Ariana Resources has a New managing director, same ethos

Market: AIM There have been quite a few changes at boardroom level for Ariana Resources. Two directors, Matthew Grainger and Steven Poulton (executive director and chief executive officer), stepped down and Dr. Kerim Sener has taken the role as Managing Director. Movements at the top of the company can unnerve investors and create an air of hesitation in the share price ? which is exactly what has happened to Ariana. The weak sentiment enveloping Ariana was not exactly bolstered by Matthew Grainger and Steven Poulton selling their shares either - Ariana has yet to recover from the drops that ensued, as the market is waiting to see how the new man in the job settles in.

Perhaps surprisingly, Kerim has many of the qualities that his predecessors held, including a strong sense of what his objectives are for Ariana, and how this will maximise the possibility of creating shareholder value. Some of the immediate changes underway at Ariana include a reduced administration overhead, after cutting the number of directors and a reduction in its London footprint whilst still maintaining and enhancing its strong team in Turkey.

The reduced cash burn has coincided with a slightly revised strategy on the ground in Turkey, where recently acquired licences in the wilder eastern regions are now up for joint ventures with partners, allowing Ariana to focus on its core area of expertise, the Western Anatolian Volcanic and Extensional Province (within approximately 100 kilometres of their base of operations at Sindirgi in Western Turkey). This geographical focus is combined with a continued desire to build up the company?s resources and, ultimately, identify a project or projects that meet the economic criteria for development.

Since listing, Ariana?s lead project has been the Sindirgi Gold Project, bought from Newmont in 2005. Ariana announced a maiden JORC compliant resource estimate of 135,000 ounces of gold equivalent at the Kiziltepe prospect, based on drilling of only 5% of the known veins. In fact, Ariana has only drilled 10% of the veins thus far at this prospect, and the focus has been on building a resource estimate by targeting near surface mineralisation that could be amenable to open pit mining. Getting a resource estimate under its belt is solid progress for Ariana, but investors and management appreciate that a 135,000 ounce project is not quite large enough to justify development. ?Just what size of project will be required in order to develop a mine?? is a question that Ariana is considering putting to SRK Consulting. The company also plans to conduct a scoping study to help determine the most cost-efficient way forward and possible development options.

It wouldn?t be overly wise on our part to pre-empt the experts, but Ariana has stated several times that they foresee the project as a series of small pits each feeding ore to a central processing facility ? it doesn?t take a leap of faith to see Ariana?s logic. The project comprises dozens of low sulphidation quartz veins, a type of mineralisation that is dominant in western Turkey. Such veins can be developed with a heap leach operation ? which offers a relatively low capital expenditure option to finance, which in turn means the total number of ounces needed to justify development is lowered. Ariana is hoping to take a minimum 100 tonne bulk sample from its existing resource, and put it through a nearby operating mill to maximise their knowledge of the metallurgical performance of the ore. At the same time, Ariana isn?t letting up with the drill bit, with a further 6000 metres of reverse circulation drilling budgeted in the coming months ? predominately at Sindirgi.

Two additional projects have also entered the Ariana radar in recent times. First the company optioned the Tavsan gold project from Odyssey Resources (TSX: ODX); looking at the share price of Odyssey doesn?t exactly inspire confidence in the quality of the project, but Kerim is satisfied that the project merits attention from Ariana. Odyssey appeared to have over stretched itself with operations in both Turkey and Morocco, so when the budget was squeezed, Tavsan got the chop. Ariana liked the potential it saw. Despite having modest resources of about 130,000 ounces gold indicated and inferred, from approximately 100 holes drilled by Odyssey at an average spacing of 100 metres, the project is again a possible heap-leach open pit type of operation potentially offering a small development option. In fact, Kerim likens the geology to certain ?Carlin? style deposits made famous in Nevada, United States, which can have low grade gold expressions near surface which are often the signature of a much larger, deeper beast. That is blue-sky stuff though; the immediate potential is the modest ounces at surface. Initial metallurgical testing undertaken already show high recoveries and the project has a very low strip ratio as any mining operation would be essentially involve ?loping off the top of a hill?. Ariana has nine months to complete due diligence at Tavsan, but Kerim hinted that this has more to do with the long time it can take to receive forestry permits, rather than concerns over Odyssey?s quality of work.

An altogether different manner of project was also picked up by Ariana in July: the Ardala Copper-Gold prospect. This is a porphyry system that was explored in the 1990?s, including 13 holes that lead to a geological resource model of 20 million tonnes with an average grade of 0.25% copper, 0.45 grams per tonne gold and 65 parts per million of molybdenum. Large complex targets like Ardala usually require around 100 million tonnes of ore to make them feasible for development, so plenty of work will be required. As Ardala is in Eastern Turkey, it also falls foul of Ariana?s ambitions to focus on a specific region in Western Turkey, so this project is intended to be joint ventured to a partner willing to invest the time and money to advance it further.

Shares in Ariana are hovering around seven pence, applying a lowly market capitalisation of around £3.3 million. This is typically the valuation one would expect for an early stage grass roots exploration company, which Ariana can credibly argue that it certainly is not! Indeed, Ariana has moved its Kiziltepe gold prospect to a more advanced stage, with JORC compliant resources (albeit a small resource), metallurgy, scoping studies and further drilling all on the way to add further value to the project and push it towards a development decision as soon as feasible. The board room shake up has taken its toll, but the new MD looks comfortable and ready to build a company.

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