26 May 2020
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 31 March 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”).
· Gross quarterly income of US$8.84 million at an average realised gold price of US$1,599 per ounce, against an average revenue per gold ounce of US$1,724 (due to silver credit)*.
· Production and sale of 5,129 ounces of gold during the quarter ending 31 March 2020.
· Operating cash costs for the quarter are estimated at US$533 per ounce#.
· 31,421 ounces of silver was not sold during the period due to adverse price conditions and has been retained in stock.
· Operational mill availability running at 99% and utilisation at 99% during March.
· 53,840 tonnes ore milled during the period ending 31 March 2020 at an average head grade of 3.22 g/t Au.
· Process recovery of gold remains high at 92.5%.
· Kiziltepe Mine currently remains on track to deliver on the 2020 production target of 18,000 ounces of gold.
Dr. Kerim Sener, Managing Director, commented:
“Production during the first quarter of 2020 has provided another pleasing result, which was delivered in part during the current pandemic. Our business, being considered an essential industry, was allowed to continue and operations remain largely unaffected despite the introduction of various risk mitigation procedures at the mine site and an overall reduction of active staff levels. Indeed, our operations in to the current quarter are continuing in accordance with the mine plan.
“It is also important to note that the average monthly production from Kiziltepe during Q1 and in to the current quarter is currently running above target. This is in part due to higher material movements and the consequent accessibility of optimal grade ore feed throughout the period. Assuming production is able to continue uninterrupted through the current quarter, we remain on track to deliver on our production target for the year.”
This announcement contains inside information for the purposes of Article 7 of EU Regulation 596/2014.
· Production of ore from the open-pits achieved an average rate of 30,827 tonnes per month over the period, with a peak rate of over 31,891 tonnes achieved in February.
· Operations in the Arzu North and Derya areas are continuing as planned, with mining undertaken primarily from Arzu North during the period.
· Following the repayment of the US$33 million construction capital loan to Turkiye Finans Katilim Bankasi A.S., the JV is largely free of debt but maintains a separate working capital loan balance with the bank of approximately US$8.5 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 and 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 Q1 2020 and for the period mid-March 2017 to end-December 2019 (life of mine to date).
Life of Mine to Date#
Plant feed grade
Operating cash cost of production
Average revenue per gold ounce(2)
Average realised gold price
(1) Cash costs are not provided for the purposes of the life of mine due to the operation having been in ramp-up during part of the period. Costs incurred during the ramp-up period are not reflective of estimated operating costs over the longer term.
(2) 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.
# Re-stated following year-end mine and mill reconciliation.
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. 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. After the repayment of all loans, profits from the operation will be shared on a 51:49 basis between Ariana and Proccea 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.
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
Panmure Gordon (UK) Limited
Tel: +44 (0) 20 7886 2500
James Stearns / Atholl Tweedie
Yellow Jersey PR Limited
Tel: +44 (0) 20 3004 9512
Dom Barretto / Joe Burgess / Henry Wilkinson
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 1.5 million ounces of gold and other metals (as at April 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 million ounces of gold equivalent. The project comprises three notable licence areas: Salinbas, Ardala and Hizarliyayla, all of which are located within a multi-million ounce Artvin Goldfield. The “Hot Gold Corridor” contains several significant gold-copper projects including the 4Moz 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”). Venus is focused on the exploration and development of copper-gold assets in Cyprus.
Panmure Gordon (UK) Limited are broker 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.