The bank finance for the Ariana Resources’ (LON:AAU) Kiziltepe gold-silver mine in western Turkey is “due very soon”, according to chief executive Kerim Sener, who says the project will be in production as planned in the first half of next year.
Negotiations are close to conclusion with an unnamed local lender, which will fund the US$25mln plant and processing facilities producing 21,000 ounces of gold equivalent a year.
The approval of investment incentives by the Turkish authorities, which occurred last week, was one of the major conditions that had to be met before the loan was granted.
Crucially, the lender is expected to sign off the package before Kiziltepe’s forestry permit is awarded.
This is a significant show of faith as the permit is the one major outstanding hurdle Ariana and partner Proccea have to negotiate before the build begins.
“The bank’s view – it is a Turkish bank – is we will get the permits. It is just a matter of process,” Sener told Proactive Investors.
“We have had two permits granted since the new forestry regime came into place in 2012. So they are being granted.
“But they are taking time to process. So what once took three months is now taking six.
“We are expecting sometime this summer to complete that process.”
Construction group Proccea is in charge of developing the facilities, which will get underway when finance is signed off.
This will also trigger re-payments of “a couple of million” Turkish lira (£550,000) from the joint-venture company that will should help fund exploration of the wider Red Rabbit area.
Ariana is assessing the potential of nearby targets in the Sindigri gold corridor, which have the potential to add to the measured and indicated 224,000 ounces at Kiziltepe and extending the initial eight-year mine life.
It may also look at picking up nearby exploration licences in the next round.
Once the Kiziltepe mine is up and running, the focus turns to Tavsan, 75km from Kiziltepe.
“It is our intention to start developing Tavsan as soon as Kiziltepe is in production,” said Sener.
“Between the two sites in a couple of years time we should be producing at a rate of 50,000 ounces a year – 20,000 from Kiziltepe and 30,000 from Tavsan.”