Ariana Resources PLC - KIZILTEPE QUARTERLY OPERATIONAL UPDATE

23 November 2020

AIM: AAU

KIZILTEPE QUARTERLY OPERATIONAL UPDATE

Ariana Resources plc ("Ariana" or "the Company"), the AIM-listed exploration and development company operating in Europe, is pleased to announce its operating results for the quarter ended 30 September 2020 for the Kiziltepe Mine ("Kiziltepe" or "the Project") in Turkey.  Kiziltepe is part of the Red Rabbit Joint Venture ("JV") with Proccea Construction Co., and is 50% owned by Ariana through its shareholding in Zenit Madencilik San. ve Tic. A.S. ("Zenit").

Highlights:

·    Gross quarterly revenue of US$11.4 million at an average realised gold price of US$1,915 per ounce, against an average revenue per gold ounce of US$2,219 (due to silver credit)*.

·    Production and sale of 5,125 ounces of gold during the quarter ended 30 September 2020.

·    Operating cash costs for the quarter are estimated at US$352 per ounce^#; lower costs for the period resulting in part due to a decline in exchange rate and sale of silver stock.

·    Operational mill availability running at 100% and utilisation at 99% during the period.

·    57,302 tonnes of ore milled during the period ended 30 September 2020 at an average head grade of 2.63 g/t Au.

·    Process recovery of gold remains high at 94.2%.

* All figures are given gross with respect to the JV.

Dr. Kerim Sener, Managing Director, commented:

"Third quarter 2020 gold production not only exceeded the prior quarter by nearly 10% and enabled full year production guidance to be maintained into the current quarter, it also showed a 15% increase in revenue for the period. While the quarter marked the end of production from the high-grade Arzu South open-pit, operations have continued exceedingly well at the Arzu North and Derya areas. In particular, open-pit material movements have remained very high and the JV has built up a very large ore stockpile which provides for over ten months of mill feed.

"The period also concluded with the completion of the final stage installation of the tailings dam liners. Consequently, development of the mine site is now fully complete in terms of the infrastructure according to the feasibility design. However, it is the intention of the JV to continue operational enhancements at the site and work is now underway on an increase in operating capacity up to about 500,000 tonnes of ore per annum.

"This will be particularly important as we look to lower grade sources of ore for the plant. The potential at Kiziltepe for larger tonnage, lower grade orebodies is evident already based on our experience of exploring and now mining of the Arzu North and Derya areas. The mine is currently producing over 200% more gold in these areas than was projected in the mine plan. We are confident that further ore will be defined in this area with future drilling programmes.

"These efforts are part of our drive to ensure that Kiziltepe remains an efficient operation, capable of producing gold at the lowest possible cash costs. The emphasis on operating margin represents one of the guiding principles on which the JV intends to continue developing. The current precious metal pricing environment only adds to the fundamental profitability of the Kiziltepe operation." 

This announcement contains inside information for the purposes of Article 7 of EU Regulation 596/2014.

Current Developments:

·    Production of ore from the open-pits achieved an average rate of 28,987 tonnes per month over the period, with a peak rate of over 40,773 tonnes achieved in July.

·    Operations in the Arzu North and Derya areas are continuing as planned and production during the quarter showed a >200% increase in mined gold over the Reserve block-model but at slightly lower than modelled grades; this trend is currently continuing in to the current quarter.

·    The JV maintains a working capital loan balance with Turkiye Finans Katilim Bankasi A.S. of approximately US$5.4 million which is expected to be repaid in full by October 2021.

* All production figures are quoted gross with respect to the JV in this announcement.

^# Operating cash costs are inclusive of on-site costs, off-site charges and royalties specific to the project. It also includes adjustments for stockpile balances at the end of each quarter, in addition to an adjustment for by-product silver. They exclude finance costs, taxes and development capital. The definition used to derive the cash costs is essentially the same as that used within the feasibility study. This cash cost was calculated based on unaudited figures obtained from Zenit.

Table 1: Production statistics for the Kiziltepe Mine in Q3 2020. 

(1)        Average revenue per gold ounce accounts for both the gold and silver sold during the period and is calculated by dividing the gross income by only the gold ounces sold in the period. 

Summary of Project

The Kiziltepe operation is currently expected to deliver approximately an average of 20,000 oz* gold equivalent per annum over eight years of initial mine life, for a total of up to 160,000 oz* gold equivalent based on current resources. The operating company, Zenit Madencilik San. ve Tic. A.S. (50:50 JV between Ariana and Proccea) is making remaining repayments against a working capital loan from Turkiye Finans Katilim Bankasi A.S. based on a contractual schedule to October 2021. Construction capital loan repayments totalling US$33 million were completed in April 2020, with excess cash-flow from the operation used to make proportional repayments of loans provided by Ariana and Proccea jointly to the JV for exploration and development respectively.

Commercial production was initiated at Kiziltepe during July 2017 and formal quarterly production reporting commenced. The Company has also completed a new resource estimate for the project based on recent drilling and geological interpretation. Detailed technical and economic assessments will be completed on several satellite vein systems which are not currently in the mining plan, in anticipation of these being developed in future years. The Company is currently targeting a minimum ten-year mine life, which will require the addition of a further 40,000 oz* gold equivalent in reserves outside of the four main pits (Arzu South, Arzu North, Banu and Derya) that are currently scheduled to be mined. Management is confident that this can be achieved assuming the conversion of existing resources to reserves.

Contacts:

Editors' Note

About Ariana Resources:

Ariana is an AIM-listed mineral exploration and development company operating in Europe.  It has interests in gold production in Turkey and copper-gold assets in Cyprus.  The Company is developing a portfolio of prospective licences in Turkey, which contain a depleted total of c. 2.1 million ounces of gold and other metals (as at July 2020). 

The Red Rabbit Project is comprised of the Company's flagship assets, the Kiziltepe and Tavsan gold projects, and is part of a 50:50 Joint Venture with Proccea Construction Co.  Both assets are located in western Turkey, which hosts some of the largest operating gold mines in the country and remains highly prospective for new porphyry and epithermal deposits.  The Kiziltepe Sector of the Red Rabbit Project is fully permitted and is currently in production.  The total depleted resource inventory at the Project and its wider area is c. 500,000 ounces of gold equivalent (as at April 2020).  At Kiziltepe a Net Smelter Return ("NSR") royalty of up to 2.5% on production is payable to Franco-Nevada Corporation. At Tavsan an NSR royalty of up to 2% on future production is payable to Sandstorm Gold.

The 100% owned Salinbas Gold Project is located in north-eastern Turkey and has a total resource inventory of c. 1.5 million ounces of gold.  The project comprises three notable licence areas: Salinbas, Ardala and Hizarliyayla, all of which are located within the multi-million ounce Artvin Goldfield.  The "Hot Gold Corridor" contains several significant gold-copper projects including the 4 million ounce Hot Maden project, which lies 16km to the south of Salinbas and 7km south of Hizarliyayla.  A NSR royalty of up to 2% on future production is payable to Eldorado Gold Corporation on the Salinbas Gold Project.

Ariana is also earning-in to 50% of UK-registered Venus Minerals Ltd ("Venus") and has to date earned into an entitlement to c. 12%.  Venus is focused on the exploration and development of copper-gold assets in Cyprus, which includes the Magellan Project on which a resource of 8.5Mt @ 0.63% Cu (+ Au, Ag, Zn) has been defined.

Panmure Gordon (UK) Limited is broker to the Company and Beaumont Cornish Limited is the Company's Nominated Adviser and Broker.

For further information on Ariana you are invited to visit the Company's website at www.arianaresources.com.

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