Ariana Resources: Still Sindirgi first

 
Kerim Sener, Managing Director of Ariana Resources, comes over as a focused and deliberate kind of guy - someone who personifies Wyatt Earp?s dictum ?Fast is fine, but accuracy is everything?. So with a deliberate kind of guy like Kerim in the saddle, we are unlikely to get sudden changes of direction based on hastily convened strategic reviews; we are more likely to get a steady nerve and measured progress based on an explicit strategy. So what is Ariana?s strategy? Ariana is focused on gold in Turkey and the company?s plan is to develop its value by moving from (a) explorer to (b) developer to (c) producer of gold, possibly by 2010, and then grow organically by repeating steps (a) to (c) iteratively ? and also possibly grow through a merger or though acquisitions.

Turkey sits on a highly prospective metallogenic belt, which already hosts a number of world-class gold and copper deposits. These deposits have been created by the European and Arabian/Asian tectonic plates, which have been crunching against each other since they started colliding about 90 million years ago. Turkey has a long history of mining; it revised its mining law recently and it is generally agreed to have an enabling attitude to mineral exploration and mining. Twenty foreign mining companies, including the Rio Tinto, Teck Cominco and Newmont, are operating in Turkey. Tenure is secure, exploration licences are granted for a maximum of five years, and can be converted to operating licences - which can run for up to sixty years. Three gold mines have been permitted promptly in the last few years and there are at least two more on the way.

Ariana?s flagship project is the Sindirgi Gold Project in Western Turkey.  In 2005, Ariana acquired Sindirgi from Newmont Mining (NYSE & ASX: NEM; TSX: NMC) who retains royalty rights of up to 2.5% on future gold production. At Sindirgi, the company is currently exploring and developing a bunch of prospects which host over 45km of gold and silver bearing epithermal quartz veins. The concept for Sindirgi is to develop prospects in the region that prove to be economically viable into mines, and feed ore from them to a central processing and production centre. It is clear that Ariana, already hold much of the immediately prospective area under licence. 

Meanwhile the Tavsan project, only 70km from Sindirgi, was optioned in 2007 - this project already has a resource 130,000 ounces and its expected that this may be expanded to accommodate a small heap leach operation. Ariana is thought to be considering a final decision on the purchase of Tavsan in March.  The Ivrindi Project, about 100 kilometres due west of Sindirgi, was the first remote-sensing target explored by the Ariana team (identified using satellite technology). So far, a 750 by 50 metres gold in soil anomaly has been identified, and channel sampling has yielded 3.21g/t over 10 metres, with two tranches of scout drilling showing many mineralised hits. At the Demirci Project, about 100 kilometres due south of Sindirgi, a 5,000 by 500 metre zone of alteration has been identified, with channel sampling showing 0.49 g/t Au over 23 metres. This was followed by a programme of initial RC drilling to investigate the geology to help identify possible mineralised drill targets.

Four prospects on the Sindirgi Gold Project (sometimes called the Sindirgi Gold Corridor) have been identified by the company: Kiziltepe which hosts 20 kilometres of epithermal quartz veins and currently has a JORC (Australasian Joint Ore Reserves Committee) resource of 135,000 ounces of gold, Kepez where 2.5 kilometres of prospective veins have been identified with composite rock-chip sampling revealing grades of 8.68 grams of gold per tonne over 16 metres across the outcrop of the main vein, Karakavak where 10 kilometres of veins have been identified and rock chip samples have yielded over 10 grams per tonne, and Kizilcukur South where local alteration and interesting geochemical anomalies have been noted.

In September, a programme of resource definition work started with reverse circulation drilling on Kiziltepe, at Sindirgi, to move it towards a resource definition, which could eventually become part of a scoping study pencilled in for 2008 (a scoping study precedes a pre-feasibility study, which precedes a feasibility study, which triggers a mine development decision). On December 3rd, the company reported initial results from 14 reverse circulation holes drilled in the Arzu South Vein - at Kiziltepe. Highlights included 10.12 g/t Au (grams per tonne of gold) over 4 metres, 13.62 g/t Au over 5 metres and 6.62 g/t Au over 6 metres. On December 9th, the company reported the balance of the results, which included 6.3 g/t Au equivalent (gold plus silver) over 10 metres, and 20.1 g/t Au equivalent over 5 metres with some juicy peak grades over 1 metre at 43.8 g/t gold and 1070 g/t silver. All of these holes come from a 650m section of vein and were drilled to between 60 and 135 metres deep.

As these results supported Ariana?s thinking that moving Kiziltepe towards production is sensible, a new drilling programme was planned and launched within a month. The new programme of 2,500 metres of drilling at Kiziltepe, on the Arzu South and North veins, has now started and is expected to be completed by March 2008. This drilling will target the top 50-60 metres of the current resource at 20m vertical and lateral along the veins. It is planned to be used for a, measured and indicated, JORC-compliant resource based on the upper 75 metres of the vein system. The idea is to develop a resource that can be used to plan a viable open pit mine model.

In January, Ariana announced that the company has signed a deal to buy its own diamond drilling rig for delivery in May (diamond drilling yields cylindrical cores of rock for assaying - whereas reverse circulation drilling yields a stream of chippings). Having an in-house drilling rig will allow the company to develop a dedicated in-house drilling team and drill all year round - it also gives the company flexibility in scheduling drill targets. The amount of drilling planned by Ariana means the rig will pay for itself within a year of delivery. Indeed, Ariana?s strategy implies ever-increasing amounts of drilling as the company develops a pipeline of projects at different stages of exploration and development.

Ariana set itself some goals in 2007; define JORC resource of 250,000oz - preferably at Kiziltepe, evaluate the production potential of Sindirgi, bulk sample material from the Arzu Vein system, start a formal scoping study, identify resources at other prospects around Sindirgi, purchase or joint venture into other advanced projects, sell or joint venture its eastern Turkey exploration portfolio, and make new discoveries from regional exploration. Drilling continues at Kiziltepe, a trade-off/scoping study is underway for the Sindirgi project, bulk sampling was undertaken at Arzu North and identified veins 2-3 metres wide over 100 metres before any further drilling was planned. That leaves ?identify resources at other prospects around Sindirgi, sell or joint venture its eastern Turkey exploration portfolio, and make new discoveries from regional exploration?. Something tells me that these items are still on Kerim Sener?s ?to do ? list ? along with a few other items such as ?check out viability of getting into production at Sindirgi by 2010?, and ?make sure that the investment community knows that Ariana resources is undervalued by the market.?

Links
Australasian Joint Ore Reserves Committee (JORC)
www.jorc.org

Newmont Mining
www.newmont.com