ARIANA RESOURCES, TURKISH GOVERNMENT GIVES MAJOR INCENTIVE BOOST TO HELP ENABLE MINE DEVELOPMENT AT KIZILTEPE-RED RABBIT

Ariana Resources (AIM:AAU) announced today that it had received a major package of incentives from the Turkish government that will help pave the way for the company to press ahead with mining at the flagship Kiziltepe Red Rabbit project in Turkey. Ariana is partnering with Proccea a major Turkish construction, EPCM and mineral process engineering company  under Zenit Madencilik the local joint venture partnership, that is working to begin mining at the Kiziltepe project. 
The range of incentives include

1. Exemption from customs duty domestic and foreign machinery and equipment (100% exemption). 

1. 80% reduction in corporation tax up to a tax limit of 40% of the capital investment.

1. Social insurance contributions for all mine employees will be paid by the Turkish Government for 7 years.

1. Interest repayment support on any Turkish Lira or foreign currency loan secured by the company.

1. VAT exemption domestic and foreign machinery and equipment (100% exemption).

The Company has commissioned an independent analysis of the above incentives, specifically focusing on the corporation tax reductions and social insurance support in order to estimate the magnitude of the incentives provided.  Over the life of the operation, an estimated saving of approximately US$1.2 million in corporation tax and US$1 million in social insurance support has been secured.  Further savings will be made from the customs duty and VAT exemptions and further work to quantify these is underway. 

Zenit has also recently applied for the inclusion of the project as a Strategic Investment.  If the application is successful there will be a further 10% reduction (i.e. 90% total reduction) in corporation tax up to a tax limit of 50% of the capital investment. 

These incentives are certain to make the debt financing for Kiziltepe now even more attractive to lenders, but also provide the strongest signal yet that the Turkish government is really keen to see Kiziltepe get into production. 

What investors should be really pleased about with this announcement is the fact that Ariana, through its Turkish  Zenit Madencilik structure is clearly has an operational management system in place in Turkey that can go all the way and build a mine.

I will be putting together a profile on Proccea in another post where readers of my blog will be quite amazed at the experience Proccea has in bringing new mine developments into play.

Watch this space