TIDMAAU
RNS Number : 2643U
Ariana Resources PLC
23 October 2017
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
--------------------- --------- --------- ------------------
Troy
Gold produced Ounces 3,762 5,691
--------------------- --------- --------- ------------------
Troy
Gold sold Ounces 3,762 5,691
--------------------- --------- --------- ------------------
Troy
Silver produced Ounces 15,985 30,504
--------------------- --------- --------- ------------------
Troy
Silver sold Ounces 15,985 30,504
--------------------- --------- --------- ------------------
Gross income US$'000 5,046 7,726
--------------------- --------- --------- ------------------
Operating cash US$/oz US$ 570 n/a(1)
cost of production
--------------------- --------- --------- ------------------
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
Kerim Sener, Managing Director
Beaumont Cornish Limited Tel: +44 (0) 20
7628 3396
Roland Cornish / Felicity
Geidt
Beaufort Securities Limited Tel: +44 (0) 20
7382 8300
Jon Belliss
Panmure Gordon (UK) Limited Tel: +44 (0) 20
7886 2500
Adam James / Tom Salvesen
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
This information is provided by RNS
The company news service from the London Stock Exchange
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