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Ariana Resources (LON:AAU) said the feasibility study for the Kiziltepe part of its flagship Red Rabbit project in Turkey is now nearly complete as it updated investors on progress.
The wide ranging statement also revealed the firm had agreed a US$2 million loan with Yorkville Advisors for current funding requirements for the project.
And it added that the company had begun acquiring land near the Arzu South pit - one of the last hurdles for the permitting of the project.
The remaining work for the feasibility study is currently focused on the design of the open pits to minimise the strip ratio and the review of engineering designs.
Work has now begun on the designs for the tailings storage facility and the final plans are expected before permits for construction are received - anticipated in the second half of 2012, said the company.
Ariana's managing director Kerim Sener said key operational and corporate milestones continued to be reached at Red Rabbit, adding that the current focus was on publishing the feasibility study.
However, he said that because of some delays relating to new environmental regulations, first production from the project was now projected in 2013.
"We will keep investors abreast of developments in this regard over the course of 2012," he added.
Sener added that the Turkish government remained highly supportive of the development of the project and Ariana planned to finalise all the study work in order to expedite Red Rabbit into production.
Ariana said the US$2 million loan will be made available in two tranches, with the first for US$750,000 to be repaid in ten instalments with the first due in January next year. The second tranche will be made available after the first tranche has been paid.
Interest at a rate of 10 per cent per annum on the outstanding loan amount, together with an implementation fee of 10 per cent on each advance, is payable with each instalment.
The firm also said today that it had agreed to make available a short-term loan of US$600,000 to be shared on a 50:50 basis with joint venture partner Proccea Construction to cover any shortfall in the development budget for phase one of the project.
House broker Fairfax said today's statement showed good progress with the feasibility study close to completion and Proccea making its first project financing investment.
"Production was expected to start in late 2012 but will now start in 2013," said the broker in a note to clients, adding that Fairfax expects an initial production of 7,000 ounces produced with ramp up to 14,400 ounces per year.
"Delay in the start relates to the design requirements on the tailings storage facility which the company expect to have in hand with permitting and construction targeted for H2 2012," it said.
Gold production should rise to 21,400 ounces in 2015 and the mine is scheduled for an eight year life but exploration is likely to allow further expansion of the gold resource, production rates and mine life, said Fairfax, which rates Ariana a 'buy' with a target price of 10 pence.
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