Shares in Ariana Resources (LSE:AAU) enjoyed a 1.13pc boost to 1.9p on Tuesday after the firm announced a 25pc year-on-year increase in the gold production guidance for its key mine in Turkey. The business expects to produce around 25,000oz of the precious metal from the Kiziltepe mine. This is a quarter higher than its 20,000oz gold production guidance for 2018, and around 21pc above than feasibility plan for Kiziltepe’s third year of operations.
Kiziltepe commenced commercial production in 2017 and is part of Ariana’s 50pc-held Red Rabbit Joint Venture with Proccea Construction. It is currently expected to deliver 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.
Ariana is currently targeting a minimum ten-year mine life, which will require the addition of a further 40,000oz gold equivalent in reserves outside of the four main pits. In Tuesday’s update, Ariana said preparations are being made to start mining on satellite pits from early next year. For the meantime, however, open-mining at Kiziltepe will continue to focus on the Arzu South pit in 2019.
Ariana’s managing director Kerim Sener said the 25pc increase in production guidance reflects the firm’s expectations of higher grades as it continues to mine deeper at Arzu South. Indeed, the average grade of mined gold during the year is expected to be 5g/t, and recoveries are forecast to exceed 90pc.
Meanwhile, full-year ore throughput to the mill is planned to reach 195,000ts, representing a 30pc increase over Kiziltepe’s feasibility plan. Ariana also said that it forecasts average monthly production of around 13,000ts of ore, peaking in the final quarter of the year.
On this, Sener said: ‘Although ore output from Arzu South will be variable through the year due to the pushbacks required to accommodate the final stage of mining, current stockpiles are expected to provide for any shortfalls in output such that mill throughput can be maintained at the highest levels through the year.’
‘As a low-cost open pit operator, ranked in the lowest quartile of cash costs globally, the JV continues to target increases in production and life of mine. We are pleased to note that our plans for advancing production from some of our satellite pits are at an advanced stage and we look forward to commencing work in these areas towards the end of this year.’
Sener added that Kiziltepe has continued to perform ‘exceptionally well’ despite difficult weather conditions following a strong end to 2018. In January, Ariana revealed that Kiziltepe production had come in at 27,110oz for 2018, exceeding forecasts by 36pc. A month later, it announced that this had translated into gross annual income for 2018 of $37.8m, with operating cash costs coming in at just $349/oz,
Elsewhere in Tuesday’s update, Sener said the Red Rabbit JV expects to have mostly paid off the balance of a $33m JV construction capital loan for Kiziltepe by the end of the year. This comes after the firm announced that the venture had paid off half of the debt as at the end of Q4 2018.
Author: Daniel Flynn
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