Ariana Resources (LSE:AAU) sat at 1.97p on Monday morning after revealing that low operating cash costs at its Kiziltepe mine have continued into 2019. In a quarterly update for the Turkey-based asset, Ariana said operating cash costs for the period came in at just c.$399/oz of gold, a slight increase on the $349/oz achieved in Q4 2018.
Managing director Kerim Sener said this figure remains low in spite of the high strip ratios incurred during the pushback of the southern pit wall at an area of Kiziltepe called Arzu South. ‘This was helped by the planned draw down on stockpiles, maintenance of significant by-product silver credit and high grades through the plant during the period,’ he added.
Elsewhere, Ariana revealed that its gross income from the asset came in at $10.86m for the quarter based on an average realised gold price of $1,311/oz. This represents a slight increase of the $10.62m turnover generated by the mine in the previous quarter. Finally, gold production came in a 7,296oz over the period while silver output reached 84,109oz.
Looking forward, Ariana said that ore production from Kiziltepe’s open pit will remain restricted during Q2 and Q3 due to the continuation of work on the pushback of the southern wall of the Arzu South pit. However, the firm said this is not expected to impact output significantly.
Alongside a project called Tavsan, Kiziltepe is part of Ariana’s 50:50 Red Rabbit JV with Proccea Construction. Both sites contain a series of prospects within two prolific mineralised districts in the Western Anatolian Volcanic and Extensional Province of western Turkey. This province hosts the largest operating gold mines in Turkey and remains highly prospective for new porphyry and epithermal deposits. The total resource inventory of the Red Rabbit Project and wider project area stands at c.605,000oz of gold equivalent.
On the operational side, Ariana said the JV has continued to make gross capital repayments on a $33m construction capital loan on their scheduled basis. As at the end of March, these payments totalled $19.6m, with $3.2m repaid over the first three months of the year.
‘These first quarter results for the Kiziltepe Mine reflects a solid start to 2019 and continues to demonstrate the efficiency of our JV operations,’ added Sener on Monday. ‘As at the end of the quarter, 60pc of the JV construction capital loan of $33 million had been repaid, and by the end of the June quarter we are expecting to be almost 70pc repaid. Monthly intercompany loan repayments and dividends from the JV to our wholly owned subsidiary, Galata Madencilik San. ve Tic. Ltd., reached approximately $2.7m by the end of Q1 2019.’
Monday’s update comes just days after Ariana said infill resource drilling had demonstrated the potential for a large-tonnage, lower-grade system at the Arzu North area of Kiziltepe. Drilling completed at the site in December to provide Red Rabbit with additional infill resource data encountered encouraging intersections. Highlights included 44m at 1.5g/t gold and 17.5g/t silver and 27.7m at 1.37g/t gold and 13.1g/t silver.
The drilling was planned to test the theory that the Arzu North vein system – which had not been tested thoroughly – broadens out into a more extensive array of vein mineralisation spanning a series of structures. According to Ariana, the results confirm the presence of at least three broad mineralised structures within the Arzu North pit.
New geological modelling and pit optimisation studies are now underway to revise the resources for Arzu North alongside another area called Derya. Ariana said it is also looking at the potential of merging Arzu North and Derya into a single pit following re-interpretation of the Aybor vein, located in a 30m-wide zone between the two areas. Regardless, mining is scheduled to begin at both areas simultaneously in the final quarter of this year now that the Red Rabbit partners have received all necessary forestry permissions.
Elsewhere, last week saw Ariana announce that it had received approval for a 10-year renewal of its Salinbas license from the Turkish General Directorate of Mining and Petroleum Affairs. The organisation is about to commence a 2,000m Reverse Circulation drilling programme, for which a drill rig has now been mobilised.
The gold, silver, and base-metal project contains three notable licence areas called Salinbas, Ardala and Hizarliyayla. The licenses are located within the multi-million-ounce Artvin Goldfield in Turkey’s “Hot Gold Corridor”. The corridor contains several significant gold-copper projects including the 4Moz Hot Maden project which lies 16km to the south of Salinbas. Also to the south lies the Hizarliyayla prospect which is partially hosted within the same stratigraphic sequence as the Hot Maden discovery.
Author: Daniel Flynn
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