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.”
Ariana’s exploration and development activities are focused on a series of expanding gold projects in western Turkey .
The main focus is the Red Rabbit project, which combines two assets - Sindirgi and Tavsan - that are 75 kilometres apart.
The main prospects are Kiziltepe, Kepez and Karakavak, which are within Sindirgi. Currently Red Rabbit has a JORC compliant resource of 448,000 ounces.
While exploration continues as Ariana attempts to more than double its resource base, the company has also set its sights on becoming a gold producer next year.
Kiziltepe is scheduled to churn out around 20,000 of gold equivalent ounces over seven years.
It will be mined over four distinct areas – Arzu North, Arzu South, Banu and Derya.
The scoping study has established the preliminary designs for the plant layout and open-pits.
It has also fully tested the metallurgical recovery and process routes via new test-work and aided by the data obtained from the trial production of 387oz of gold from ore from the areas to be mined.
The estimated $25m capital cost of the project will be covered by the 50:50 joint venture with Proccea Construction which will finance, build and operate the mines.
City firm Fairfax reckons the company is worth 10 pence a share (current price 4 pence), or £24.4 million.
Analyst John Meyer values Kiziltepe at £13.5 million and Ariana’s exploration projects at £9.6 million, while the group has around £1.2 million in the bank.
This he says values the group at just US$36 an ounce of gold, which “is at the low end of the market”.
Shore Capital’s Yuen Low is more interested in the potential of the new licences when they come up for sale.
“The company has identified 20 prospective licences of interest. Success in the auctions could see Ariana significantly increase its exploration footprint in Western Turkey,” he said.
“Red Rabbit is a nice little project, but we believe that it is the new ground that could truly be the company’s making. Consequently, we await the results of the auction with interest.”