Ariana Resources plc : Positive Definitive Feas...
25 June 2013
AIM: AAU
POSITIVE DEFINITIVE FEASIBILITY STUDY FOR KIZILTEPE
Ariana Resources plc ("Ariana" or "the Company") is pleased to announce that its independent consultants, Tetra Tech, have completed a Definitive Feasibility Study ("DFS") for the Kiziltepe Sector of the Red Rabbit Gold Project in Western Turkey, which is held within a Joint Venture currently 82% owned by Ariana. Proccea Construction Co. ("Proccea") is funding US$8 million to earn in to 50% of the project.
Highlights:
Base case financial model provides a US$34.4 million Net Present Value (8%) ("NPV") and a 37.8% Internal Rate of Return ("IRR") using a base case gold price of US$1,304 / oz and silver price of US$22.6 / oz. These figures are quoted on a 100% project basis.
Payback of 2.4 years on US$31.1 million initial capital.
Cash costs of US$588 - 611 across financial model range, reflecting reduced input costs and revised commercial quotations.
The Company and its JV partners are now seeking finance ahead of production targeted for H2 2014.
Dr. Kerim Sener, Managing Director, commented:
"This is a watershed event for the Company and we are very pleased with this outcome. The Definitive Feasibility Study for Kiziltepe demonstrates robust economics across the financial model range. Now that the feasibility is concluded, the Company intends to advance discussions with potential lenders to the project. The Company is expecting the Environmental Impact Assessment ("EIA") approval process to conclude in the Autumn of 2013 and it is the intention of the JV company to progress to term-sheet stage with a lender in advance of EIA approval. The Company remains on track for delivery of first production in the second half of 2014."
Summary of Feasibility Study
The Definitive Feasibility Study ("DFS") for the Kiziltepe Project was prepared by Tetra Tech following final geotechnical and engineering inputs provided by Turkish consultants on the Tailings Storage Facility. Much of the DFS remains essentially unchanged from the interim feasibility study, which was announced on 29 October 2012. Consequently, the reader is invited to review the earlier announcement in parallel with this one.
The economic analysis by Tetra Tech presented here has been updated from that presented in the interim feasibility study to reflect the latest cost quotation for contract mining (which is lower than that established for the interim feasibility study), recent changes in gold price forecast and to allow for cost escalation. The pre-tax financial model was established on a 100% equity basis, excluding debt financing and loan interest charges on a total escalated capital expenditure estimate of US$31.1 million.
The financial model is based on an eight-year mine life (including low-grade stockpile) and 1,193,700 tonnes selected pit reserve detailed previously in the interim feasibility study. It is important to note that the reserves lie within pits optimised and designed at a gold price of US$1,058 / oz Au. The financial model includes royalty, State Right, typical smelter terms, transport and insurance.
A revised base case has been established using a gold price of US$1,304 / oz and a silver price of US$22.6 / oz. Tetra Tech, in line with its policy on metals prices, has utilised long-term prices obtained from the Energy and Metals Consensus Forecast ("EMCF") as at May 2013. Sensitivities were generated at plus or minus 30% on this base case (Table 1). A capital cost escalation factor of 6.9% has been applied to the 2012 data and is based on CPI data published by the Turkish Statistical Institute.
Table 1: Sensitivity analysis results based on escalated cost data. The cash costs provided are the operating costs including on-site and all off-site charges and royalties. Consequently the cash costs scale in line with the gold price across the financial model range. The sensitivity analysis results are reported gross on a project basis with respect to the Red Rabbit JV.
| Scenario | Gold Price (US$/oz Au) | NPV 10 (US$ M) | NPV 8 (US$ M) | IRR (%) | Payback Year | Cash Cost (US$/Au Eq. oz) |
| Minus 30% | 913 | 3.5 | 5.7 | 13.7 | 3.6 | 588 |
| Minus 20% | 1,043 | 12.5 | 15.3 | 22.3 | 3.1 | 592 |
| Minus 10% | 1,174 | 21.5 | 24.8 | 30.3 | 2.7 | 596 |
| Base Case | 1,304 | 30.4 | 34.4 | 37.8 | 2.4 | 600 |
| Plus 10% | 1,434 | 39.4 | 44.0 | 45.0 | 2.2 | 603 |
| Plus 20% | 1,565 | 48.4 | 53.5 | 52.0 | 2.0 | 607 |
| Plus 30% | 1,695 | 57.4 | 63.1 | 58.8 | 1.8 | 611 |
Contacts:
| Ariana Resources plc | Tel: +44 (0) 20 7407 3616 |
| Michael Spriggs, Chairman | |
| Kerim Sener, Managing Director | |
| Beaumont Cornish Limited | Tel: +44 (0) 20 7628 3396 |
| Roland Cornish / Felicity Geidt | |
| Beaufort Securities Limited | Tel: +44 (0) 20 7382 8387 |
| Chris Rourke / Guy Wheatley | |
| Loeb Aron & Company Ltd. | Tel: +44 (0) 20 7628 1128 |
| John Beresford-Peirse / Dr. Frank Lucas | |
| St Brides Media & Finance Ltd | Tel: +44 (0) 20 7236 1177 |
| Susie Geliher / Lottie Brocklehurst | |
Editors' note:
The Competent Persons responsible for this study are as follows:
For the Resource Estimate, Paul Gribble, FIMMM, C.Eng., a senior geologist with Tetra Tech in Swindon, UK
For the mining studies, Richard Hope, MIMMM, C.Eng., a senior mining engineer with Tetra Tech in Swindon, UK.
For the processing studies, Dr. Arun Vathavooran, PhD., MIMMM, C.Eng., a senior processing engineer with Tetra Tech, Swindon, UK.
The above persons have reviewed the data presented in this press release and consent to the inclusion of data and text taken from the study report in the form and context in which it appears. Tetra Tech is a leading provider of consulting, engineering, and technical services worldwide (NASDAQ:TTEK). See more at: http://www.tetratech.com. Proccea were also involved in the process engineering and costing for the metallurgical process.
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, on its own in western Turkey and in Joint Venture with Eldorado Gold Corporation in north-eastern Turkey. Eldorado owns 51% of this joint venture and are fully funding all exploration work on the JV properties, while Ariana owns 49%. The total resource inventory within this JV is 1.09 million ounces of gold.
The Company's flagship assets are its Kiziltepe 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 at the Red Rabbit Project stands at 448,000 ounces of gold equivalent.
Ariana 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 11.5% of Tigris Resources Limited.
Beaufort Securities Limited and Loeb Aron & Company Ltd. are joint 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.
Ends
The owner of this announcement warrants that:
(i) the releases contained herein are protected by copyright and other applicable laws; and
(ii) they are solely responsible for the content, accuracy and originality of the
information contained therein.
Source: Ariana Resources plc via Thomson Reuters ONE
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