1 February 2018
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 December 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").
- Gross income for the quarter is US$6.31 million and average effective gold price (see Table 1, note 2) is US$1,402 per ounce.
- Production and sale of 4,501 oz gold and 35,095 oz silver during the quarter ending 31 December 2017 exceeded feasibility forecast by c.38% for recovered gold on an annualised basis.
- Operating cash costs for the quarter are estimated at US$ 585 per ounce#.
- Total gold and silver sales for 2017 are 10,191 oz and 65,600 oz respectively.
- Operational mill availability running at 98% and utilisation at 95% during December.
- Weighted average grade of ore mined in the period is 3.40 g/t Au and 33.5 g/t Ag, matching overall reserve expectations.
- 45,381 tonnes ore milled during the period ending 31 December 2017; 21% higher than the feasibility forecast, on an annualised basis and milled grades were 3.90 g/t Au and 40.7 g/t Ag.
- Approximately 46,600 tonnes of ore at a weighted average grade of 1.88 g/t Au stockpiled for future use.
- Process recoveries of gold and silver remain higher than expected at c.89% for gold and 67% for silver as 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.
- Production of ore from the open-pit achieved an average rate of 16,600 tonnes per month over the period, with a peak rate of over 19,000 tonnes achieved in December.
- 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$7.7 million as at the end of December 2017; c. US$1.9 million was repaid in Q4.
- Second-stage Tailings Storage Facility ("TSF") dam wall to be completed during Q1 2018 and Stage 2a TSF liners installation to commence in order to increase capacity further; operation fully re-circulating process water from the TSF.
- Central Bank of the Republic of Turkey now buying gold from the operation through its mandated right of first refusal, which has become effective since early January 2018.
- Share bonuses and options due to management (including directors) and staff as detailed in the announcement of 21 December 2017 have been finalised. Further to that announcement and to provide additional clarity, the Company confirms that presently it has no intention of issuing further options to management or staff until the current award period has expired (1 January 2023), other than in the event of exceptional circumstances.
Dr. Kerim Sener, Managing Director, commented:
"This is another great result from the Kiziltepe Mine, demonstrating that we have exceeded 2017 production guidance on a gold-only basis. Our second quarter of commercial production, as detailed here, underscores the profitability of this operation, with operating cash costs remaining well within range of our expectations. At current gold prices, profitability of the mine is predicted to increase further during 2018, due to increasing grades expected to be encountered in the coming months.
As the JV company has been cash-flow positive for some time, we are currently expecting intercompany loan repayments from the JV to our wholly owned subsidiary, Galata Madencilik San. ve Tic. Ltd. to commence during Q1 2018. Whilst it is too early to say for certain, the current operational plan and gold price situation suggests that with cash-flow from our JV, together with existing cash resources at Group level, the Company has the capacity to become self-financing during 2018.
Work is now progressing on the permitting of other open pits in the vicinity of the primary pit at Arzu South and we envisage commencing mining of some of these areas towards the end of this year. We are also giving consideration to future underground mining scenarios for optimal resource extraction. We will be providing 2018 production guidance during Q1 2018 once these matters are considered further."
Table 1: Production statistics for the Kiziltepe Mine in Q4 2017 and for the period mid-March to end-December 2017.
|Measure||Unit||Q4 2017|| 2017 Production |
March to End-December
|Gold produced||Troy Ounces||4,501||10,191|
|Gold sold||Troy Ounces||4,501||10,191|
|Silver produced||Troy Ounces||35,095||65,600|
|Silver sold||Troy Ounces||35,095||65,600|
|Operating cash cost of production||US$/oz||585||n/a(1)|
|Average realised gold price||US$/oz||1,273.26||1,269.58|
|Average realised silver price||US$/oz||16.56||16.75|
|Average effective gold price(2)||US$/oz||1,402.35||1,377.40|
- 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.
- 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 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 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.
|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|
|Panmure Gordon (UK) Limited||Tel: +44 (0) 20 7886 2500|
|Adam James / Tom Salvesen|
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:
"g/t" grams per tonne;
"oz" Troy ounces.
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The issuer of this announcement warrants that they are solely responsible for the content, accuracy and originality of the information contained therein.
Source: Ariana Resources plc via GlobeNewswire