This morning, Ariana Resources (LSE:AAU) announced operating results for the third quarter of 2018 for the Kiziltepe mine in which it owns a 50% interest. The mine achieved gross income of US$10.12m during the period with sales of 7,588 ounces of gold. Operations at Kiziltepe are forecast to deliver around 20,000 ounces of gold equivalent per annum over eight years of initial mine life. Revenues at the mine include the sale of by-product Silver. This quarter has seen 70,346 ounces of silver produced and sold, a 36% increase compared with the previous quarter. 

Dr. Kerim Sener, Managing Director, commented: 

"These quarterly results have yet again demonstrated record performance for the Kiziltepe Mine and we are now well on track to exceed our production guidance for the year.  Since start-up in 2017 the JV has produced about 30,000 ounces of gold and over 200,000 ounces of silver”

The company hopes that several satellite vein systems which are not currently in the mining plan can by developed to extend mine life to at least 10 years and recently completed a new resource estimate.

 Operating cash costs have also fallen for the quarter and are estimated at US$330 per ounce. This compares with a realized price of US$1,198 for gold sold in the period.

Dr. Sener adds: "Our operating cash cost per ounce has continued to remain low, due in part to a marked fall in value of the Turkish Lira (-28%), a substantial increase in by-product silver credit (+36%) and maintenance of high grades through the plant during the period."  Sener added.

Kiziltepe is part of the Red Rabbit Joint Venture with Proccea Construction Co. and is 50% owned by Ariana through its shareholding in Zenit Madencilik San. ve Tic. A.S. Zenit continues to make debt repayments based on a contractual schedule and construction capital loan repayments should be completed by April 2020. In the meantime, excess cash-flow from operations is being used to make proportional repayments against the loans provided by Ariana and Proccea. 

Dr. Sener commented: As at the end of the quarter, 40% of the JV construction capital loan of US$33 million has been repaid, with the remaining balance to be repaid between now and April 2020.  Monthly intercompany loan repayments from the JV to our wholly owned subsidiary, Galata Madencilik San. ve Tic. Ltd. since early Q1 2018, has now reached approximately US$1.6 million for the year (c. US$200,000 per month)."

Ariana also owns 100% of the Salinbas Gold Project in north-eastern Turkey. We caught up with managing Director, Kerim Sener in an interview about the project last month.

Author: Stuart Langelaan 

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