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Ariana Resources powers ahead as it agrees terms of possible Turkish partnership

Snapshot

The company is currently exploring and developing one million ounce Salinbas Gold Project in north-eastern Turkey

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Quick facts: Ariana Resources PLC

Price: 2.25 GBX

AIM:AAU
Market: AIM
Market Cap: £23.84 m
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  • Ariana Resources PLC is an AIM-listed gold-silver exploration and development Company with operations in Turkey

  • Gold and silver production started in July 2017 at Kiziltepe, part of the wider Red Rabbit Gold Project in joint venture with Proccea.

  • The Company is currently exploring and developing one million ounce Salinbas Gold Project in north-eastern Turkey, where the 4mln oz Hot Maden project is 16km to the south

  • Wholly-owned Australian subsidiary Asgard Metals has investments in a number of lithium/antimony projects in that country

 

How is it doing

Income of US$11.76mln in the third quarter of 2019 was achieved at an average realised gold price of US$1,476 per ounce.

Production in the quarter clocked in 6,933 ounces of gold, taking output in the first nine months of the year up to 20,667 ounces, leaving the company on track to achieve its annual production guidance of 25,000 ounces of gold.

Operating cash costs for the quarter are estimated at US$540 per ounce of gold produced.

The quarter saw 55,174 tonnes of ore milled at an average head grade of 4.47 grams per tonne of gold, with process recoveries of gold running at 93.6% at the end of the quarter.

Production of ore from the open-pit was 47,933 tonnes over the three months, with a peak rate of over 17,444 tonnes achieved in August.

 

What’s next

In the quarterly operational update in November, Ariana said mining operations had commenced in the Arzu North and Derya areas, supplementing production from the Arzu South pit, which is nearing the end of its operational life.

Meanwhile, the company has also agreed a potential partnership deal with a major Turkish construction firm for a number of its projects in the country.

The explorer said the proposed deal, outlined in a memorandum of understanding (MoU), will involve the sale of 17% of its Salinbas gold project for US$5mln.

The deal also proposes the sale of 53% of Zenit, Ariana’s joint venture (JV) with Turkish group Proccea which operates the Kiziltepe mine, for US$50mln to be split between the JV partners equally, as well as an US$8mln cash injection by the proposed partner to help bring the project into production.

The company expects to secure binding agreements and shareholder approval for the partnership no later than February next year.

 

What the boss says: Kerim Sener, Managing Director

Kerim Sener, Ariana’s managing director, said the partnership, if approved, “will create a formidable exploration, development and production group focused on Turkey”.

“This [MoU] will combine the unique skill-sets of each Partner in a mutually beneficial and synergistic manner. We look forward to advancing the proposed MoU into a joint venture capable of unlocking the full value of our assets in Turkey, which will also target the development of a future pipeline of high-value production projects.”

 

Video interview

 

Inflexion points

  • The company has now paid off 78% of the £26mln (US$33mln) loan taken out for its flagship mine Kiziltepe in Turkey, a 50/50 joint venture with Proccea Construction Co.

  • Once the construction loans are repaid, Ariana will receive a much larger, pro-rata share of Kiziltepe’s income.

  • Annual production rises to 50koz/year (from 25koz/year) following the hoped-for commencement of mine development at Tavsan during 2020.

  • LIcences at Salinbas renewed until 2024 with mining permit area at Ardala extended

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