Ariana Resources AIM:AAU the Turkish Gold Mine developer announced Monday 30th December 2013, that the Turkish authorities had approved the company's Environmental Impact Assessment for their flagship Red Rabbit Gold Project located in Ariana's Kiziltepe Sector gold bearing acreage.
This milestone event now paves the way for the company to start mine development. Turkey has long been a proven gold production jurisdiction and has often been overlooked by investors. With downward price pressure on the gold price, the cost per ounce of gold production by Turkish miners generally hovers around the 600USD$ per ounce mark and Ariana's cost base falls in line with those miners already in production such as Eldorado, Alacer and Koza.
Below is the RNS that the company put out. Shares are trading at 1.33p and up 13% on the day.
EIA APPROVED FOR KIZILTEPE GOLD-SILVER MINE IN TURKEY
Ariana Resources plc ("Ariana" or "the Company") is delighted to report that, further to the announcement released on 30 August 2013 regarding the submission of its final Environmental Impact Assessment ("EIA") report for the Kiziltepe Sector of the Red Rabbit gold-silver project in Western Turkey, the Ministry of Environment and Urban Planning has now formally approved the EIA for the initial mine at Kiziltepe.
Highlights:
- Milestone achievement in the development of the Kiziltepe mine towards gold and silver production - targeted at 21,000oz of gold equivalent per annum.
- Ariana's joint venture partner, Proccea Construction Co. ("Proccea") to manage and finance the development, with construction commencing following receipt of final permits and mining anticipated to commence approximately six months after start-up.
- Negotiations regarding debt financing for remaining US$25 million at an advanced stage - clear pathway towards production at Kiziltepe without additional dilution.
- Project remains robust at current gold price, with production cash costs estimated at US$600 per ounce of gold.
- Resource expansion upside has already been demonstrated across the project area - recent results from on-going exploration programmes underpin the potential to double the current mineable resource-base of 448,000oz gold equivalent.
Dr. Kerim Sener, Managing Director, commented:
"The approval of our EIA for the Kiziltepe Gold-Silver Mine demonstrates the determination and vision of the Ariana team to develop this highly prospective asset through to commercial production. We have taken what was a high-risk exploration programme in western Turkey right through to the delivery of a low-risk, feasible and environmentally approved mining project, which will benefit both local stakeholders and Ariana investors alike.
"The environmental approvals and permitting process in Turkey is methodical and thorough. Under the latest regulations it has been important to gauge the social impact of development in parallel with the environmental impact. In our case, we have involved the local community at every stage of the development of the project over several years and we have been greatly encouraged by the support that they have shown for the mine during the EIA process.
"With our joint venture partners, Proccea Construction, now assuming management control through the final permitting and construction phases, the Ariana team can again focus on what we excel at: value accretive exploration. As recently reported, Ariana has initiated a new exploration strategy at Kiziltepe, and our operational team are confident there remains the potential to double the current mineable resources across the wider Red Rabbit Project Area.
"With this in mind, as we accelerate towards production and the generation of maiden revenues, our attention still remains squarely on the evaluation and development of our wider acreage as we look to becoming a full-cycle gold exploration, development and production company focused on highly prospective regions of Turkey."
Further Information:
As announced on 30 August 2013, Ariana, via its joint venture company in Turkey with Proccea Construction Co., Zenit Madencilik San. ve Tic. A.S., ("Zenit"), submitted the final EIA report for the Kiziltepe Sector of Red Rabbit gold-silver project to the Ministry of Environment and Urban Planning ("MEUP"). The mandatory 10-day public notice period has been completed and final signatures approving the EIA by MEUP were received in late December. In accordance with this, the EIA Positive Decision Certificate for the project has now been issued and dated 23 December 2013.
Following this, Zenit will proceed formally to Phase 2 of development at Kiziltepe, being the granting of final permits and construction, with Proccea in management control of the joint venture. Construction will commence following receipt of final permits and the completion of necessary land acquisitions. Following the receipt of the EIA the joint venture company can now apply for permits including those for construction, health and safety, and forestry, among others, with mining commencing approximately six months after construction start-up.
Proccea specialises in gold-silver processing plant design and construction, so is ideally placed to drive development at Kiziltepe. Under the terms of the joint venture agreement, Proccea is earning into 50% of the joint venture on expenditure of US$8 million. Phase 1 expenditure to date, which was focused on the Definitive Feasibility Study and EIA, has totalled over US$2 million. Proccea is due to spend the remaining earn-in funds during Phase 2: Construction, in addition to being in management control of the joint venture. The additional capital expenditure requirement of US$25 million will be sourced from debt at the joint venture level. Negotiations regarding the formalisation of debt funding are progressing encouragingly and the board of Ariana will announce further details in due course.
Once in production, the mine at Kiziltepe will represent a significant employer in the region, with approximately 100 local people expected to be retained on a permanent basis. Ariana, Zenit and Proccea are committed to developing a sustainable and environmentally, socially and economically robust mining project at Kiziltepe and remain actively involved in dialogue with the local communities in order to achieve this.
