Ariana Resources plc : Excellent results from Tavsan Scoping Study

10 November 2016


Ariana Resources plc ("Ariana" or "the Company"), the exploration and development company operating in Turkey, is pleased to announce the completion of a scoping-level assessment for the Tavsan Project* ("Tavsan" or "the Project") undertaken by independent geological, metallurgical and mining consultants.  Tavsan is part of the Red Rabbit Joint Venture with Proccea Construction Co. and will be 50% owned by Ariana once mine construction at the Kiziltepe Sector is completed in Q416. 


  • Results show potential for strong financial returns, with NPV (8%) at US$41.9M, with payback secured within 1.1 years over the Life of Mine ("LoM") at a gold price of US$1,250/oz.
  • LoM C1 gold equivalent cash-cost of US$559-630/oz, across model range with a pre-tax IRR of 80% at a gold price of US$1,250/oz.
  • Average LoM production of approximately 30,000 ounces of gold per annum over approximately 4 years; potential to increase the resource with drilling.
  • Capital expenditure estimated at US$20 million, which would involve development of a very low strip ratio open-pit mine and heap-leach.
  • Planned as a semi- stand-alone operation to Kiziltepe, potentially sharing much of the same infrastructure including the gold stripping and carbon regeneration facility, and gold room.
  • Additional drilling and metallurgical test-work being planned on the Project as part of a Pre-Feasibility Study ("PFS") scheduled for 2017.

Dr. Kerim Sener, Managing Director, commented:

"This is an excellent result which reinforces our view that the Tavsan Sector will become a valuable additional source of revenue within the context of the Red Rabbit Joint Venture with Proccea Construction Co.  The addition of Tavsan to our mining schedule will enable the Company the opportunity to increase production from approximately 20,000 oz pa to 50,000 oz pa between two operations.

We are investigating options for the fast-tracking of further exploration and development work at Tavsan, targeting completion of a PFS in 2017.  As part of this programme of work we are currently planning and budgeting for a dedicated drilling programme at Tavsan and further metallurgical test-work." 

Scoping Summary

Ariana and its consultants have completed a scoping-level assessment for the development of the Company's JV project at Tavsan, in Kutahya Province, western Turkey.  The scoping study provides initial estimates for costs and financial returns, based on the current Mineral Resource, which includes JORC 2004 classified Indicated and Inferred material as per the SRK Consulting (UK) Ltd Mineral Resource estimate, completed in 2008 (Table 1).

Table 1: SRK Mineral Resource statement (2008) for Tavsan.

Classification Zone Tonnage
Grade Metal
Au (g/t) Ag (g/t) Oz Au Oz Ag
Indicated Main 1.7 1.6 4.2 87,000 229,000
Inferred Main + Satellites 3.2 1.1 3.7 117,000 380,000

Project scoping was conducted independently by mining consultancy Auralia Mining Consulting Pty. Ltd. ("Auralia"), which has extensive experience in gold mining project development and assessment worldwide. For more information visit

Whittle Optimisation

Major parameters for the scoping study were derived from previous work undertaken for the Company, completed in 2008, by SRK and SGS on Mineral Resource estimation and metallurgical test-work respectively.  For the purposes of the Whittle optimisations, a revised block model was prepared independently for a sub-set of the original Mineral Resource by Odessa Resources Pty. Ltd.  New topographic data and certain corrections to drill hole collar coordinates were also taken in to account for the revised block model.  A base-case and set of range runs were carried out on the Tavsan project utilising the Whittle optimisation software package.  The base-case inputs applied in Whittle are outlined in Table 2 below.

Table 2: Summary inputs of the Whittle base case optimisation.

Whittle Input Parameter Value Units
Overall Slope Angle 50 Degrees
Reference Mining Cost 1.0 US$/t
Mining Dilution 10 %
Mining Recovery 95 %
Processing Cost 12.0 US$/t
G & A Cost 11.0 US$/t
Processing Recovery (Au) 80 %
Processing Recovery (Ag) 24 %
Sell Price Gold 1,060 US$/oz
Sell Price Silver 15 US$/oz
Sell Costs Royalties as required US$/oz
Discount Rate 8 %
Processing Constraint 0.75 Mtpa

The physical parameters of the base-case Whittle Revenue Factor (RF) 1 shell is summarised in Table 3 below.

Table 3: Summary outputs of the modified Whittle base-case optimisation (rounded figures with mining recovery and dilution applied) at US$1,060/oz Au.

Parameter Output
Total rock 8.1 Mt
Ore 2.7 Mt
Strip ratio 2:1
Average gold grade 1.6 g/t
Average silver grade 3.0 g/t
Gold ounces recovered 109,000 oz

For the purposes of determining mining inputs into the Whittle base-case run, the study assumed conventional drill, blast, load and haul methods with excavation planned to be carried out by 30t excavator and 25-35 tonne rigid body truck fleets.  Due to the geometry of the mineralisation in relation to the topography, a flat US$/t unit rate mining cost was applied, based on Ariana's Red Rabbit Gold Project.

Whittle range runs were carried out as part of the study.  They displayed standard expected linear movement and sensitivities to altering input parameters.  Although only at a scoping level, the resulting runs indicate the project is most sensitive to sell price fluctuations, but is physically robust to change on variance away from key base-case parameters.  This can be seen in Table 4 below.
Table 4: Whittle range run outputs, RF 1 worst-case shells used for comparison purposes.  All figures are rounded.

Mine Design

The topography at the Tavsan Project is dominated by a gently rolling hills.  Much of the Mineral Resource lies within the Main Zone, referred to here as the 100 Zone and several satellite zones, referred to as the 200, 300 and 600 zones (Figure 1).  As much of the mineralisation occurs within a gently dipping and largely outcropping unit of mineralised jasperoid, the bulk of the current Mineral Resource varies in depth from 0m to 30m below the surface. 

This physiography would potentially enable the development of several open-pits which would be initiated from the lowest point, with mining progressing sequentially up the hill-side with side-casting or dumping of waste behind the working face (Figure 1).  The open-pit could essentially be back-filled as mining progresses, minimising environmental impact and eliminating the requirement for a large permanent waste rock dump, which would also keep capital costs to a minimum.  Based on the high level scoping study Whittle shells, the overall strip ratio for the project is likely to be approximately 2:1, so little waste will need to moved within the pits.
Figure 1: which can be accessed from the link above shows a plan view of conceptual open-pit design for all pits at Tavsan (left) with the Main (100) Zone at Tavsan (right).  The mineralised zone is shown in yellow (left), sitting within the conceptual pit designs shown in brown.  The conceptual designs were based upon the side casting and back-filling premise as discussed above.  For the Main (100) Zone, Mineral Resources at >0.5g/t gold are displayed in pink in the diagram on the right, looking north-east, with topography shown in green. 

Mine Schedule

A conceptual mining schedule was completed for the life of the project using the RF1 Whittle shells for each ore zone (Figure 2).  As the deposit has a low strip ratio with ore at or close to the surface, very little pre-strip is required and therefore for the purposes of conceptual scheduling it is reasonable to use averaged ore delivery figures for the life of the project.  More detailed future studies will provide an opportunity to further optimise pit designs and scheduling so as to deliver the best overall cash flow for the project.
Figure 2: which can be accessed from the link above shows high level mining schedule including tonnes processed and input gold grades.

Process Route

Preliminary metallurgical test-work conducted in 2008 by SGS Lakefield Research Limited confirmed that processing using heap-leach methods would be suitable for the Tavsan mineralisation.  Recovery rates on average grade gold mineralisation (1.4 g/t Au) of 80% for gold and 26% for silver are expected based on column-leach test-work, although further test work is required, particularly for higher than average grade gold mineralisation (4.2 g/t Au).  Initial test-work showed that higher grade mineralisation demonstrated lower recoveries (67% for gold and 22% for silver), though the limited distribution of such mineralisation is not considered extensive enough to be a metallurgical concern at this stage. 

A four-year processing schedule is expected based on an all-materials schedule.  The silver contained with the mineralisation is not economic on its own, but adds credits as an output given the requirement to mine and process it along with the gold recovered (where the gold grade exceeds the economic cut-off).  Of approximately 136,000 ounces of gold input to the heap leach, approximately 109,000 ounces of gold is recovered at an 80% gold recovery rate.  A cut-off grade of approximately 0.96 g/t Au was established for the base case at US$1,060/oz Au.

It is envisaged that processing would commence on a small starter pad developed outside of the Main Zone.  After mining had progressed sufficiently within this zone, part of the pit could be converted to heap leach pads for the remaining mine life.  This would substantially reduce the environmental footprint of the operation, as the pads and much of the waste could be recycled back in to the pits, the operation would be largely self-rehabilitating. 

It is expected that loaded carbon could be potentially trucked to the Kiziltepe processing plant for carbon elution and recovery of gold.  In this case, there would be no requirement at Tavsan for gold stripping involving carbon elution and regeneration, electro-winning or a gold room, which would substantially reduce the capital cost.  Further work is required to determine the potential for such infrastructure to be shared in this manner.


The Tavsan project benefits from well-developed infrastructure and an established mining culture in the vicinity of the proposed mine.  A combination of sealed and un-sealed roads provide access to the project from the nearby town of Balikoy (8.5km away).  Nearby towns and villages provide a source of both skilled and un-skilled labour for the project.  Labour costs are significantly lower in Turkey than in comparable jurisdictions.  Power would be supplied from the grid for which costs are expected to be approximately 11 c/kWh.  A 31KV power line runs adjacent to the property and water would be derived from nearby sources.

Project Costs

Capital costs have been estimated by Auralia for the mining and processing components of the operation based on cost estimates that have been compiled based on metrics demonstrated by similar mining operations in Turkey and elsewhere.  The capital cost for the process plant, heap-leach pads and ancillary infrastructure is US$20 million at an estimated accuracy of ±30%.

Operating costs for the heap-leach plant are estimated at US$10.00/t, based on quoted pricing received by Ariana for the company's Salinbas project.  It should be noted that the mine optimisation work utilised a processing cost of US$12/t ore, based upon a 0.5Mtpa initial case, but this was subsequently revised for the modified base-case to US$10.00/t based on an enhanced production rate of 0.75Mtpa.

Across the model range, C1 gold equivalent cash costs are expected at approximately US$559-630/oz for the (averaged) LoM, based on the scoping study level Whittle shells.

Financial Model

A high level indicative pre-tax financial evaluation showing sensitivity to gold price (Table 5) was prepared on the basis of the Whittle outputs for the NPV (8%) scenario and the modelled NPV (10%) based on the RF1 Whittle shell derived at NPV (8%).  Total capital expenditure on the project has been deducted from the NPV figures.  All values were derived pre-tax due to the complexity and variability of tax on mining projects in Turkey, which are subject to investment incentives provided by the Government of Turkey.

It is important to note that for the high level financial analysis, the G&A parameters used in Whittle were amended from the original base-case to better reflect the economics of the project and the fact that Tavsan is likely to function as a satellite operation to the established Kiziltepe project, which will absorb the majority of the company's corporate overheads. The G&A figure was revised down to a still conservative US$9/t for the financial analysis.

Table 5: Summary high level indicative financial model and sensitivity of the project to gold price.  The NPV at 8% and 10% discount rates are shown after deduction of the total capital expenditure.  Estimated C1 cash costs are inclusive of royalty costs and calculated using the following formula: (Au Sell Price x Rec oz Au + Au equiv Rec oz Ag) - Undisc Cash Flow)/(Rec oz Au + Au equiv Rec oz Ag).  All figures shown are rounded.

Gold Price (US$/oz) NPV (US$M) Pre-Tax inc. CAPEX IRR%
(Pre Tax)
Approx. Ave. Payback (Years) Est. C1 Cash Cost* (US$/oz)
8% D/R 10% D/R
1250 41.9 39.1 80 1.1 630
1150 32.6 30.2 67 1.3 619
1060 24.4 22.5 55 1.5 606
950 14.6 13.1 39 1.8 586
850 6.1 5.1 23 2.2 559

Approvals and Incentives

The Joint Venture holds the relevant mining licences for the project through Zenit Madencilik San. ve Tic. A.S., but would require an Environmental Impact Assessment ("EIA") to be completed, in addition to other permits required for mining, in order for the project to be developed.  Preliminary EIAs are already in place for additional exploration and trial mining.

Turkey has adopted policies aimed at encouraging development of the mining sector through specific incentives.  Corporate tax rates are competitive, with a headline rate of 20% but with various tax incentives potentially reducing effective rates to 4% or less for initial periods of production.

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


Ariana Resources plc Tel: +44 (0) 20 7407 3616
Michael de Villiers, Chairman  
Kerim Sener, Managing Director  
Beaumont Cornish Limited Tel: +44 (0) 20 7628 3396
Roland Cornish / Felicity Geidt  
Beaufort Securities Limited Tel: +44 (0) 20 7382 8300
Jon Belliss  
Panmure Gordon (UK) Limited Tel: +44 (0) 20 7886 2500
Adam James / Tom Salvesen  

Editors' note:

The information in this report that relates to Mineral Resources is based on information compiled by Mr. Alfred Gillman of Odessa Resources Pty. Ltd., who is a fellow of the Australasian Institute of Mining and Metallurgy.  Mr. Gillman is a consultant to Ariana Resources plc and has sufficient experience relevant to the styles of mineralisation and type of deposit under consideration and to the subject matter of the report to qualify as Competent Person and defined in the 2012 edition of the Australasian Code for the Reporting of Exploration Results Mineral Resources and Ore Reserves (JORC Code).  Mr. Gillman consents to the inclusion in the report of the matters based on his information in the form and context in which it appears.

About Ariana Resources:

Ariana is an exploration and development company focused on epithermal gold-silver and porphyry copper-gold deposits in Turkey.  The Company is developing a portfolio of prospective licences selected on the basis of its in-house geological and remote-sensing database, on its own in western Turkey and in Joint Venture with Eldorado Gold Corporation in north-eastern Turkey.  Eldorado owns 51% of this joint venture and are fully funding all exploration work on the JV properties, while Ariana owns 49%.  The total resource inventory within this JV is 1.09 million ounces of gold.

The Company's flagship assets are its Kiziltepe and Tavsan gold projects which form the Red Rabbit Gold Project.  Both contain a series of prospects, within two prolific mineralised districts in the Western Anatolian Volcanic and Extensional (WAVE) Province in western Turkey.  This Province hosts the largest operating gold mines in Turkey and remains highly prospective for new porphyry and epithermal deposits.  These core projects, which are separated by a distance of 75km, are presently being assessed as to their economic merits and now form part of a Joint Venture with Proccea Construction Co.  The total resource inventory at the Red Rabbit Project stands at c. 525,000 ounces of gold equivalent. 

Beaufort Securities Limited and Panmure Gordon (UK) Limited are joint brokers to the Company and Beaumont Cornish Limited is the Company's Nominated Adviser. 

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


The open pit mining study carried out by Auralia Mining Consulting Pty Ltd referred to in this document is classed as high level only, and although constitutes a scoping study it does not meet the criteria of a pre-feasibility or feasibility study.  Due to this, the subsequent material inventories resulting from this work do not constitute or imply Ore Reserves. The estimates and beliefs applied in undertaking the scoping study, either stated or implied, by the Company and its consultants are based on a combination of quoted data, industry best practise and assumptions that may involve known and unknown risks and uncertainties which may result in future outcomes that differ to any expressed or implied estimates or projections derived from this scoping study.  Given the level of study, any data resulting from this scoping study refers solely to potential and does not guarantee that future work will result in the determination of Ore Reserves.  This document describes references to JORC classified Indicated and Inferred Mineral Resources. Inferred Mineral Resources have a greater amount of uncertainty as to their existence and greater uncertainty as to their economic feasibility. It cannot be assumed that any, or all, parts of the Inferred Resource will be upgraded to a higher Mineral Resource category or converted to Proven or Probable Ore Reserves.

Glossary of Technical Terms:

"Ag" the chemical symbol for silver;

"Au" the chemical symbol for gold;

"g/t" grams per tonne;

"Indicated resource" a part of a mineral resource for which tonnage, densities, shape, physical characteristics, grade and mineral content can be estimated with a reasonable level of confidence. It is based on exploration, sampling and testing information gathered through appropriate techniques from locations such as outcrops, trenches, pits, workings and drill holes. The locations are too widely or inappropriately spaced to confirm geological and/or grade continuity but are spaced closely enough for continuity to be assumed;

"Inferred resource" a part of a mineral resource for which tonnage, grade and mineral content can be estimated with a low level of confidence. It is inferred from geological evidence and has assumed, but not verified, geological and/or grade continuity. It is based on information gathered through appropriate techniques from locations such as outcrops, trenches, pits, workings and drill holes that may be limited or of uncertain quality and reliability;

"IRR" Internal Rate of Return;

"JORC" the Joint Ore Reserves Committee;

"m" Metres;

"M" million;

"Mt" million tonnes;

"Mtpa" million tonnes per annum;

"NPV" Net Present Value;

"oz" Ounces;


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Source: Ariana Resources plc via Globenewswire

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