Ariana Resources sees potential for early production at Kepez

Ariana Resources (LON:AAU) said surface sampling of the Karakaya vein on the Kepez project in Western Turkey has identified higher than previously anticipated concentrations of silver.

Rock chip and float sampling revealed the average grade was 65 grams per tonne of the precious metal to a maximum of 277 grams per tonne.

This is in addition to the existing high gold grades found in the area, and could potentially lead to a doubling of the indicated resource estimate at Kepez. 

The indicated resource currently stands at 60,000 tonnes at 4.6 grams of gold for a rather modest total of 8,900 ounces of gold.

Managing director Kerim Sener and his team are also reviewing whether to bring the prospect into production earlier than planned.

Kepez is part of Ariana’s Red Rabbit joint venture, which it jointly owns with Turkey’s Proccea Construction Co.

Managing director Sener said: "These excellent silver results make the already high-grade Karakaya vein at Kepez an even more valuable prospect.  

“The resulting gold equivalent grades, which could allow for a doubling of the existing resource at Kepez, may potentially mean that the prospect is mined earlier in the Red Rabbit Project than originally scheduled."

"While the Karakaya vein continues to excite and is a priority target for our ongoing exploration programmes in the region, it forms only part of the wider Kepez prospect area.  

“The geophysics programme conducted earlier in the year, coupled with prospect-wide surface geochemical anomalies, lead us to believe that Kepez will yield further high grade areas.  

“We plan to start drill-testing these targets in the first quarter of 2012."

Ariana is less than a year away from its first gold pour at Kiziltepe in Turkey, which is also part of the Proccea JV. 

It is part of the Sindigri asset - one of two gold areas the pair own. The other is Tavsan, 75 kilometres away.

The plan at Kiziltepe is to ramp up production to an annualised 20,000 ounces of gold equivalent.

The main pit and four smaller veins nearby are expected to produce at this rate for eight years.  

However, there is scope to raise the rate of production or to increase the mine life in the event of new vein discoveries in the region.

The capital costs are expected to be in the order of US$25-26 million, while the cash costs of extracting the precious metal will be in the order US$470 an ounce. 

Preparations are being made to submit applications for the outstanding permits needed for Kiziltepe, and they will be formally lodged at the start of next year. 

This drive to production doesn’t mean the company is ignoring the exploration potential of the Red Rabbit joint venture with Proccea.

The group’s plan is to lift its current JORC compliant resource from 448,000 ounces to around 1 million ounces across the wider Red Rabbit project area.

The company has uncovered what it thinks are subsidiaries to the main four veins at Kiziltepe.

“If we are successful in that process and do define these veins properly, then next year we’d intend to go back in and do some infill drilling and work up towards a resource,” Sener said recently. 

Additional prospects are located in the Sindirgi region, while it recently acquired a project from fellow AIM prospector Kefi Minerals, which lies outside the Red Rabbit JV but within the wider Red Rabbit project area. 

Partner Proccea has placed US$6.6 million on reserve to cover the initial funding of the project, which means a further US$18 million or so needs to be found to bankroll the capital programme.

The joint venture company in Turkey is likely to debt-finance the capex costs.