Ariana Resources (LSE:AAU) treated investors to an across-the-board positive update on Thursday.
The AIM-listed firm revealed that 2020 gold production from its Kiziltepe mine in Turkey is expected to come in at around 18,000 ounces – nearly a third ahead of the project’s feasibility plan for this stage of mine life. Meanwhile, ore throughput to the project’s mill this year is expected to be c.205,000 tonnes – a 37% higher than estimated – while gold recovery is expected to exceed 90% at an average grade of 2.5 grams per tonne.
Kiziltepe is jointly owned by Ariana and a construction company called Proccea as part of a joint venture called Red Rabbit. The project is expected to produce a total of 160,000 ounces over an eight-year mine life across four main pits - Arzu South, Arzu North, Banu, and Derya. Work is also ongoing on several satellite vein systems currently absent from the Kiziltepe mining place, with the goal of bringing these into action in future years.
In Thursday’s update, Ariana said that open-pit mining will be completed in the Arzu South by the third quarter of the year. At this point, work will move entirely to the Arzu North and Derya areas.
The company’s managing director Kerim Sener said the strong guidance comes off the back of a particularly fruitful beginning to 2020 and a record-breaking end to 2019. “With the addition of lower grade ore and higher mining rates required from the satellite pits, such as Arzu North, we are expecting output to reach 18,000 ounces in 2020,” he added.
Critically, Sener also said the Red Rabbit JV will have paid off 99% of its $33 million capital loan from Turkiye Finans Katilim Bankasi by the end of this month. The imminent absence of repayment obligations should allow Ariana and Proccea to enhance Kiziltepe’s total production and life of mine, he said:
“Strategies have included planning associated with expanding mill throughput, investigating opportunities for expansion of our open pits and examining preliminary planning and design work required for potential underground operations. Associated resource estimation and optimisation work has yielded encouraging results, which we will expand upon in due course.”
Elsewhere, Ariana offered investors some reassuring words in respect of the global market pandemonium currently being driven by crashing oil prices and the spread of COVID-19.
Sener said weak oil prices will have a positive effect of the firm’s processing costs, also highlighting the benefits of a strong rise in gold prices as investors flee to safe haven assets. Despite a sharp fall in recent days as investors shifted into cash in response to stimulus measure by the US federal reserve, the metal remains close to the £1,300 an ounce mark.
“These, along with other positive trends including the declining value of the Turkish Lira, reinforce the economics of the Kiziltepe operation,” said Sener.
Finally, the chief executive said that Ariana is not anticipating disruption to its production schedule as a result of coronavirus. “If this situation changes then we will inform the market," he added.
Author: Daniel Flynn
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