21 February 2020
AIM: AAU
KIZILTEPE QUARTERLY OPERATIONAL UPDATE
Ariana Resources plc ("Ariana" or "the Company"), the AIM-listed exploration and development company operating in Europe, is pleased to announce its operating results for the quarter ended 31 December 2019 for the Kiziltepe Mine ("Kiziltepe" or "the Project") in Turkey. 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 year is US$45.1 million from production of 27,985 ounces of gold, exceeding its full year production guidance of 25,000 ounces of gold by 2,985 ounces; representing an increase of c. 12%.
· Record gross quarterly income of US$12.78 million at an average realised gold price of US$1,484 per ounce, against an average revenue per gold ounce of US$1,736 due to silver credit).
· Production and sale of 7,318 ounces of gold during the quarter ending 31 December 2019.
· Operating cash costs for the quarter are estimated at US$500 per ounce#.
· Operational mill availability running at 99% and utilisation at 97% during December.
· 54,735 tonnes ore milled during the period ending 31 December 2019 at an average head grade of 4.42 g/t Au.
· Process recovery of gold remains high at 92%.
Dr. Kerim Sener, Managing Director, commented:
"The performance of the Kiziltepe Mine remains fully in line with expectations and these record-breaking results for Q4 2019 represent a fitting end to an operationally superb year. The sustained increase in gold price during the period contributed significantly to revenue, while operating cash cost per ounce remained low; mainly due to increased by-product silver credit. It is important to note that these strong results are despite the expected reduction in grade during the period as operations on the high-grade Arzu South pit were decreased and gradually replaced by production from the lower-grade Arzu North pit.
"The Kiziltepe Mine has been producing for about three years now and was expected to deliver approximately 20,000 oz gold equivalent per annum, on average, over eight years. We are excited by the resource growth opportunities we have identified recently at Kiziltepe and the progress being made at Tavsan, which represents the opportunity to deliver an additional 30,000 oz of gold per annum to the Red Rabbit Joint Venture, targeting an overall production of 50,000 oz of gold per annum.
"As at the end of the quarter, 87% of the JV construction capital loan of US$33 million has been repaid, with the remaining balance to be completed in April 2020. Intercompany loan repayments from the JV to our wholly owned subsidiary, Galata Madencilik San. ve Tic. Ltd., have totalled US$2.0 million during the year ending 31 December 2019."
Current Developments:
· Production of ore from the open-pits achieved an average rate of 24,678 tonnes per month over the period, with a peak rate of over 29,328 tonnes achieved in November.
· 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$28.9 million in aggregate as at the end of December 2019 (c. US$4.1 million remaining); c. US$3.0 million was repaid in Q4 2019.
· Operations in the Arzu North and Derya areas proceeded according to plan, with mining undertaken primarily from Arzu North during the period.
* All production figures are quoted gross with respect to the JV in this announcement.
# Operating cash costs are inclusive of on-site costs and off-site charges and royalties specific to the project. It also includes adjustments for stockpile balances at the end of each quarter, in addition to an adjustment for by-product silver. They exclude finance costs, taxes and development capital. The definition used to derive the cash costs is essentially the same as that used within the feasibility study. This cash cost was calculated based on unaudited figures obtained from Zenit.
Table 1: Production statistics for the Kiziltepe Mine in Q4 2019 and for the period mid-March 2017 to end-December 2019 (life of mine to date).
Measure |
Unit |
Q4 2019 |
Q3 2019 |
Total Production Life of Mine to Date |
Plant feed grade |
g/t Au |
4.42 |
4.47 |
4.29 |
Gold produced |
Troy Ounces |
7,318 |
6,933 |
65,555 |
Silver produced |
Troy Ounces |
107,074 |
89,478 |
670,861 |
Gross income |
US$'000 |
12,784 |
11,758 |
96,910 |
Operating cash cost of production |
US$/oz |
500 |
540 |
n/a(1) |
Average revenue per gold ounce(2) |
US$/oz |
1,736.30 |
1,696.01 |
1,478.30 |
Average realised gold price |
US$/oz |
1,484.07 |
1,476.17 |
1,315.61 |
(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 |
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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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Panmure Gordon (UK) Limited |
Tel: +44 (0) 20 7886 2500 |
Atholl Tweedie / James Stearns |
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Yellow Jersey PR Limited |
Tel: +44 (0) 20 3004 9512 |
Dom Barretto / Joe Burgess / Henry Wilkinson |
[email protected] |
Editors' Note
About Ariana Resources:
Ariana is an AIM-listed mineral exploration and development company operating in Europe. It has interests in gold production in Turkey and copper-gold assets in Cyprus. The Company is developing a portfolio of prospective licences in Turkey, which contain a total of 1.6 million ounces of gold and other metals (as at end-2017).
The Red Rabbit Project is comprised of the Company's flagship assets, the Kiziltepe and Tavsan gold projects, and is part of a 50:50 Joint Venture with Proccea Construction Co. Both assets are located in western Turkey, which hosts some of the largest operating gold mines in the country and remains highly prospective for new porphyry and epithermal deposits. The Kiziltepe Sector of the Red Rabbit Project is fully permitted and is currently in production. The total resource inventory at the Project and its wider area is 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.
The 100% owned Salinbas Gold Project is located in north-eastern Turkey and has a total resource inventory of c. 1 million ounces of gold equivalent. The project comprises three notable licence areas: Salinbas, Ardala and Hizarliyayla, all of which are located within a multi-million ounce Artvin Goldfield. The "Hot Gold Corridor" contains several significant gold-copper projects including the 4Moz Hot Maden project, which lies 16km to the south of Salinbas and 7km south of Hizarliyayla. A NSR royalty of up to 2% on future production is payable to Eldorado Gold Corporation on the Salinbas Gold Project.
Ariana is also earning-in to 50% of UK-registered Venus Minerals Ltd ("Venus"). Venus is focused on the exploration and development of copper-gold assets in Cyprus.
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.
