The company has now completed the first of two design stages on the Tailings Storage Facilty (TSF) for the project in Turkey and expects to finish the final study before receiving permits for the facility's construction.

Those permits are expected in the second half of this year.

The firm has also finished its technical report for the waste rock dump design, with final overall storage estimated at 12.3 million tons of waste.

Managing director Kerim Sener said publication of the feasibility study for Red Rabbit remained a key aim for Ariana.

"..This highly encouraging update demonstrates the ongoing progress made towards achieving this goal in the near term," he said.

"In addition to our focus on achieving production from Red Rabbit in the near term, we also continue to broaden the scope and potential of the project through exploration activities aimed at identifying areas in which the current JORC resource of 448,000 ounces gold equivalent could be expanded.

"Following the completion of 2,000m of drilling at the Kiziltepe sector of the Red Rabbit Project, we have now successfully confirmed the presence of continuity between the Arzu North and Arzu South structures," said Sener.

"We will now complete a IP/resistivity survey over a large part of this vein system with the intention of generating targets for future deep drilling to provide further information on the wider resource potential of the Red Rabbit Gold project."

Sener said this exploration work had the potential to provide further considerable upside to the project, which has a current life of mine of eight years targeting average production of 20,000oz of gold equivalent from 2013," he told investors.

Also today, the company said it had continued to acquire strategic freehold land near the planned Arzu South pit through a new subsidiary - known as Camyol.

Around 95 per cent of the freehold land in the Arzu South area now belongs to Camyol, with further acquisitions planned during 2012 in the TSF area and along site access roads, it said.

As at 12.05 pm, the firm's shares stood up 4.35 per cent, at 2.88 pence.

Ariana Resources (LON:AAU) chief Dr Kerim Sener this morning hailed the exploration success of its joint venture in the Artvin region of north-eastern Turkey.

The best intercept from the Salinbas prospect returned 6.48 grams per tonne of gold and 39.4 grams of silver from a 9.5 metre section.

An 11.3 metre section contained 4.98 grams of gold and 42.8 grams of silver, while there were 3.4 grams of gold and 7.9 grams of silver over a 25 metre section.

Ariana said the new drilling has defined a gently dipping mineralised body “emplaced along a thrust zone to the east of a series of breccia pipes”.

Managing director Sener said: "These results underpin our confidence in the exploration potential of our projects in the Artvin region of north eastern Turkey.  

“The virgin discovery of Salinbas by our JV team was a true exploration success and the prospect continues to yield highly encouraging drilling results.  

“The fact that the Salinbas system is still open to the south and to the east indicates that there is considerable scope to define a substantial gold system.  

“The orientation of the mineralisation and the continuity of high grades suggest that the mineralised body will provide for a resource, which could be mined by open-pit methods.

"The JV team is currently planning for a further drilling programme scheduled to commence in May 2012.  We have in place an efficient, dedicated team, committed to bringing this programme to a successful conclusion."

The drilling work comes ahead of the project's feasibility study which is scheduled for completion towards the end of this year, prior to the start of production next year.

The programme will comprise of 4,000 metres of drilling on the Kiziltepe, Kepez West, Karakavak and Kizilcukur areas of the Red Rabbit project. Ariana said that work is currently underway at Kiziltepe, on the Fidan Vein.

"This drilling programme aims to better define mineralised structures across the project area that may host open-pittable resources that would provide additional mill feed for the planned plant at Kiziltepe,” said managing director Dr. Kerim Sener.

“This is an exciting time for the company, as we advance our feasibility study on Red Rabbit and continue to look for new resource growth opportunities in the region.  

“Having our own drilling team provides tremendous flexibility as we can mobilise to new areas at short notice which will be particularly advantageous in the event of the successful acquisition of new ground via auction."

Around 50 holes will be drilled to depths of 50 to 100 metres.  Ariana expects the programme to finish during the first quarter of 2012.

This was one of the key results of a pre-feasibility study released this morning. 

The report also contained an increased pit resource of 188,200 ounces of gold and 1.45 million ounces of silver. The deposit is expected to produce 20,000 ounces of gold per year for the first five years.

The company also said today it is confident of increasing its current resource base to 1 million gold equivalent ounces from 448,000 currently.

The Red Rabbit project is jointly owned with local construction firm Proccea. It combines two assets - Sindirgi and Tavsan - that are 75 kilometres apart.

The main prospects are Kiziltepe, Kepez and Karakavak, which are within Sindirgi. This time next year the group will be on the cusp of its first gold pour at Kiziltepe.

Ariana managing director Kerim Sener said: "The results from the PFS provide us with further evidence of the significant potential of the Red Rabbit gold project as we gear up towards production.

“Importantly, the increase in mineable tonnage and, in turn, total mine life to in excess of eight years, reinforces the company's ability to generate significant revenues from Red Rabbit.   

“This  statement holds true even if we take a conservative  approach to long-term gold prices as demonstrated by the pit optimisation, which was undertaken using a US$1,058 per ounce base case.

"In  tandem with the feasibility study being completed before the end of 2011, exploration at Red Rabbit remains a core focus for Ariana as we are confident of the wider area's potential to host  in excess of 1 million ounces of gold equivalent.   

“New discoveries  such as  the Gamze  Vein, where  continuous high-grades  of up to 10.7 grams per tonne of gold equivalent were identified; and the Hande Vein, where grades of up to 7.74 grams per tonne of gold  equivalent were reported, underpin this confidence.   

“This  strategy ensures near-term revenue generation whilst also benefitting from the significant uplift potential new discoveries will bring to the company."

Turkey-focused gold miner Ariana Resources (LON:AAU) said today that it has a “key opportunity” to substantially increase its mineral exploration footprint in western Turkey now that licence auctions in the country have been announced.

Turkey’s auctions for what are known as ‘Group IV’ licences (which include gold, silver and copper) are due to commence in January and continue until May 2012. In all, 1,252 exploration licences will be auctioned via a consecutive closed and open bidding process.

Ariana said that it has identified 20 prospective target licences within its area of interest and it plans to further evaluate these before the auctions begin. Meanwhile, the firm said it is in a “strong position” to take advantage of opportunities offered by this round of auctions following on from its grassroots exploration programme in 2010/2011.

“We are in an unrivalled position to identify prospective target areas for exploration in western Turkey, and acquire these at auction,” said Dr Kerim Sener. “Having our own operational drill rig means we can quickly evaluate any licences that we acquire. This will help us on our way to growing our resource-base across western Turkey through low-cost grassroots discoveries by the Ariana exploration team, and achieving our target resource of one million ounces gold equivalent.”

Shares in Ariana were higher by 6.7 per cent at 4.4 pence each in early trading this morning.

UPDATE: Adds comments from brokers Fairfax Securities & Northland Capital

Announcing its 2011 interim results today, Ariana Resources (LON:AAU) said it is making progress towards becoming Turkey’s next gold producer with its Red Rabbit gold project set to begin production in the fourth quarter of next year.

The firm’s total resource inventory current stands at 448,000 ounces of gold equivalent and Ariana has an objective to increase this resource to one million ounces in the medium term.

Ongoing exploration at Red Rabbit has generated “exciting results”, said Ariana, with two new vein discoveries at the Kiziltepe Sector containing up to 10.7 grams per tonne and 7.74 grams per tonne gold equivalent.

Meanwhile, the firm is focused on expanding its resource inventory through new ground acquisitions and exploration in western Turkey with licence auctions expected during Q4 2011 and Ariana having identified “several attractive targets”.

Dr Kerim Sener, Arian’s managing director, said the firm’s “sights remain firmly set on becoming Turkey’s next gold producer” and that Ariana was “delighted” with the continued progress made at Red Rabbit, where it is gearing up to a new drilling programme to test new targets at Kiziltepe ahead of Proccea Construction taking control of the joint venture project.

"Much of the earlier part of this year was focused on evaluating the results of our regional exploration programmes in Western Turkey,” said Sener. “The exploration team has built several enviable datasets and we are now in an excellent position to rapidly assess new opportunities across the region. We have already set our sights on a number of targets, which are expected to become available as part of the Turkish Government's licence auctions process.”

During the six months to June 30 Ariana made a net loss of £854,000, compared with a £183,000 loss in H1 2010. At the end of the period, it had £1.2 million cash in the bank.

“Ariana is moving quickly to develop its first gold mine and to increase gold and silver resources on the JV and wholly owned licence area,” Fairfax Securities analyst John Meyer said.

“The management are conservative in their approach to announcements on the project and they are more likely to under promise and over deliver. The mine plan is being built on a resource base which is likely to expand as results come through on exploration near the Kiziltepe sector of the Red Rabbit project.”

Fairfax has a buy recommendation on the stock with a 10 pence a share target price. The broker’s target is based on a conservative estimate of Ariana’s 50% share of the Red Rabbit project, Meyer said.

In a note to clients Northland Capital analyst Andrew McGeary also emphasised the potential of the Red Rabbit project: “The conclusion of the feasibility study at the Red Rabbit Deposit will be an important milestone towards first production from the Red Rabbit Deposit.” 

Announcing its 2011 interim results today, Ariana Resources (LON:AAU) said it is making progress towards becoming Turkey’s next gold producer with its Red Rabbit gold project set to begin production in the fourth quarter of next year.

The firm’s total resource inventory current stands at 448,000 ounces of gold equivalent and Ariana has an objective to increase this resource to one million ounces in the medium term.

Ongoing exploration at Red Rabbit has generated “exciting results”, said Ariana, with two new vein discoveries at the Kiziltepe Sector containing up to 10.7 grams per tonne and 7.74 grams per tonne gold equivalent.

Meanwhile, the firm is focused on expanding its resource inventory through new ground acquisitions and exploration in western Turkey with licence auctions expected during Q4 2011 and Ariana having identified “several attractive targets”.

Dr Kerim Sener, Arian’s managing director, said the firm’s “sights remain firmly set on becoming Turkey’s next gold producer” and that Ariana was “delighted” with the continued progress made at Red Rabbit, where it is gearing up to a new drilling programme to test new targets at Kiziltepe ahead of Proccea Construction taking control of the joint venture project.

"Much of the earlier part of this year was focused on evaluating the results of our regional exploration programmes in Western Turkey,” said Sener. “The exploration team has built several enviable datasets and we are now in an excellent position to rapidly assess new opportunities across the region. We have already set our sights on a number of targets, which are expected to become available as part of the Turkish Government's licence auctions process.”

During the six months to June 30 Ariana made a net loss of £854,000, compared with a £183,000 loss in H1 2010.

At the end of the period, it had £1.2 million cash in the bank.

Shares in Ariana were down 2.9 per cent at 4.37 pence each during early trading this morning.

Shore Capital welcomed the announcement, saying that if the vein system uncovered is connected with the Banu system as the company believes, the planned Banu pit could potentially be extended.

It adds:"While today’s and recent discoveries are encouraging, these are still very early days and drilling will be required before we have a clearer idea of by how much the current 0.448Moz resource could be expanded."