Ariana Resources Share Discussion Threads

[soulsauce] 01/5/2019 14:28

Cheers Plasybryn.

[plasybryn] 01/5/2019 14:21

Post 3:
Some discussions inevitably took place concerning ‘that’ placing. The BOD acknowledged it wasn’t the greatest achievement to date but that it was entirely necessary with the limited timescales they then faced. Dr S stated that if it hadn’t occurred we wouldn’t have had the plant built as quickly and we wouldn’t be in the position we are in now. Personally I wish shareholders would accept this now, its history and lessons were learned. Move on, please.
MDV agreed I was in the right ballpark with a conservative free cash flow prediction of £8m pa for each of the JV partners post April 2020 (and the completion of the loan). Hmm, and our MV is £20m!
The Kizilcukur trial mining material will be processed through Kiziltepe late summer, obviously will produce shiny stuff but will also to test how processing will be achieved. It’s very different to that currently being processed as its low in clay. I asked if the 3 x terms into the JV was negotiable in light of the reserves found. Dr S said not, but that AAU aren’t compelled to go down this route. There is another operation (I forget the name) close to Kizilcukur which may present a possibly alternative for processing. He did (I think) agree that the 3 x into the JV was a bit of gift to Proccea, but that at the end of the day the resource isn’t big enough to warrant its own plant, so we have to get it processed somehow.
Kizilcukur drilling results are imminent. Hint that it may be in the next couple of weeks.
Permitting is getting more efficient, both in general across the industry and for AAU as it is now respected by the authorities, so hopefully Tavsan can proceed soon, with 2020 still hoped for. But further Gantt charts are unlikely as the Kiziltepe time targets were frustrated by delayed permitting. They don’t want a reoccurrence in the future of expectations conveyed too strongly via Gannts.
Arzu South North (if you know what I mean) is exciting.
Ore is blended at the mill to an extent to smooth results, both for operational reasons (getting the processing right is hard if grades vary) and for reporting quarter on quarter.
Hopes that Tavsan can be extended out from 4 to 8 years LOM. Grades are poor but viable due to the nature of the deposit mineralisation on the very surface (very low strip ratio), but the upside is that you really just need a bunch of navvies with a few shovels from B&Q
I had a chat with MDV after the meeting, nice bloke. Fellow sailor and skier. He didn’t really divulge anything further about AAU, and if he had I wouldn’t report it I’m afraid, only meeting material. He has great respect for Dr S, and I could tell that he has no regrets with his level of shareholding. Read into that what you will.
I came away feeling totally reassured that the company is undervalued and well run. I still can’t see what will ignite the share price at the moment, with exploration extending years into the future.

[plasybryn] 01/5/2019 14:20

Post 2
I have to expand on what Michael said about Arzu South. It is starting to reach exhaustion maybe towards the end of this year. However there is still the possibility for deeper mining there as originally the drilling only extended to a maximum of 280m (I think that’s right), at which point mineralisation was still being encountered. There is also the possibility of further exploitation at the Northern End of Arzu South, though it may be in the future rather than continuing mining there now. I raised a concern that the move to Arzu North and Derya would cause disruption to production figures, but it was implied that this would be managed using stockpiles.

[plasybryn] 01/5/2019 14:18

A poster on LSE attended last night and he has agreed for me to copy his feedback.
I do it in stages as quite a bit.
Post 1
Did my usual drive to Oxford Park & Ride then Oxford Tube bus into London because of lack of late night trains to Telford, so late night and late start today!
Anyway. Generally more of the same, little if anything new. The presentation was very assured by Dr S, getting better with time tbh, with contributions from MDV also. No questions were ducked, and all answered (even daft ones from me).
So in addition to Michaels contribution. All of this is a brain dump so don’t expect logical structure:
Zack van Collier was I the audience, and contributed on several occasions. He is obviously rightly appreciated as important part of the team.
We can expect costs from the current mining to remain on a par with those recently reported, both in the recent quarter and foreseeable future. Oil is a very significant element of the companys costs, so the relative stability of PoO at a level significantly less than previous highs is welcome.
There is still significant undistributed funds in the JV, the amount was not however specific. Holding cash back in the prudent, and I personally support that, though would be nice to see a number!
I disagree with Michael on one point. There was discussion on the free cash flow post the completed repayments of the Kiziltepe loan - the BOD did not dismiss returns to shareholders, and were aware of s/h expectations, but that the needs of the ongoing business was the priority. They did point out the many potential uses of such money. On a general point they cannot commit to never seeking placings/ right issue but are not implying that any are likely. There are many uses for such money and I’m sure that free cash could be spent several times over on advancing exploration (and shortening timescales), maintenance of licences etc etc – the latter is a concern as progress has to be shown to maintain/ renew, although as the Companys reputation grows this becomes easier. The BOD were confident of the Companys standing with the Turkish authorities (including the current lending Bank).
Support from Turkish government, for mining in general as well as Ariana, is solid. They don’t see any immediate threat to the Turkish economy but acknowledged that external influences cannot be predicted (but that is true pretty much everywhere).

[soulsauce] 01/5/2019 14:14

Derailed bigglesbingham or derisked 😊

[jaynesdad] 01/5/2019 14:07

Hello JC
All I am saying that while the MC is (as far as most here are concerned) massively undervalued then we don't want a placing. Think of the effect on the net asset value per share if say the number of shares in issue were doubled at, say 1.5p (discount to current share price would be inevitable), to raise £15m - a figure that will be less than 2 years net cash once the Kiziltepe loan is repaid in 12 months time. I agree with Biggles that it may look plausible at 5p, but not at this level. Much as I don't like companies loading debt on their balance sheets, that would be my preference if a cash raise were necessary in AAUs current (essentially debt free)position. Just my opinion.

[bigglesbingham] 01/5/2019 14:06

Have to say I'm very excited about the prospects here. It's been dramatically derailed over the last 24 months!

[bigglesbingham] 01/5/2019 14:05

Point here is future cash calls cannot be taken off table. The word here is future. Yes I agree if the share was at current price hell no to a cash call. Price above 5p to complete drilling after superb results from 10000m drilling then no issue. Particularly if it means we end up with a 100% hot madden equivalent !!!

[soulsauce] 01/5/2019 13:48

Agree Charles.

[jc2706] 01/5/2019 13:30

JaynesDad,

The point being that the raise would be considerably higher if we had those kind of results. The market is occasionally not stupid - Hot Maden is a known entity, so any hint of something similar would cause a bit of a rush.

[charles clore] 01/5/2019 13:11

I get the distinct feeling that in the event of Salinas producing Hot Maden type results of the MARL variety, fundraising would be the least of our problems. On the contrary, I think our biggest challenge would be fighting off predators!

[dixi] 01/5/2019 12:45

I do not think it would be such a bad thing for PI's if it was off the back of spectacular results from Salinbas.

[jaynesdad] 01/5/2019 12:43

If you agree that this share sis significantly undervalued than I cannot agree that a cash call is good for existing shareholders.

[jc2706] 01/5/2019 12:33

If 2p is breached we could see a quick run up to 2.5p ish.

[jc2706] 01/5/2019 12:28

bigglesbingham,

I agree completely with that sentiment. A cash call to accelerate Salinbas on the back of Hot Maden-like results would be entirely welcomed. Cash calls can put a drag on the share price but one that accelerates progress can actually provide a floor to the share price.

[thanksamillion] 01/5/2019 11:43

Plenty of room for the technical pointers RSI/Stochastic to rise further indicating breach of 2p possible this time.

[bigglesbingham] 01/5/2019 11:02

Excellent report many thanks. One point on the cash call not being ruled out. No managing director should rule out any method of capital raise and a lot depends on what they find at salinbas. Hopefully if they were in a position to require a cash call it would be due to finding exceptional results at salinbas which would mean we'd be looking at several multiples of where we are now. Would I mind a cash call at 5p?? Probably not

[thanksamillion] 01/5/2019 10:38

Thank you Micheal, sound report.

[bigglesbingham] 01/5/2019 10:26

Closing in on salinbas now

[8rad] 01/5/2019 10:24

Yes what broker. Seems like Kerim just repeated the Mining Maven interview last night but still all pretty positive stuff.

[soulsauce] 01/5/2019 09:14

Agree Charles, if only they had taken more care of the raisings in the past and aligned themselves to a better and less corrupt broker and may be they wouldn't have lost some shareholders respect for a while.
That said they seem to have more than redeemed themselves, however as Biggles says and echoes my thoughts, there is still work to be done on the broker front ;-)

[charles clore] 01/5/2019 09:05

Soul, biggles - I agree Kerim came across very well in the interview. He seems a very genuine person and in the past years could not always tell us everything i.e. fundraising plans etc. Judging by his demeanour it seems to me that he is now free of any underlying worries. I think the company could be on the cusp of a serious re-rating.

[soulsauce] 01/5/2019 08:56

Many thanks Michael, great post.

[jaynesdad] 01/5/2019 08:53

Thank you Michael, a comprehensive post
JD

[michaelmcandrew] 01/5/2019 08:44

A brief note of last night's presentation:

Attended by Kerim, MDV and Chris Sangster, NED. Bill Payne was otherwise engaged.

Presentation by Kerim - as good as come to expect with all questions answered. He gives an aura of confidence and honesty.

The content was underpinned by the company's Corporate Presentation from April.

There was little new but the following points may be of interest.

There will be a further update on costings in the next month or so. Company has strong operational record and its discovery track record speaks for itself. Proud of discovery costs @ US$15 per oz against an industry average @ US$43 per oz.

The bank is very happy with the repayment record and is likely to be the first port of call for new funding requirements. The current construction capital loan will be repaid by April, 2020 and 95% repaid by end of 2019. Substantial cash remains within the joint venture after distributions to partners. There will be no returns of cash to shareholders once the loan is paid off as there will be an ongoing need for new investment, particularly in Salinbas. A placing / cash call cannot be ruled out if it became necessary. Shareholders present made it clear that would not be welcome.

Refined gold is sold to the Turkish Central Bank at the spot price and paid for in Turkish Lira. It is immediately converted to US$.

Expects share price to improve as debt is repaid.

Turkey is very sound so far as mining is concerned with solid incentives for gold miners. Turkey is the leading gold producer in Europe. There are no obvious political risks for gold miners in Turkey. There is little Chinese involvement in gold.

Kizilcukur is not large enough to justify on-site processing.

Arzu South at Kiziltepe will be mined out by the end of this year with Arzu North and Derya coming on stream later this year. Permissions are already in place. There will be a focus on stockpiling to ensure continuity of gold production

Excited by the potential of other parts of Kiziltepe and between Kiziltepe and Kizilcukur.

Tavsan currently has a 4 year life but there is potential to increase this. This will be the next area to come on line for production with a fair amount of work already taking place. Uncertainty about when production will commence as this depends upon the grant of permits. 2020 remains the broad target but this may slip following the social impact process. Reluctant to be more specific following slippage at Kiziltepe.

Salinbas is in a fantastically rich area for gold prospects.

Eldorado's exploration of 20,000 metres cost $9m - a further 20,000 metres is needed - this will be less expensive.

Drilling to explore Salinbas North is planned to start in May this year with first results by end of June. Only drilling will prove that targets are viable for gold production but there is the potential for between 1.419m and 2.727m ozs of gold based on the proof of concept. There is increasing confidence that targets will be viable. The footprint at Salinbas is huge compared to Red Rabbit.

Development may take several years - 10 rather than 5 before any commercial mining.

This is just part of the portfolio being developed by the company - the exploration side of the business is an essential part of sustaining the longevity of the company.

Hope that gives a flavour of a very upbeat presentation.