Ariana Resources reports ‘excellent’ performance from Kiziltepe gold Mine (AAU)

Ariana Resources (LSE:AAU) had a positive end to the year continuing a strong run of production from its Turkish gold mine. Gross income for the final quarter was $10.62m from production and sale of 7,417 ounces of gold.  These figures were in line with what Ariana’s Managing Director, Dt. Kerim Sener described as ‘excellent performance’ during the previous two quarters.

In a quarterly update released on Friday, Ariana said final year gross income totalled $37.8m from the production of 27,110 ounces of gold. This saw the company substantially exceed its yearly production forecast with year-on-year increase of gold production of around 166pc.

Operating costs have also come down since 2017, averaging $349 per ounce in 2018, compared with $585 per ounce in the previous year. With the gold price appearing to have put in a base since its lows of $1161 last August, Ariana appears poised to capitalise on a much-improved margin as we continue into 2019. 

Earlier this month, Ariana said it will receive up to £3.79m worth of capital from its subsidiary Galata Madencilik. Galata, Ariana’s wholly-owned Turkish operating company, has transferred around £1m to date as a result of the repayment of loans by its JV company, Zenit Madencilik.

The company is currently undertaking a drilling campaign in Western Turkey at Kizilcukur, which lies around 22km to the northeast of the Kiziltepe Mine. Drilling to date has indicated that Kizilcukur has the capacity to act as a high-grade satellite source for Kiziltepe 

Dr. Kerim Sener, Managing Director, commented: 

"These final results for Q4 2018 are fully in line with the excellent performance of the Kiziltepe Mine achieved during the prior two quarters. Operating cash cost per ounce remains low, mainly due to the maintenance of significant by-product silver credit and increased grades through the plant during the period. 

"As at the end of the quarter, 50% of the JV construction capital loan of US$33 million has been repaid, with the remaining balance to be repaid largely during 2019. Monthly intercompany loan repayments from the JV to our wholly owned subsidiary, Galata Madencilik San. ve Tic. Ltd., reached approximately US$2.1 million by the end of 2018." 

Author: Stuart Langelaan

The Author does not hold any position in the stock(s) and/or financial instrument(s) mentioned in the piece.
Catalyst Information Services Ltd, the owner of MiningMaven.com, owns a position in the stock(s) and/or financial instrument(s) mentioned in the piece.
Catalyst Information Services Ltd, the owner of MiningMaven.com, has been paid for the production of this piece by the company or companies mentioned above.
MiningMaven.com and Catalyst Information Services Ltd are not responsible for its content or accuracy and do not share the views of the author.  News and research are not recommendations to deal, and investments may fall in value so that you could lose some or all of your investment. Past performance is not an indicator of future performance.

Kerim Sener talks progress as Ariana Resources reveals £3.79m payment from Kiziltepe subsidiary (AAU)

Ariana Resources (LSE: AAU) climbed 8% on Tuesday on news that it will receive up to £3.79m worth of capital from its subsidiary Galata Madencilik. Galata, Ariana’s wholly-owned Turkish operating company, has transferred around £1m to date as a result of the repayment of loans by its JV company, Zenit Madencilik.

Galata made the loans to cover the exploration and development of its Kiziltepe Mine, which achieved first gold production in March 2017. The mine is part of the Red Rabbit Gold Project, a joint venture between Galata and Proccea Construction (incorporated as Zenit Madencilik). Now that production has ramped up, cashflow from the mine has reduced capital requirements, allowing Zenit to make repayments back to Galata.

Speaking with Mining Maven, Ariana’s Managing Director, Dr. Kerim Sener explains:

"We’ve been building up a strong position of funds within our subsidiary as a result of the transfers that were coming from our joint venture with Proccea.  Those funds were derived from cashflow in repayment of loans we previously made to the joint venture. We have been receiving loan repayments pretty much every month since February of last year.’"

The return of funds will obviously be very beneficial to Ariana, which will now be able to redistribute additional capital to its other assets in Turkey.  The company is currently undertaking a drilling campaign in Western Turkey at Kizilcukur, which lies around 22km to the northeast of the Kiziltepe Mine. Sener told us some of its new funds will be redirected here. Sener commented on progress at the Kizilcukur Project in a January update to investors, saying:

“We are encouraged by the results of this recent work and the current drilling programme will add confidence to the resource estimate for the Zeki Pit as part of our feasibility work programme.”

Drilling to date has indicated that Kizilcukur has the capacity to act as a high-grade satellite source for Kiziltepe. More will be known in the summer when the joint venture plans to truck 300ts of ore to Kiziltepe for test processing. 2,800ts of material has already been stockpiled on site and has been subjected to successful initial testing. Ariana will truck the remaining 2500ts for processing if the first batch of 300ts is successful.

The repatriation of funds back to Ariana is expected to pick up again after this year. In line with this, Sener tells us that repayments of loans to the Turkish bank that provided the finance for the development of Kiziltepe are marginally higher this year: 

"Once we’re through this year, the free cashflow will be directed to the partners – ourselves and Proccea Construction. But we first need to bring those funds into Ariana PLC. The most efficient way to do this is to pursue a reduction in capital. The reduction of capital allows us to repatriate that capital to the UK, without incurring tax.’"

With the Kiziltepe Mine in full swing and generating cashflow, Ariana is now in a strong position to continue the expansion of its operations.

Author: Stuart Langelaan

The Author does not hold any position in the stock(s) and/or financial instrument(s) mentioned in the piece.
Catalyst Information Services Ltd, the owner of MiningMaven.com, owns a position in the stock(s) and/or financial instrument(s) mentioned in the piece.
Catalyst Information Services Ltd, the owner of MiningMaven.com, has been paid for the production of this piece by the company or companies mentioned above.
MiningMaven.com and Catalyst Information Services Ltd are not responsible for its content or accuracy and do not share the views of the author.  News and research are not recommendations to deal, and investments may fall in value so that you could lose some or all of your investment. Past performance is not an indicator of future performance.

Ariana Resources plans maiden processing shipment from Kizilcukur (AAU)

Ariana Resources (LSE:AAU) rose 2.94pc on Monday after laying down development plans for its 100pc-owned Kizilcukur project in Turkey.

Kizilcukur is based 22km to the northeast of the Kiziltepe mine, which is part of the Red Rabbit joint venture held between Ariana and Proccea. Its mineral resource in the indicated and inferred JORC categories stands at c.308,000 tonnes at 2.11g/t gold and 73.4g/t silver with upside potential.

In Monday’s update, Ariana revealed strong results in its latest round of drilling at the asset. A bulk sample obtained from the Kizilcukur vein returned c.20ts at 4.22g/t gold and 284g/t silver. This came from the Zeki pit, which is the largest and highest grade of three pits defined at the resource.

The work aimed to obtain a high-grade bulk sample for test processing at the Kiziltepe processing plant. Ariana is now planning to truck 300ts of this material grading 4.3g/t gold and 239g/t in the summer. It this is successful it plans to transport the remaining 2,500ts of mineralisation ore it currently has stockpiled on site. It believes it could double this through limited additional trial mining in 2019.

Ariana’s exploration team focused on drilling activities at Kizilcukur since early December 2018. Their work is now around a quarter completed and has continued despite harsh winter weather condition. In Monday’s update, the firm it intends to keep drilling as long as possible through a window of more favourable weather over coming weeks.

Ariana’s managing director Kerim Sener said the latest bulk sampling results demonstrate that Kizilcukur can act as a source of high-grade satellite feed to the Kiziltepe processing plant. The total resource inventory at the Red Rabbit Project and wider project area stands at c.605,000oz of gold equivalent, as at end-2017.

‘We are encouraged by the results of this recent work and the current drilling programme will add confidence to the resource estimate for the Zeki Pit as part of our feasibility work programme,’ added Sener. ‘We are planning to truck a 300 tonne batch of ore to Kiziltepe for test processing during the summer, in order to assess the merits of potentially expanding our operations at Kizilcukur.’

Author: Daniel Flynn

Disclaimer: The author does not own shares in the company covered in this piece.

Ariana Resources smashes 2018 gold production forecasts by more than a third (AAU)

Ariana Resources (LSE:AAU) rose 2.2pc this morning after announcing that production from its flagship project in Turkey beat expectations by more than a third in 2018. Production from the Kiziltepe mine came in at 27,110ozs of gold over the 12 months. This output surpasses initial full-year production guidance of 20,000oz by around 36pc.

Gold production for the final three months of 2018 came in at 7,517oz, slightly below the 7,556oz it produced in the last quarter of 2017. Meanwhile, total ore processed for the quarter was 49,717ts at an average head grade to the plant of 5.23g/t gold, and average metallurgical plant recovery of gold remained high at 91.6pc.

Kiziltepe is part of Ariana’s 50pc-held Red Rabbit joint venture with Proccea Construction in Turkey. It is fully permitted and, as it stands, the company’s chief producing asset. A net smelter return royalty of up to 2.5pc on production is payable to the Franco-Nevada Corporation.

Last month, Ariana announced plans to carry out an imminent 1,00m diamond drilling programme at a licence called Kizilcukur, 22km northeast of Kiziltepe. The programme is expected to upgrade Kizilcukur’s existing indicated and inferred resource of c.308,000 tonnes at 2.11g/t gold and 73.4g/t silver. Ariana plans to truck ore from the licence and process it at Kiziltepe in the future, further boosting the latter’s upside.

The Red Rabbit project also contains the Tavsan gold project, where a royalty of up to 2pc on future production is payable to Sandstorm gold.

Kiziltepe and Tavsan host a series of prospects and span two prolific mineralised districts in the Western Anatolian Volcanic and Extensional province of western Turkey. This area hosts the most significant operating gold mines in Turkey. According to Ariana, it remains highly prospective for new porphyry and epithermal deposits. All-in-all, the total resource inventory at Red Rabbit and its wider project area stands at c.605,000ozs of gold equivalent.

Ariana’s managing director Kerim Sener said that beating production expectations was a ‘significant milestone’ for the business. He added that it coincides with the repayment of 50pc of a $33m redevelopment loan. It will repay the majority of the remaining balance throughout 2019, he said.

‘The past year has seen the Joint Venture achieve several successes, quarter on quarter, including an annualised increase in mill throughput to 200,000 tonnes per annum. We look forward to the continuation of these very positive developments. We take this opportunity to thank both our dedicated JV team and our partners, Proccea Construction Co., for their diligence and focus during the year,’ said Sener. ‘We begin 2019 on firm-footing, and we are very excited about the year ahead.  We are expecting to publish 2019 production guidance in due course.’

Alongside its stake in Red Rabbit, Ariana owns 100pc of the Salinbas Gold Project in north-eastern Turkey. This contains numerous prospects, the most notable of which are the Salinbas gold-silver deposit and the Ardala copper-gold-molybdenum porphyry. The project’s total resource inventory comes in at c.1MMoz of gold equivalent. A royalty of 2pc on future production is also payable to Eldorado Gold Corporation.

Author: Daniel Flynn

Disclosure: The author does not own shares in the company mentioned in this article

Ariana announces planned drill at Kizilcukur project in Turkey (AAU)

Ariana Resources (LSE:AAU) jumped 6.7pc to 1.6p today after announcing ‘imminent’ drilling at its Kizilcukur project in Turkey. A 1,000m diamond drilling programme aims to upgrade existing JORC resources to the measured and indicated categories.