Q4 2018 Total Production
Life of
Mine to
Date
Gold produced Troy Ounces 7,296 7,517 44,561
------------- --------- --------- -----------------
Silver produced Troy Ounces 84,109 90,881 391,357
------------- --------- --------- -----------------
Gross income (gold/silver
sold) US$'000 10,860 10,623 62,698
------------- --------- --------- -----------------
Operating cash cost
of production US$/oz 399 349 n/a(1)
------------- --------- --------- -----------------
Average realised gold
price US$/oz 1,310.71 1,237.51 1,271.00
------------- --------- --------- -----------------
Average revenue per
gold ounce(2) US$/oz 1,488.51 1,413.26 1,407.05
------------- --------- --------- -----------------
(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.
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) will continue to make repayments against its
loan from Turkiye Finans Katilim Bankasi A.S. based on a
contractual schedule. Construction capital loan repayments will
have been completed by April 2020 and, during this time, excess
cash-flow from the operation is being 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 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.
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
Atholl Tweedie / James Stearns
Yellow Jersey PR Limited Tel: +44 (0) 20 3004
9512
Felicity Winkles / Tim Thompson / Harriet arianaresources@yellowjerseypr.com
Jackson
/ 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. An 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:
"Au" chemical symbol for gold;
"g/t" grams per tonne;
"oz" Troy ounces.
Ends.
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