TIDMAAU
RNS Number : 6723D
Ariana Resources PLC
21 February 2020
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
Kerim Sener, Managing Director
Beaumont Cornish Limited Tel: +44 (0) 20 7628
3396
Roland Cornish / Felicity Geidt
Panmure Gordon (UK) Limited Tel: +44 (0) 20 7886
2500
Atholl Tweedie / James Stearns
Yellow Jersey PR Limited Tel: +44 (0) 20 3004
9512
Dom Barretto / Joe Burgess / Henry arianaresources@yellowjerseypr.com
Wilkinson
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.
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