Final Audited Results For the Year Ended 31 Dec...

 

 

30 May 2012
AIM / PLUS Markets: AAU

FINAL AUDITED RESULTS FOR THE YEAR TO 31 DECEMBER 2011

Ariana Resources plc ("Ariana" or "the Company"), the gold exploration and development company focused on Turkey, announces its final audited results for the year ended 31 December 2011.

Highlights

• Finalisation of the resource estimate and scoping study for the Red Rabbit Gold Project ('Red Rabbit') 

• Completion of the Pre-Feasibility Study ('PFS') on the Kiziltepe Sector of Red Rabbit 

• Commencement of a 4,000m drilling programme at Red Rabbit 

• Discovery of four new vein systems at Kiziltepe 

• New exploration licences acquired in the vicinity of Kiziltepe 

Chairman's Statement

It gives me great pleasure to review our activities, at a time when we are proud to celebrate the first 10 years of operation for Ariana Resources.

In that time, the Company has advanced from unassuming origins as an imaginative research concept to become a vibrant and successful exploration and mine development company, now on the threshold of becoming a profitable gold producer. It has been a privilege to have been Chairman since that key date in July 2005 when Ariana listed on the AIM market and successfully launched its IPO.

During this period, there have been many important milestones, on a journey which has shaped our well-defined business strategy.

We continue to pursue aggressively our three-pronged approach. The main thrust remains the Red Rabbit Gold Project in western Turkey, on which we made major progress during the year. After successful trial mining in 2009, Red Rabbit - comprising the Kiziltepe and Tavsan sectors - is now being developed as a mine in Joint Venture (JV) with Proccea Construction Co. who will earn into a 50% stake by committing US$8m to the project.

In 2011, the pre-feasibility study was completed, defining a phased project to bring into production initially the Kiziltepe sector, with an eight-year-plus mine life. This is planned as a 20,000 oz/year open-pit gold operation, scheduled to come into production during 2013, based on in-pit JORC resources of 118,200 oz gold and 1.5 Moz silver.

Kiziltepe accounts for just over half the total Red Rabbit JORC resource of 448,000 oz gold equivalent. Kiziltepe's core operation will be the Arzu South open-pit, with four additional satellite pits on adjacent gold-silver bearing veins. The processing route will be via a conventional CIL (carbon-in-leach) plant.

As part of the planning process, we are well on the way towards completion of the EIA (Environmental Impact Assessment) and obtaining the necessary permits for mining Kiziltepe. In addition, by year-end we had purchased most of the requisite freehold land for our mining operations.

Exploration continues at Kiziltepe, which shows strong potential for further discoveries. During the year we identified four new gold-bearing vein systems. These are being investigated as part of our 4,000-metre 2011-12 drilling programme, using our own drill rig and dedicated drilling team. Similar in character, these veins all form part of the sub-parallel vein system at Kiziltepe. Significantly, continuity of mineralisation was finally established in the gap area between Arzu South and Arzu North with the discovery of the Emel vein.

It is intended that mining the Tavsan portion of Red Rabbit will follow on the completion of Kiziltepe. A preliminary assessment of Tavsan, geologically very different in character, indicates it to be economically viable as a simple heap leach operation, with a potential output of 30,000 oz/year gold equivalent.

The second cornerstone of our business strategy is our programme of grassroots exploration, prospect definition and licence acquisition, whose bold objective is to locate areas with the potential to host multi-million ounce deposits. We are successfully using surface exploration techniques to identify a number of prospective targets over wide areas of western Turkey. The Company is actively seeking to secure the corresponding licences containing the best of these targets via the Turkish Government's auction process.

In parallel, we continue to expand our licence portfolio through acquisition. During 2011, we purchased from KEFI Minerals plc four licence areas some of which lie within the Red Rabbit area of interest.

Finally, the third element of our strategy: the diversification of our portfolio through JVs and investments. Since 2008 we have been in JV with European Goldfields (subsequently acquired by Eldorado Gold), which is funding the exploration of the Ardala and Salinbas prospects in north-eastern Turkey. This project is yielding increasingly exciting results, and the 2012 drilling programme is designed to take this project to the resource estimation stage.

Additionally, we have our strategic 13% investment in Tigris Resources which gives us access to their pioneering exploration work in south-eastern Turkey. Tigris' extensive airborne reconnaissance work during 2011 in this highly prospective region led to the definition of a number of targets, which are currently the subject of licence applications.

Turkey is becoming an increasingly attractive destination for investment in mining. In the gold sector, there are now six operating mines and a further six in the pipeline. Having overhauled the mining law in 2010, the Turkish Government has further demonstrated its support for the mining industry by improving its mining legislation to provide a more favourable platform for exploration and mining companies. It has introduced tax incentives to encourage foreign investors, introduced a competitive royalty and corporation tax framework, and now waives VAT and customs duty on gold exploration.

Globally, exploration expenditure on the precious metals sector continues to grow and now attracts the lion's share of the total. In 2010, according to the Metals Economics Group of Canada, gold for the first time accounted for over half of total world exploration spending of US$11.2 billion. With a strong correlation with the bullion price, this spending growth trend is likely to continue.

For gold, it was another year of buoyant investment demand and strong overall price performance, with bullion reaching an all-time high of US$1,921/oz in London in September 2011.

For 2012, the outlook is again broadly positive for gold in its role as a safe investment haven: real interest rates remain low or negative and the US Federal Reserve is committed to further monetary stimulation; inflationary concerns persist, particularly in the major South East Asian markets; and uncertainty over Eurozone debt is unlikely to abate. In addition, Central Banks have now become net buyers, reversing the trend of the previous decade.

With such a positive backdrop, it might seem paradoxical that the AIM precious metals sector has underperformed bullion over the past year. Ariana's relative outperformance of the AIM All-Share index for most of the past 12 months masks the market difficulties faced by the junior mining sector during 2011. The sector, of course, was not immune to the general malaise affecting equity markets. The number of mining IPOs dwindled rapidly last year and the number of secondary placings was also well down on 2010. The decline in market liquidity continues to reflect the impact of the global economic downturn and the combination of looser monetary policy and tighter fiscal policy among the major economies.

Despite these headwinds, during 2011 Ariana successfully completed a £1.16 million placing, the proceeds of which are being devoted to maintaining our exploration and development programmes in western Turkey. We also concluded a Standby Equity Distribution Agreement (SEDA) backed loan agreement for US$2m with US-based Yorkville Advisors LLC. The SEDA offers a flexible and cost- effective way of raising capital by selling new stock, offered at a discount, without making a formal Secondary Market Offering to the market. The timing of any sales is entirely under Ariana's control, so we may sell whenever the share price is appropriate - or not at all, if we so decide.

The year ahead promises to bring further solid progress towards our goal of bringing Red Rabbit into production. Proccea has already funded US$1.4m towards the first phase of the project (EIA, Feasibility Study and additional permitting) which is due to be completed in H2 2012. Proccea will then commit a further US$6.6m to the second phase of the project involving plant construction and mine commissioning, so that mining should commence during 2013. To take Red Rabbit through to production will require an additional US$22m. The JV partners are actively examining options for raising this amount through debt finance.

Through an invigorating but challenging year our loyal shareholders have remained steadfast, and we thank them all - large and small - for their continuing support. Ariana has many positive attributes, not least of which are the Company's deep knowledge and decade-long experience of operating in this stimulating and rewarding geological environment. We are fortunate to have such a strong operating and management team, both here in the UK and on the ground in Turkey. I thank them and my fellow board members for their tireless support. The importance of having in place experienced local management who understand the mechanics of operating in Turkey and who are able to connect with key Government agencies cannot be overstated.

We shall continue to pursue our three-point strategy vigorously. As outlined, much of our attention this year will be focused on bringing Red Rabbit into production, but we shall continue to extend our exploration and drilling programmes, and are actively examining further JV and investment possibilities that would complement our strategy.

I hope I have demonstrated how we strive to match our shareholders' commitment to our Company. After 10 years, we are now within sight of significant gold production, turning us into a very different type of AIM junior.

Michael Spriggs
Chairman
23 May 2012

Business Review

Red Rabbit Gold Project

Following trial mining at Kiziltepe in 2009, the Company made a strategic decision to create a single integrated project named 'Red Rabbit' comprising its two principal projects at the Kiziltepe and Tavsan sectors. This strategic packaging enabled the Company to enter into a Joint Venture (JV) with Proccea Construction Company (Proccea) in 2010.

Earning in to a 50% stake in the JV company, Zenit Madencilik San. ve Tic. A.S. (Zenit), a total of US$8m will be committed by Proccea during the phased development of the project. To date Proccea has committed US$1.4m and has earned into a 14% stake in Zenit.

The Red Rabbit Gold Project continues to progress at pace towards production. In 2011 the Company successfully completed the Pre-Feasibility Study and prepared its project summary document for submission to the Ministry of the Environment and Town planning as part of the EIA process.

In addition, permitting applications and land acquisition have been underway throughout 2011. Through a 99% owned subsidiary of Ariana, known as Çamyol, approximately 178,372 m2 of land has been purchased, which corresponds to almost all of the freehold land in the planned Arzu South open-pit area. Further acquisitions are planned during 2012.

Strategic Partnerships

Our strategic partnerships have also continued to deliver this year. Throughout 2011 European Goldfields (which was acquired by Eldorado Gold in February 2012) committed significant funding toward exploration and drilling programmes at Ardala and Salinbas to determine the potential of these prospect areas.

The Company's strategic investment in Tigris Resources focuses on the underexplored and highly prospective south-eastern region of Turkey. Throughout 2011 Tigris Resources completed extensive aerial reconnaissance work and ground follow-up, during which targets were generated and prospects defined. Exploration work leading up to a drilling programme is now underway at these properties.

Exploration

The Company has two exploration programmes underway in western Turkey. The first aims to identify target areas that have the potential to host multi-million ounce deposits in western Turkey. Following the completion of a 45,000km2 geochemical sampling programme in 2011, the Company has been able to identify key licence areas for acquisition via the auction process.

The second exploration programme aims to identify further resource potential at the Kiziltepe sector of the Red Rabbit Gold Project. Structural and geophysical studies identified evidence of several buried or poorly exposed vein systems at Kiziltepe. During 2011 four new vein systems were discovered. Drill testing of these sites began during 2011 and will extend into 2012.

Financial

Over the course of the year the Company completed a placing for £1.16m, which was utilised for continuing exploration and development work, notably in the Red Rabbit region and the wider WAVE Project Area in western Turkey. In 2010 the Company had concluded a £5m Standby Equity Distribution Agreement (SEDA) via US-based Yorkville Advisors LLC. The SEDA is a draw-down facility that will provide the Company with a means of raising additional capital as and when required through the sale of new shares in Ariana to Yorkville. In 2011 the Company completed a US$2m SEDA-backed loan agreement with Yorkville involving an initial tranche of US$750,000.

Core Project Area

The Company is focused on the Western Anatolian Volcanic and Extensional (WAVE) province in western Turkey. This province hosts three operating gold mines and remains highly prospective for large epithermal and porphyry deposits. The Company considers the exploration and development risk in this region to be low due to excellent infrastructure and established gold mining operations.

Within the WAVE Province, the Company is focused on the 'Red Rabbit Gold Project' comprising the Kiziltepe and Tavsan sectors. Other exploration projects in western Turkey include the Ivrindi and Demirci project areas. The region surrounding these projects is named the WAVE Project Area, with our base of operations in Sindirgi located strategically at its core.

In joint venture the Company is actively developing the Red Rabbit Gold Project as an environmentally friendly small-footprint mine, with mining expected to be initiated at the Kiziltepe sector in 2013.

Ariana is targeting a million ounce gold resource within the WAVE Project Area and our strategy is designed to build steadily on our existing resource base in the region via exploration and future acquisitions. Elsewhere, through our joint venture with Eldorado Gold and our strategic investment in Tigris Resources, a similar strategy is being pursued.

Advancing to Production: Red Rabbit Gold Project

Kiziltepe Sector

The Kiziltepe Sector (Kiziltepe) contains several prospect areas which are located within the Sindirgi Gold Corridor. Kiziltepe lies 130km north-east of the coastal city of Izmir. Kiziltepe was acquired in 2005 from Newmont for US$400,000, with a royalty of up to 2.5% on future gold production from the project assigned to Franco-Nevada Corporation. Current JORC compliant resources stand at 232,000 ounces gross gold equivalent

The Kiziltepe sector contains 45km of outcropping low-sulphidation epithermal quartz veins, which are hosted principally by dacitic volcanic units of Miocene age. Three distinct vein fields occur in an area covering approximately 12km by 6km and are well serviced by asphalt road and forestry tracks. Individual veins are exposed at the surface for 750m in strike length and are between 1m and 14m wide.

Following a joint venture agreement in 2010, Proccea and Galata Madencilik (Ariana Resources' operating subsidiary in Turkey) have been working in partnership through an incorporated joint stock company Zenit Madencilik San. ve Tic. A.S. (Zenit). Galata and Proccea may each own a 50% shareholding in Zenit, subject to the terms of the JV.

Earning in to a 50% stake in Zenit, a total of US$8m will be committed by Proccea. By the end of 2012 approximately US$2m of this will have been committed to the first phase of development by funding the Environmental Impact Assessment (EIA), Feasibility Study and additional permitting. To date Proccea has earned a 14% stake in Zenit. A further US$6m will be committed towards the second phase of plant construction and commissioning of the gold mine. It is expected that a total capital expenditure of approximately US$28m will be required for the development of the project. An additional funding requirement of approximately US$22m will be required to take the project to production. The JV partners are aiming to secure this additional capital requirement through project finance secured at the JV level.

On the successful commissioning of the gold processing plant, the share of profit within Zenit will be 51% Galata and 49% Proccea.

The project development programme has been split in to three phases. In Phase 1 the management control of Zenit will rest with Galata and in Phase 2 and beyond, management control will lie with Proccea.

Phase 1 of the project is nearing completion with both the EIA and Feasibility Study due to be completed in mid 2012. Based on the current feasibility work, one central pit is envisaged at Arzu South, with satellite pits at Banu, Derya, Arzu North and Kepez. The site layouts were finalised for the Pre-Feasibility Study (PFS) stage and are unlikely to change for the Feasibility Study (FS). The layout minimises the environmental footprint of the plant and related mine infrastructure.

In October 2011 Ariana concluded its Pre-Feasibility Study on Kiziltepe ('PFS') which confirmed the robust economics of the Red Rabbit Gold Project. The PFS showed an increase in mineable tonnage and as a consequence an increase to the mine life to over eight years. Pit optimisation was carried out using a conservative figure of US$1,058/oz Au as a base case. In pit resources now stand at 1,177,800 tonnes corresponding to 118,200 ounces of gold and 1,452,600 ounces of silver at an average grade of 3.6 g/t Au and 41.6 g/t Ag respectively.

Work on the Environmental Impact Assessment is still underway, whilst the environmental baseline studies drew to a close in late 2011. A project summary document has been prepared and will be submitted in accordance with Turkish government regulations to the Ministry of the Environment and Town Planning.

Many of the required permits are now in place for the development of the Kiziltepe mine and land acquisition has been underway throughout 2011. A new subsidiary of Ariana, known as Çamyol, has been established for acquisitions of strategic freehold land in the vicinity of the planned Arzu South pit. In 2011, Çamyol purchased approximately 178,372m2 of land, which corresponds to approximately three-quarters of the freehold land in the Arzu South area. Further acquisitions are planned in Q2 2012. Any land acquired by Çamyol will either be sold in to or leased to Zenit for the duration of the project (Ariana's subsidiary Galata Madencilik is 99% shareholder of Çamyol).

The potential to expand the project at Kiziltepe is significant as the current resource and economics are based on just 20% of the known vein system. A drilling programme was initiated in Q4 2011 with the aim of better defining mineralised structures across the Project area that could host open-pittable resources in the future. These would provide additional mill feed for the planned plant at Kiziltepe. Ariana's own drilling team and rig have been mobilised and the Company now runs a two shift 24 hour drilling operation.

Previous structural and geophysical studies at Kiziltepe showed evidence for further resource potential within buried vein systems in the area. In May 2011 the Company announced the discovery of the Fidan and Gamze veins, running approximately parallel to the Arzu North and Arzu South veins. This 1,800m long vein system shows similar surface sample results to other high-grade gold bearing vein systems at Kiziltepe. Initial results show continuous gold grades of up to 10.7 g/t Au Eq.

In August 2011 the Hande vein was discovered. It lies parallel to the Fidan and Gamze veins. This vein shows gold grades of up to 7.74 g/t Au Eq. and shows the potential to extend into the planned Banu pit.

In February 2012 drilling by the Company resulted in the discovery of the Emel vein, which is located in the undercover 'gap zone' between Arzu North and Arzu South.

Tavsan Sector

The Tavsan Sector ('Tavsan') lies 75km from the Kiziltepe Sector, 210km north-east of the coastal city of Izmir. Tavsan was purchased in 2008 from Odyssey Resources for US$500,000 and 3,000,000 shares in the Company at 5p per share, with a retained royalty of up to 2% on future gold production from the project assigned to Teck Resources Ltd. Current JORC compliant resources stand at 215,000 oz Au Eq.

The Tavsan prospect contains 4km of outcropping gold mineralised jasperoid, which is located along a low-angle thrust fault separating underlying Jurassic limestone from overlying Late Cretaceous ophiolitic rocks. The outcropping jasperoid occurs in an area covering approximately 4km by 4km and is well serviced by asphalt road and forestry tracks. Individual segments of jasperoid are exposed at surface for 500m and are up to 20m thick. Owing to the relatively gently dipping nature of the jasperoid, much of the mineralisation is potentially open-pittable.

Due to the simplicity of the project and acceptable metallurgical recoveries reported in column-leach test work, the Company considers merit in its development as a heap-leach operation capable of delivering up to 30,000 ounces per annum. The Company envisages production at a rate of 1Mt per annum via the development of a linked series of shallow pits across the prospect. A preliminary economic assessment of Tavsan has been completed and a positive result was achieved.

Tavsan is being developed as an integral part of the Red Rabbit Gold Project and mining at this location is envisaged to commence after mining concludes at the Kiziltepe sector.

Project Portfolio Expansion: Regional Exploration

Core to the Company's long term strategic plan is the development of its exploration portfolio through grassroots exploration, prospect definition and licence acquisition.

Following extensive grassroots exploration in 2010, 20 prospective target licences have been identified in Ariana's area of interest. These targets were refined on the basis of exploration and other geo-scientific datasets and all have the potential to host gold mineralisation. The licence auction process began in January 2012.

In July 2011 four exploration licences covering two highly prospective project areas; Kizilcukur and Muratdag were acquired from AIM-listed Turkish explorer KEFI Minerals plc. The acquisition of the Kilizcukur project now provides Ariana with access to the entire gold mineralised trend within the Sindirgi Gold Corridor, which is contained by the Company's flagship Red Rabbit Gold Project.

Strategic Partnerships:

Eldorado Gold

Reconnaissance exploration in eastern Turkey for large porphyry copper-gold and related deposits identified potential in north-eastern Turkey and resulted in the acquisition of the Ardala Project by the Company. This project, in addition to several other licences, is now being advanced through a Joint Venture agreement with Eldorado Gold (which acquired European Goldfields in 2012). A Joint Venture exploration company, 49% owned by Ariana Resources and named Pontid Madencilik San. ve Tic. Ltd., was established in 2008. The Joint Venture includes a free-carry to bankable feasibility at 20% or 10%, for initial projects or new projects, respectively.

Ardala and Salinbas

The Ardala prospect is located in the Pontides Metallogenic Province of Turkey and lies approximately 80km south-east of the coastal city of Hopa and 20km east of Artvin. The prospect was acquired according to a royalty agreement for which a 1.5% NSR will be payable in the event that the project enters production.

The prospect hosts a porphyry copper-gold (plus molybdenum) mineralised system associated with a series of nested quartz-diorite intrusions of Eocene age within an Upper Cretaceous volcanic-sedimentary sequence. Exposed parts of the porphyry have dimensions of 600m by 700m and interpretation of ground magnetic data suggests further lateral continuity beneath limestone units.

Since 2008 European Goldfields had spent approximately US$4.5m towards exploration and drilling programmes at the Ardala and Salinbas prospects. A total of 8,913m of diamond drilling has been completed over these properties. In addition, a regional sampling programme has been underway, which is aimed at selecting other targets for licence applications across the Pontides region.

The virgin discovery of Salinbas in 2009 by our JV team was a true exploration success and the prospect continues to yield highly encouraging drilling results. The Salinbas system is open to the south and to the east, which indicates that there is considerable scope to define a substantial gold system. The orientation of the mineralisation and the continuity of high grades suggest that the mineralised body will provide for a resource that could be mined by open-pit methods.

The JV team is currently planning for a further drilling programme scheduled to commence in H2 2012 and resource estimation is currently underway.

Strategic Partnerships:

Tigris Resources

The Tigris Resources exploration team is focused on defining exploration targets across south-eastern Turkey. During the year an airborne reconnaissance programme was completed with ground validation of targets generated. Work continued on a number of licences held in JV with a Turkish mining company. At one location several drilling targets are being identified in advance of a drilling programme scheduled for mid 2012.

Outlook

2011 saw the Company focus its efforts on progressing Red Rabbit Gold Project toward production whilst growing its mineral exploration footprint in western Turkey.

The joint venture between Ariana and Proccea has enabled steady progress against key strategic milestones for Red Rabbit. The team is now on track to enter into forward discussions for project finance and to finalise both the EIA and Feasibility Study in 2012.

Finally, 2012 marks a decade since Ariana Resources' inception. In this time we have gone from grass roots exploration to the brink of gold production. Our vision and dedication to gold exploration and development in Turkey remains focused and we are excited about the next decade of growth for the Company.

Dr. Kerim Sener
Managing Director
23 May 2012

Consolidated statement of comprehensive income
for the year ended 31 December 2011

						Note	2011 £'000	Restated* 2010 £'000
Administrative costs							(1,291)	(466)
General exploration expenditure							(181)	(326)
Other income							74	345
Operating loss							(1,398)	(447)
Investment income							51	9
Loss before tax							(1,347)	(438)
Taxation							-	(17)
Loss for the year							(1,347)	(455)
Other comprehensive income
Exchange differences on translating foreign operations							(239)	(1)
Other comprehensive income for the year net of tax							(239)	(1)
Total comprehensive income for the year							(1,586)	(456)
Loss per share (pence):
Basic and diluted							(0.54)	(0.22)

Continuing operations
None of the Group's activities were acquired or discontinued during the current or previous year.
* See note 1.

Consolidated statement of financial position
for the year ended 31 December 2011

				Note	2011 £'000	Restated* 2010 £'000
Assets
Non-current assets
Other receivables					12	12
Available for sale investments					169	71
Intangible exploration assets					4,627	3,840
Property, plant and equipment					311	176
Total non-current assets					5,119	4,099
Current assets
Trade and other receivables					340	757
Available for sale investments					-	56
Cash and cash equivalents					908	730
Total current assets					1,248	1,543
Total assets					6,367	5,642
Equity
Called up share capital					2,597	2,220
Share premium					6,481	5,167
Other reserves					720	720
Share based payments reserve					578	100
Translation reserve					(176)	63
Retained earnings					(4,250)	(2,903)
Total equity attributable to equity holders of the parent					5,950	5,367
Liabilities
Current liabilities
Trade and other payables					417	275
Total current liabilities					417	275
Total equity and liabilities					6,367	5,642

Consolidated statement of changes in equity
for the year ended 31 December 2011

	Share capital £'000	Share premium £'000	Other reserves £'000	Share options £'000	Translation reserve £'000	Retained earnings £'000	Total attributable to equity holders of parent £'000
Changes in equity to 31 December 2010
Balance at 1 January 2010	1,709	4,738	720	100	64	(2,448)	4,883
Loss for the year (Restated)*	-	-	-	-	-	(455)	(455)
Other comprehensive income - exchange differences on translating foreign operations	-	-	-	-	(1)	-	(1)
Total comprehensive income	-	-	-	-	(1)	(455)	(456)
Issue of share capital	511	518	-	-	-	-	1,029
Share issue costs	-	(89)	-	-	-	-	(89)
Transactions with owners	511	429	-	-	-	-	940
Balance at 31 December 2010 (Restated)	2,220	5,167	720	100	63	(2,903)	5,367
Changes in equity to 31 December 2011
Loss for the year	-	-	-	-	-	(1,347)	(1,347)
Other comprehensive income - exchange differences on translating foreign operations	-	-	-	-	(239)	-	(239)
Total comprehensive income	-	-	-	-	(239)	(1,347)	(1,586)
Share based payments	-	-	-	478	-	-	478
Issue of share capital	377	1,386	-	-	-	-	1,763
Share issue costs	-	(72)	-	-	-	-	(72)
Transactions with owners	377	1,314	-	478	-	-	2,169
Balance at 31 December 2011	2,597	6,481	720	578	(176)	(4,250)	5,950

Consolidated statement of cash flows
for the year ended 31 December 2011

	Note	2011 £'000	Restated* 2010 £'000
Cash flows from operating activities
Cash generated from operations		(626)	(1,158)
Net cash outflow from operations		(626)	(1,158)
Cash flows from investing activities
Purchase of investments		(98)	(137)
Proceeds from sale of share of Zenit		164	638
Proceeds from sale of investments		135	12
Purchase of property, plant and equipment		(179)	(15)
Payments for intangible assets (excluding capitalised depreciation)		(960)	(467)
Investment income		51	9
Net cash used in investing activities		(887)	40
Cash flows from financing activities
Proceeds from issue of share capital		1,691	940
Net cash proceeds from financing activities		1,691	940
Net (increase)/decrease in cash and cash equivalents		178	(178)
Cash and cash equivalents at beginning of year		730	908
Cash and cash equivalents at end of year		908	730

Notes to the consolidated financial statements
For the year ended 31 December 2011

1. Basis of preparation

The financial information for the year ended 31 December 2011 as set out in this announcement does not constitute statutory accounts as defined in Section 434 of the Companies Act 2006.  The Group's statutory financial statements for the year ended 31 December 2011, from which the information contained within this announcement has been extracted, have not yet been filed with the Registrar of Companies.   The auditor's report on those financial statements was unqualified and did not contain a statement under section 498 (2) or (3) of the Companies Act 2006.

The Group consolidated financial statements have been prepared in accordance with International Financial Reporting Standards (IFRS) as adopted by the European Union, effective for the Group's reporting for the year ended 31 December 2011.

In the prior year the Group consolidated its investment in Madencilik San. ve Tic. A.S. ("Zenit") as a subsidiary undertaking. The Directors now consider that the Group's investment in Zenit should be proportionally consolidated in accordance with IAS 31 Joint Ventures, as the Group shares control of Zenit with its Red Rabbit joint venture partner Proccea Construction Co. This has been corrected by way of a prior year restatement.

2. Loss per share

The calculation of basic loss per share is based on the loss attributable to ordinary shareholders of £1,347,000 (2010: £455,000 as restated) divided by the weighted average number of shares issued during the year being 249,719,107 shares (2010: 209,441,203). There is no dilutive effect of share options or warrants on the basic loss per share.

3. Availability of Annual Report and Financial Statements

This information has been extracted from the Company's full Annual Report and audited Financial Statements, copies of which will be sent to shareholders and are available for download from the Company's website at www.arianaresources.com.

4. Annual General Meeting

The Company's next Annual General Meeting ('AGM') will be held at the East India Club, 16 St James's Square, London SW1Y 4LH, on 29 June 2012 at 11:00 a.m.   A formal Notice of AGM and proxy form has been posted to shareholders and is also available for download from the Company's website at www.arianaresources.com.

* * ENDS * *

Contacts:

Ariana Resources plc	Tel: [phone]
Michael Spriggs, Chairman
Kerim Sener, Managing Director
Beaumont Cornish Limited	Tel: [phone]
Roland Cornish / Felicity Geidt
Fairfax I.S. PLC	Tel: [phone]
Ewan Leggat / Laura Littley
St Brides Media & Finance Ltd	Tel: [phone]
Susie Geliher / Hugo de Salis

Editors' note:

Dr Kerim Sener, BSc (Hons), MSc, PhD, is the Managing Director of Ariana Resources plc.  A graduate of the University of Southampton in Geology, he also holds a Master's degree from the Royal School of Mines (Imperial College, London) in Mineral Exploration and a doctorate from the University of Western Australia.  He is a Fellow of The Geological Society of London and has worked in geological research and mineral consultancy in Southern Africa and Australia.  He has read and approved the technical disclosure in this regulatory announcement.  

About Ariana Resources:

Ariana is an exploration and development company focused on epithermal gold-silver and porphyry copper-gold deposits in Turkey.  The Company is developing a portfolio of prospective licences selected on the basis of its in-house geological and remote-sensing database.

The Company's flagship assets are its Sindirgi and Tavsan gold projects which form the Red Rabbit Gold Project.  Both contain a series of prospects, within two prolific mineralised districts in the Western Anatolian Volcanic and Extensional (WAVE) Province in western Turkey.  This Province hosts the largest operating gold mines in Turkey and remains highly prospective for new porphyry and epithermal deposits.  These core projects, which are separated by a distance of 75km, are presently being assessed as to their economic merits and now form part of a Joint Venture with Proccea Construction Co.  The total resource inventory of the Company stands at 448,000 ounces of gold equivalent.  

Ariana maintains a Joint Venture in northeastern Turkey and also has a strategic investment in Tigris Resources Limited (www.tigrisresources.com), a private Jersey-based exploration company, which is focused on the exploration of copper and gold deposits in southeastern Turkey.  Ariana retains approximately 13% of Tigris Resources Limited.  

Fairfax I.S. PLC are brokers to the Company and Beaumont Cornish Limited is the Company's Nominated Adviser.

For further information on Ariana you are invited to visit the Company's website at www.arianaresources.com.

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Source: Ariana Resources plc via Thomson Reuters ONE

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