Ariana Resources (LSE: AAU) has again beaten guidance to exceed targeted gold production from its Kiziltepe operations.

In its 2020 full-year production results, the AIM-listed explorer said production of the yellow metal outpaced expectations by 3.5% to hit 18,645 ounces in the year to December 2020. Revenue exceeded $37 million in 2020, it added.

Managing director Dr Kerim Sener said: 

The final quarter of 2020 rounded off another solid year of production for Kiziltepe, which once again exceeded joint venture guidance. We were further buoyed by gold and silver prices during the year, capping off an exceptional period of company development.

Spot gold prices remain elevated in early 2021 with an ounce of the yellow metal north of $1,800/oz.

In the three years since commercial gold-silver production began at the Turkish mine, the group reported that Kiziltepe had produced a total of 84,200 ounces of gold and 915,233 ounces of silver. This output amounts to a total revenue of $134 million. 

Dr Sener added: 

Since operations commenced at Kiziltepe, the joint venture company, Zenit, has successfully repaid US$36.7 million in debt to Turkiye Finans Bankasi A.S. Accordingly its relationships with lenders are very sound, which bodes well for future mine development projects at Tavsan and Salinbas, contemplated as part of our planned new joint venture with Özaltin and Proccea.”

Kiziltepe expansion

The company has long maintained there is significant opportunity for further resource and production expansion at Kiziltepe. To that end, it has now begun a two-rig diamond drilling programme of up to 5,000m to test vein extensions like Arzu South, Arzu North, Derya and Banu.

Mining is continuing at Arzu North and Derya, with plans to expand these open-pit operations, Ariana said. A processing plant expansion is also underway with construction due to complete in H2 2021. The plant’s capacity will be 300% larger than initial designs and able to process 500,000 tonnes of ore per year. 

Ariana currently operates the Kiziltepe mine in a 50% joint venture as part of its Red Rabbit gold project with Ankara-based engineering firm Proccea Construction. That stake is set to reduce to 23.5% as part of its deal with conglomerate Özaltin Holding.

Transformational year 

Ariana’s strategy to expand its portfolio using current cashflow will continue, it said. The company is also exploring and developing the 1 million ounce Salinbas gold project in north-east Turkey.

An April 2020 resource update upgraded the Kiziltepe mine life to 2026 and extended the asset’s total undepleted gold estimate by a further 25%. 

In July the same year, the company secured a landmark deal worth $50 million with Özaltin for a 53% stake in Salinbas and a 50% stake in the Red Rabbit JV.

Investors received notice of a special dividend in September 2020 to mark completion of the Özaltin JV with managing director Dr Kerim Sener noting that Proccea would pay Ariana $5.75 million in cash to acquire its 23.5% stake in Salinbas. 

A scoping study of Salinbas identified a 10-year life of mine with a JORC resource of 9.9Mt @ 2.0 g/t Au.

Ariana’s reduced holding in the JV “will naturally place a different emphasis on our operational activities going forward,” Dr Sener noted. Production would now be reported every six months rather than quarterly. 

Other portfolio developments include the start-up of field activities, fast-tracking a range of copper-gold opportunities in the region and increasing the pace of the company’s involvement with Venus Minerals in Cyprus. 

It expects that diamond drilling will be able to start at the Magellan Project by Q2 2021. 1,705m of percussion drilling across 15 holes has already discovered a zone up to 12m thick containing anomalous gold geochemistry at just 50 to 80 metres below the surface.

Permitting activities continued at portfolio projects Tavsan and Salinbas throughout the winter, Ariana said, with resource drilling at Tavsan due to start in spring 2021.

Author: Mark Sheridan

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