www.arianaresources.com
Ariana is an AIM-listed and PLUS-traded gold exploration and development company which aims to develop new gold mines in Turkey. Ariana is lead by an experienced board and is spearheaded by a focused Turkish management team. Current resources stand at approximately 400,000 ounces of gold in western Turkey, with two key projects under development: the high-grade Kiziltepe prospect and the heap-leachable Tavsan prospect. An exploration joint venture with European Goldfields (20% shareholders in Ariana) in northeastern Turkey is focused on the Ardala copper-gold porphyry and surrounding areas. Ariana holds a large and prospective licence portfolio from which a pipeline of new exploration targets is being generated for drill-testing utilizing an ‘in-house’ drilling team. Exploration and development success is being delivered via a strategy which integrates geoscientific knowledge and new technologies to identify and advance prospects for drill-testing. Ariana aims to develop a portfolio of licences in western Turkey which contain an aggregate of one million ounces of gold; a target which it is already on the way to achieving.
Ariana's Turkish partner earns into Red Rabbit joint venture
Ariana Resources (LON:AAU) said its joint venture partner Proccea has taken its first steps to earning into the Red Rabbit project in Turkey by injecting cash into the joint venture vehicle Zenit.
Zenit’s registered capital moves to US$5.59 million, taking Proccea’s stake to 11 per cent.
The Turkish construction firm has paid US$650,000 in phase I of the JV and has committed to another US$350,000 injection.
Red Rabbit is the centre-piece of Ariana’s growth strategy and brings together the London-listed group’s Kiziltepe prospect with Proccea’s Tavsan gold area.
Together the two have a resource of 450,000 ounces of gold and gold equivalent, though the target is to take that figure to at least 500,000 ounces.
From that they hope to produce around 30,000 ounces per annum over a five year period.
Proccea has committed to spending US$8 million to earn a 50 per cent stake in the joint venture company.
Phase one of the project will be overseen by Ariana, which will include the feasibility study and environmental permitting process.
Once this is completed the project will then be handed over to Proccea, which will supervise the construction of the gold plant.
Ariana managing director Kerim Sener said: "This capital increase represents the first major step towards the earn-in on the Red Rabbit project by Proccea as envisaged by the joint venture shareholders agreement.
“The injection of funds to the JV company, Zenit, provides further working capital for the feasibility study and the environmental impact assessment.
“This earn-in step represents part of the phase one capital requirement for the JV.”
Work on the feasibility study is underway and progressing well, and Sener said detailed and final metallurgical test-work to optimise plant design will commence shortly.
At the same time, geotechnical and hydrological drilling will begin later this month to cover the areas selected for open pits, processing plant, waste rock dump and tailings dam sites.
Construction of the plant should begin in the early part of 2012, and Sener reckons it will take “six-to-eight months” to complete.
So we ought to see the first production from Kiziltepe in the third quarter of the same year.
Before that the Red Rabbit joint venture company must find US$17-18 million for the construction phase.
And it is looking to Turkish banks as a possible source of project financing.
A scoping study has already revealed that the cash costs of production will be in the region of US$350-400 an ounce. The difficulty is predicting the price of the precious metal, which in turn will dictate the design of the mine.
“With the resource estimate we have got at the moment we ran the Whittle pit optimisation at US$800 gold and US$14 silver,” Sener said in recent interview.
“Based on the latest consensus forecasts we are actually looking at a gold price well in excess of US$800 and probably closer to US$950 an ounce.
“Whether we design an open pit at that level is another question. You want to build in an element of conservatism building an open pit.”
While the joint venture company develops the Red Rabbit project, Ariana is already scouting for opportunities in Western Turkey that could eventually be fed into it to expand the resource base to one million ounces.
Sener has his eye on the upcoming licence auction, which kicks off in January next year.
Ariana shares closed last night at 4.28p.
