Ariana Resources PLC KIZILTEPE QUARTERLY OPERATIONAL UPDATE (4313N)

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: [phone] 
                                    3616 
 Michael de Villiers, Chairman 
 Kerim Sener, Managing Director 
 
 Beaumont Cornish Limited          Tel: [phone] 
                                    3396 
 Roland Cornish / Felicity Geidt 
 
 Panmure Gordon (UK) Limited       Tel: [phone] 
                                    2500 
 Adam James / Tom Salvesen 
 
 Yellow Jersey PR Limited          Tel: [phone] 
                                    882 
 Tim Thompson / Harriet Jackson    [e-mail] 
  / 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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May 09, 2018 02:01 ET (06:01 GMT)