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Ariana Resources takes show on the road with rapid expansion beyond Turkey (AAU, 4A6)
If you have a business strategy that works, why would you want to change it?
Indeed, wouldn’t it make more sense to take an approach that you already know to be successful, and apply in other areas where it can generate even more value?
Well, that’s exactly what gold explorer and producer Ariana Resources (LON: AAU | FRA: 4A6) is doing right now.
You see, with its proven, highly successful approach continuing to gather increasingly impressive momentum in Turkey, this London-listed company is taking what it has learned into a growing number of new territories, increasing the upside on offer for both itself and its investors with every passing day.
And make no mistake, given the scale of geological potential across these new areas, this upside could be vast.
Here, Ariana’s managing director Dr. Kerim Sener walks Mining Maven through his firm’s exciting plans over the coming months and years.
How it works – the basis of a strong strategy
Sener tells us that Ariana’s approach to gold exploration and production in Turkey began with a focus on picking “relatively early-stage mineral development opportunities” which showed potential to become mines.
Then, from here, the firm has gone on to build these opportunities into producing mines and advanced development projects using successive drilling campaigns.
According to Sener, “it was a matter of identifying good in-country teams and good partnerships” that ultimately created such a solid platform on which to build the company.
And this foundation is extremely solid. In fact, in its latest annual report for 2020, Ariana revealed gold production of 18,645 ounces and pretax profit of just over £5 million.
Critically, thanks to this work, Ariana is now completely self-funded through its Turkish JV gold mining activities. In fact, the company’s last significant fund raise came over four years ago.
Beyond Turkey – Ariana pursues success further afield
As alluded to earlier, with Turkey continuing to deliver, Ariana has now taken its strategy even further afield.
“Our approach worked so well in Turkey that we recognized the opportunity to do the same thing and roll the same sort of strategy out elsewhere,” Sener explains.
In Cyprus, this expansion is taking place through Venus Minerals, where Ariana has an earn-in agreement for up to a 50% stake and into which they have already earned an entitlement to 37.5%.
Venus Minerals, active in Cyprus for over 15 years, is seeking to develop volcanogenic massive sulphide copper-gold deposits, and its main projects are Magellan and Mariner.
Magellan comprises three licence areas known as Kokkinoyia, Klirou, and New Sha sectors.
The three are Venus Metals’ most advanced projects, with JORC 2012 resources of approximately 9.5 million tonnes of ore with an average grade of 0.65% copper. All three also have indications of significant gold assays and all three have exploration upside, as reinforced in the latest drilling results from the Kokkinoyia Sector.
This puts a target of more than 10 million tonnes at a minimum of 0.5% copper, 0.5g/t gold, and 0.5% zinc well within reach.
Mariner, meanwhile, was acquired more recently and consists of two licences - Avdellero and Troulli. Venus Minerals analysed over 2,000 soil samples from Mariner and mapped over 10 square kilometres, finding several copper-zinc anomalies
Alongside, Cyprus, Ariana has also moved further into Eastern Europe now, too, with several exploration licence applications already submitted in Kosovo through Western Tethyan Resources (“WTR”). These include the Terpeza, Hertica, and Cecelia projects.
Previous trench results from Terpeza include an impressive 51m at 1.25 g/t gold, while drill intersections have returned 17m at 1.32 g/t gold and 24m at 1.65 g/t gold, 2% lead plus zinc.
Likewise, historical exploration has also been promising, returning above 1% lead and zinc over a kilometer-long structure. Finally, at Cecelia, a stream sampling programme found several significant gold anomalies, ranging between 0.2 and 2.2 parts per million gold.
Ariana will hold a 75% interest in WTR, after recently committing a further €100,000 of exploration funding in 2021. A local management team holds the other 25% WTR interest.
Other projects in Eastern Europe are also being assessed, with a focus on major copper-gold systems in areas like Bulgaria, North Macedonia, Serbia, and Bosnia.
Solid foundations - Turkey keeps on delivering riches for Ariana
Returning to Turkey, and Sener tells that us that he chose the country as Ariana’s kicking-off point after considering “a whole range of countries across the Tethyan Belt”.
Ultimately, he picked the country thanks to its stability and his own heritage.
“I am half Turkish. I was born there and spent the first four years of my life in Turkey before moving to the UK. I was naturally drawn to Turkey, and it was obvious from fairly early on that the country was going to be the focus for the company because of that,” Sener explains.
So why the Tethyan Belt in particular?
Well, the area is a major metal-producing belt that stretches all the way from Europe to the Himalayas and beyond. Sener compares it to “the Western seaboard of the Americas”, where the geology has created significant precious and base metal mineral systems running “from Alaska all the way down to the tip of Chile”.
He says the Tethyan belt is, like the Western seaboard of the Americas, highly prospective. However, it is vastly underexplored in comparison, due to the difficulties of working in some of these countries it scales, for example, Afghanistan.
Turkey has proven to be a great place for Ariana to have built its business. The potential of the region immediately becomes clear when one looks at Kiziltepe, currently Ariana’s flagship project.
The mine has a depleted JORC Measured, Indicated, and Inferred Resource of 700,000 ounces of silver and 227,000 ounces of gold, as of April 2020.
Kiziltepe has been in profitable production since 2017 and is expected to deliver around 20,000 ounces of gold a year until at least the mid-2020s.
Meanwhile, at the Kepez North area of the Kiziltepe Sector, drilling demonstrated potential for a northwest-trending high-grade mineralised shoot. This will be part of a revised resource estimate – now showing potential for a substantial boost in grade.
Elsewhere in Turkey, the Salinbas project is still a major opportunity for Ariana’s future growth, situated only 16km from the 4-million-ounce Hot Maden project.
Credit for much of the firm’s success to far goes to Ariana’s “almost 100% Turkish team,” which Sener calls “the best of the best in the business, certainly in Turkey”.
This team truly is impressive, boasting a remote-sensing specialist and in-house capabilities in areas like geophysics and geochemistry.
“Although we may be a relatively small company on the junior end of the market, we punch well above our weight,” Sener proclaims.
What’s next? – Ariana’s path to success
With a strong team already in place, Sener says Ariana’s aim is to demonstrate that it can operate within the framework of its joint ventures (“JVs”) successfully, maintaining “stable and robust” partnerships.
Sener believes that, at this point, there’s nothing stopping the company’s growth, especially given its “very sound financial footing”.
Being self-funded alone is a very valuable quality for a miner, especially one of Ariana’s size.
Indeed, the fact that the firm is not returning to the market for funds, which would likely dilute shareholder value, is worth anyone’s attention.
But perhaps most importantly, the company’s market capitalisation has already climbed “from a couple of million pounds” to almost £55 million at the time of writing.
And today, given the company’s proven model for taking projects from exploration and into production and considering the exploration and expansion into new geological environments that are already underway…
This figure only stands to increase by even greater multiples.
As Sener himself puts it:
“If we can go from £2 million to £55 million in the space of fifteen years, you know, what’s the next ten or fifteen years going to bring? I imagine significant, further growth.”
Bottom line is, now is an excellent time to invest and potentially reap the long-term rewards, with Ariana all set to replicate its solid strategy in new and exciting locations
Author: Anna Farley
The Author does not hold any position in the stock(s) and/or financial instrument(s) mentioned in the piece.
MiningMaven Ltd, the owner of MiningMaven.com, does not own a position in the stock(s) and/or financial instrument(s) mentioned in the piece.
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