23 October 2017
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 30 September 2017 for the Kiziltepe Mine ("Kiziltepe" or "the Project"). Kiziltepe is part of the Red Rabbit Joint Venture with Proccea Construction Co. and is 50% owned by Ariana through its shareholding in Zenit Madencilik San. ve Tic. A.S. ("Zenit").
Operational Highlights:
· Production and sale of 3,762 oz gold and 15,985 oz silver during the period ending 30 September 2017 has exceeded feasibility forecast by c.6% for recovered gold on an annualised basis.
· Operating cash costs for the quarter are estimated at US$ 570 per ounce*.
· Total gold and silver sales since start-up are 5,691 oz and 30,504 oz respectively.
· Gross income for the quarter is US$5.05 million and average realised gold equivalent price is US$1,342 per ounce.
· Processing plant fully-tested beyond design specifications; operational mill availability increased to 97% and utilisation increased to c.98% during September.
· Weighted average grade of ore mined in the period is 3.12 g/t Au and 43.7 g/t Ag, matching overall reserve expectations; higher grade ore is expected during Q4 as mining progresses deeper in to the Arzu South orebody.
· 35,049 tonnes ore milled during the period ending 30 September 2017; 7% lower than the feasibility forecast, on an annualised basis, though milled grades were 3.46 g/t Au and 41.7 g/t Ag.
· Approximately 46,000 tonnes of ore at a weighted average grade of 2.14 g/t Au stockpiled for future use; 19,700 tonnes of this total represents the fine ore stockpile at a grade of 2.60 g/t Au.
· Process recoveries of gold and silver remain higher than expected at c.95% for gold and 71% for silver as at the end of the quarter.
* 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 June and the end of September, 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 18,600 tonnes per month over the period, with a peak rate of over 22,600 tonnes achieved in August; such rates are planned to be maintained through Q4.
· Gold and silver pour in early October yielded an additional 482 oz and 4,088 oz respectively; these figures have not been added to the period totals.
· Gross loan repayments by Zenit to Turkiye Finans Katilim Bankasi A.S. have been made on their scheduled basis and have amounted to over US$5.9 million as at the end of September 2017; c. US$1.8 million was repaid in Q3.
· Second larger diameter tailings pipeline installation complete and undergoing testing; will facilitate continued higher load on the tailings pumps while an additional diaphragm pump is procured to maintain higher-rate pumping at optimal cost.
· Space-truss roof being built to cover the pre-crusher ROM stockpile to minimise saturation of the ore and aid crusher throughput during periods of wet weather.
· Zenit has recently received a substantial recent Turkish VAT refund in line with the investment incentive schemes secured for the project.
Dr. Kerim Sener, Managing Director, commented:
"This is an excellent result from our first quarter of commercial production. We have successfully increased our peak production rate from the open pit at Arzu South to over 22,000 tonnes of ore per month during the quarter. The process plant, in particular the mill, has also been tested successfully at its highest rates and work is progressing on achieving higher sustainable rates. To date this work has demonstrated that the operation has the capacity to achieve throughput rates substantially higher than feasibility parameters.
Most encouraging of all, we have demonstrated that the operating cash cost of production is well within the range of feasibility expectations. The operating success and process refinements undertaken by mine management demonstrate the capability and professionalism of our operations team and joint venture partners. I would like to take this opportunity to thank and congratulate both teams on their outstanding performance."
Table 1: Production statistics for the Kiziltepe Mine in Q3 2017 and for the period mid-March to end-September 2017.
Measure |
Unit |
Q3 2017 |
2017 Production to Date March to End-September |
Gold produced |
Troy Ounces |
3,762 |
5,691 |
Gold sold |
Troy Ounces |
3,762 |
5,691 |
Silver produced |
Troy Ounces |
15,985 |
30,504 |
Silver sold |
Troy Ounces |
15,985 |
30,504 |
Gross income |
US$'000 |
5,046 |
7,726 |
Operating cash cost of production |
US$/oz |
US$ 570 |
n/a(1) |
Average realised gold price |
US$/oz |
1,271.02 |
1,266.67 |
Average realised silver price |
US$/oz |
16.59 |
16.97 |
Average realised gold equivalent price(2) |
US$/oz |
1,341.52 |
1,357.60 |
(1) Cash costs are not provided for the purposes of the year to date 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) Gold equivalent 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 pre-determined 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 has 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 veins (Arzu South, Arzu North, Banu and Derya) that are currently scheduled to be mined.
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 |
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Kerim Sener, Managing Director |
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Beaumont Cornish Limited |
Tel: +44 (0) 20 7628 3396 |
Roland Cornish / Felicity Geidt |
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Beaufort Securities Limited |
Tel: +44 (0) 20 7382 8300 |
Jon Belliss |
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Panmure Gordon (UK) Limited |
Tel: +44 (0) 20 7886 2500 |
Adam James / Tom Salvesen |
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Editors' Note
About Ariana Resources:
Ariana is an exploration and development company focused on epithermal gold-silver and porphyry copper-gold deposits in Turkey. The Company is developing a portfolio of prospective licences originally selected on the basis of its in-house geological and remote-sensing database.
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. 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.
Beaufort Securities Limited and Panmure Gordon (UK) Limited are joint brokers 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:
"doré" semi-pure alloy of gold and silver;
"g/t" grams per tonne;
"kg" Kilograms;
"oz" Ounces;
"tpa" tonnes per annum;
"tpm" tonnes per month.
Ends
