Sign up UNITED KINGDOM
Proactive Investors - Run By Investors For Investors

Scoping study highlights Ariana Resources' Turkish potential

Kiziltepe is just 75km away and the plan will be for Tavsan to use a lot of its infrastructure for processing.
picture of gold pour
Two gold mines are better than one

Ariana Resources plc (LON:AAU) already has one gold mine in Turkey due to come on stream around the end of 2016, but it may not be too long before it has two.

A scoping study at Tavsan has just come back very favourably and if numbers continue to impress will add a further 30,000 ounces a year to the 20,000 oz expected from the first mine at Kiziltepe.

The scoping study at Tavsan showed production at that level would cost between US$559-630/oz over the expected four-year mine life and generate a net present value of US$41.9mln at a gold price of US$1,250.

That is a return of 80% on the expected US$20mln build cost plus operating expenses.

 

First mine at Kiziltepe 75km away

Kiziltepe is just 75km away and the plan will be for Tavsan to use a lot of its infrastructure for processing.

Kerim Sener, Ariana’s managing director, said it will look at fast-tracking further exploration and development work with completion of a more detailed ore-feasibility study (PFS) in 2017 the aim. 

"This is an excellent result which reinforces our view that the Tavsan Sector will become a valuable additional source of revenue

''We've got a very robust project ... we have a very good internal rate of return across the model range varying from 23% at the very bottom end, all the way up to 80% at the top of the range, with very fast payback within 1-2 years'', Sener said.

Kiziltepe, meanwhile, is at the commissioning stage with first gold scheduled for this quarter, as mining has already begun and low-grade ore is now being stockpiled.

Turkey's unpredictable weather has been the undoing of more than one development schedule but most of Ariana’s work is now done.

In October, it said 95% of the tailings landscaping was complete, the dam wall and concrete drainage channel under construction, the mine-site laboratory near completion; testing of leach tanks and thickeners done; and back-up tailings pumps are on site ready for installation.

Brokers impressed by progress

Even before today’s announcement, brokers said Ariana was looking undervalued.

Panmure Gordon notes Ariana is operating within the Western Anatolian Volcanic and Extensional (WAVE) Province in western Turkey, which contains some of the country’s largest operating gold mines and is a region renowned for porphyry and epithermal deposits.

An original target to produce 20,000 oz of gold and 100,000 oz of silver from the Kiziltepe mine over eight years also looks conservative, the broker said in September, with 22,000 oz of gold and 150,000 oz for at least ten years likely.

At that time, the broker had a price target of 2.71p per share but that reflected nothing for grade increment and little for the potentially highly prospective Salinbas project.

Shares were 1.74p in November.

View full AAU profile View Profile

Ariana Resources plc Timeline

Related Articles

picture of copper tubes
May 25 2017
Production of copper doubled to 1,941 tonnes while silver production increased six-fold to 165,131 ounces.
Yanfolila mine from the air
Fri
Next year the miner aims to produce 130,000 ounces of the yellow metal
picture of gold
November 20 2017
The oxide mineralisation is open to the northeast with potential continuity for at least three kilometres

No investment advice

The Company is a publisher. You understand and agree that no content published on the Site constitutes a recommendation that any particular security, portfolio of securities, transaction, or investment strategy is suitable or advisable for any specific person. You further understand that none of the information providers or their affiliates will advise you personally concerning the nature, potential, advisability, value or suitability of any particular security, portfolio of securities, transaction, investment strategy, or other matter.

You understand that the Site may contain opinions from time to time with regard to securities mentioned in other products, including company related products, and that those opinions may be different from those obtained by using another product related to the Company. You understand and agree that contributors may write about securities in which they or their firms have a position, and that they may trade such securities for their own account. In cases where the position is held at the time of publication and such position is known to the Company, appropriate disclosure is made. However, you understand and agree that at the time of any transaction that you make, one or more contributors may have a position in the securities written about. You understand that price and other data is supplied by sources believed to be reliable, that the calculations herein are made using such data, and that neither such data nor such calculations are guaranteed by these sources, the Company, the information providers or any other person or entity, and may not be complete or accurate.

From time to time, reference may be made in our marketing materials to prior articles and opinions we have published. These references may be selective, may reference only a portion of an article or recommendation, and are likely not to be current. As markets change continuously, previously published information and data may not be current and should not be relied upon.

© Proactive Investors 2017

Proactive Investor UK Limited, trading as “Proactiveinvestors United Kingdom”, is Authorised and regulated by the Financial Conduct Authority.
Registered in England with Company Registration number 05639690. Group VAT registration number 872070825 FCA Registration number 559082. You can contact us here.

Market Indices, Commodities and Regulatory News Headlines copyright © Morningstar. Data delayed 15 minutes unless otherwise indicated. Terms of use