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