31 July 2017
KIZILTEPE QUARTERLY OPERATIONAL UPDATE
Ariana Resources plc ("Ariana" or "the Company"), the exploration and development company operating in Turkey, is pleased to announce its results for the ramp-up period ended 30 June 2017 and to provide the following operational update for July 2017 from the Kiziltepe Mine ("Kiziltepe" or "the Project").Kiziltepe is part of the Red Rabbit Joint Venture with Proccea Construction Co. and is 50% owned by Ariana.
Production of c.1,370 oz gold and c.6,780 oz silver during July 2017 has exceeded forecast, with total production since start-up of c.3,300 oz gold and c.21,300 oz silver.
Operation has successfully transitioned in to commercial production during July, as expected (see announcement dated 30 June 2017).
Gold and silver production during ramp-up period (ending 30 June 2017) totalled 1,929 oz and 14,519 oz respectively.
Processing plant operating to design specifications, with mill availability increasing to c.97% and utilisation increasing to c.96% by June.
Process recoveries of gold and silver remain significantly higher than expected; average recoveries were 94% for gold and 79% for silver, while feasibility expectations were 86% and 64% respectively.
38,886 tonnes ore milled during the period ending 30 June 2017, with May and June tonnage exceeding feasibility expectations.
Grade of ore mined in July is c.4g/t Au and c.40 g/t Ag which is higher than forecast; grades expected to be maintained at this level over the next 6 months.
Production of ore from the open-pit is being increased to 17,000 tonnes per month, with a further increase to 22,000 tonnes per month planned by late summer.
Doré pour of c.450 oz gold and c.2,000 oz silver expected today (included in July figure quoted above and Table 1 below); gold and silver in circuit after this pour is estimated to be 300 oz and 3,000 oz respectively.
Loan repayments to Turkiye Katilim Finans Bankasi A.S. have been made on their scheduled basis and have amounted to over US$4.2 million as at the end of July 2017.
Calendar year 2017 production guidance lies within a range 10,100 to 11,900 oz gold and 103,500 to 106,500 oz silver.
Dr. Kerim Sener, Managing Director, commented:
"We are very pleased to provide our first quarterly operational update for the Kiziltepe Mine, encompassing the period of ramp-up from mid-March through to the end of June 2017. We remain very encouraged by the performance of all aspects of the operation, especially during July when doré output considerably exceeded forecast. Following sustained high-rate mill throughput, we have now achieved a production rate above our feasibility plan and the transition in to commercial production is complete.
Our confidence in the ability for the operation to increase output, particularly during the dry summer months is significantly improved. Ore movement from the pit will be increased to 22,000 tonnes per month, which will represent an increase of over 75% above the feasibility plan. We are also continuing to consider strategies to increase mill throughput which may enable production to be eventually increased to c.200,000 tonnes of ore per annum, representing an increase of one third over the feasibility plan. Notably these strategies will not involve any significant additional capital expenditure and relate to alternative crusher scheduling, screening and milling approaches."
Table 1: Production statistics for the period reported, mid-March to end-June 2017 and production to date up to the end of July 2017. End-July production includes a doré pour, occurring on the 31 July 2017, which will yield c.450 oz gold and c.2,000 oz silver.
|Measure||Unit||Q2 2017||2017 Production to Date
March to End-July
|Gold produced||Troy Ounces||1,929||c.3,300|
|Gold sold||Troy Ounces||1,929||2,861|
|Silver produced||Troy Ounces||14,519||c.21,300|
|Silver sold||Troy Ounces||14,519||19,372|
|Cash cost of production||US$/oz||n/a*||n/a*|
|Average realised gold price||US$/oz||1,258.20||1,247.75|
|Average realised silver price||US$/oz||17.40||17.04|
(*) Cash costs are not provided for the purposes of this report due to the operation having been in ramp-up. Costs incurred during the period are not reflective of estimated operating costs over the longer term.
Summary of Project
The Kiziltepe operation is currently expected to deliver approximately 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) will continue to make repayments against its loan from Turkiye Finans Katilim Bankasi A.S. based on a pre-determined schedule. Major loan repayments will have been completed by April 2020 and, during this time, excess cash-flow from the operation will be used to make repayments of loans provided by Ariana and Proccea jointly to the JV for exploration and development respectively. After the repayment of all loans, profits from the operation will be shared on a 51:49 basis between Ariana and Proccea respectively.
Ramp-up to full production capacity at Kiziltepe has been concluded and formal quarterly production reporting is commencing. 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 veins (Arzu South, Arzu North, Banu and Derya) that are currently scheduled to be mined.
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|
|Panmure Gordon (UK) Limited||Tel: +44 (0) 20 7886 2500|
|Adam James / Tom Salvesen|
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 originally selected on the basis of its in-house geological and remote-sensing database.
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, form part of a 50:50 Joint Venture with Proccea Construction Co. The Kiziltepe Sector of the Red Rabbit Project is fully-permitted and is currently in production. The total resource inventory at the Red Rabbit Project and wider project area stands at c. 605,000 ounces of gold equivalent. 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.
In north-eastern Turkey, Ariana owns 100% of the Salinbas Gold Project, comprising the Salinbas gold-silver deposit and the Ardala copper-gold-molybdenum porphyry among other prospects. The total resource inventory of the Salinbas project area is c. 1 million ounces of gold equivalent. A NSR royalty of up to 2% on future production is payable to Eldorado Gold Corporation.
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 www.arianaresources.com.
Glossary of Technical Terms:
"doré" semi-pure alloy of gold and silver;
"g/t" grams per tonne;
"tpa" tonnes per annum;
"tpm" tonnes per month.
The issuer of this announcement warrants that they are solely responsible for the content, accuracy and originality of the information contained therein.
Source: Ariana Resources plc via Globenewswire