Ariana Resources’ (LSE:AAU) strong week continued on Thursday with the ‘highly encouraging’ news that it had encountered bonanza-grade gold and silver mineralisation at Kizilcukur project in Turkey. The business completed a total of 745.8m of diamond drilling across 13 holes within the project’s previous-optimised Zeki open pit in the first quarter of the year. In Thursday’s update, Ariana said this work has confirmed the presence of high-grade mineralisation in the Zeki vein to a depth of approximately 40m below surface.

Indeed, one hole yielded 0.9m at 30.27g/t gold and 184g/t silver in a footwall vein not previously drill-tested – a level classified at ‘bonanza-grade’ mineralisation. Elsewhere, near-surface in-fill resource drilling results from the vein include 6m at 4.21g/t gold and 205.9g/t silver, 5.3m at 4.04g/t gold and 171.9g/t silver and 6.4m at 3.44g/t gold and 89.3g/t silver. Ariana added that the majority of its high-grade results occur over around 130m of strike to a depth of at least 40m.

Meanwhile, a new access road has been constructed to the trial mining area at Kizilcukur. This can be used for future haulage to the nearby Kiziltepe processing plant. The project is based 22km to the northeast of Kiziltepe, which is held within Ariana’s Red Rabbit joint venture with Proccea Construction.

Kizilcukur, which is not part of Red Rabbit, covers an area containing a series of sub-parallel quartz veins hosted by ophiolitic units that trend northwest and extend for about two kilometres A mineral resource estimate prepared in 2016 identified the potential for the development of three open pits within the asset, of which Zeki is the largest and highest grade. The asset’s total mineral resource in the indicated and inferred categories is c.308,000ts at 2.11g/t gold and 73.4g/t silver with upside potential. Ariana’s target for future exploration at Kizilcukur is currently 500,000 tonnes at more than 2 g/t gold and more than 70g/t silver.

Ariana’s managing director Kerim Sener said Thursday’s results were ‘highly encouraging’ and confirmed the potential for Kizilcukur to be established as a satellite source of high-grade ore for Kiziltepe.

‘The mineralisation encountered within the top 40m of the Zeki vein system shows sufficiently high grades and widths to support an open pit operation,’ he added. ‘During Q3 2019 we are expecting to conclude our assessments on the feasibility of hauling ore from Kizilcukur to the Kiziltepe processing plant as part of a bulk processing trial. 

‘In anticipation of this, we have already completed the construction of a low-gradient haulage road connecting the trial mining area to the existing road network, enabling excellent access to the site. In addition, we will prepare a revised Mineral Resource estimate upon which we can make appropriate decisions about the future of the project. We expect that Kizilcukur will be an attractive addition to the JV operations, due to the high grades and gold recoveries that have been demonstrated in recent work.’

Thursday’s update follows a strong start to the week for Ariana. On Wednesday, the company enjoyed an 8.6pc boost to 2.1p after releasing a robust set of 2018 results.  It revealed that gold output from Kiziltepe reached more than 27,100oz over the period, 36pc ahead of guidance. What’s more, the mine achieved an average cash cost of $415/oz, placing it within the lowest cash-cost quartile for mines globally. This helped to push its profit before tax up to £2.2m from £400,000 in 2017.

Elsewhere, Ariana said that the Red Rabbit JV’s financial strength had allowed it to progress its Tavsan project to the next stage of development. The JV is on track to complete a formal environmental impact assessment submission to the authorities for the asset in late 2019. This will precede the conclusion of a feasibility study in line with the requirements of project financing and final permitting. According to Ariana, getting Tavsan to this stage will enable Red Rabbit to increase its annual gold production rate from 25,000oz – where it currently stands – to 50,000oz. The company believes this will, in turn, influence a positive re-rating of its market valuation.

Author: Daniel Flynn

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