Vatukoula Gold Mines (VGM:AIM) Turning a Corner as Production Cash Costs Fall and Gold Production Increases

Monday 13th January 2013

Vatukoula Gold Mines (VGM:AIM) Turning a Corner as Production Cash Costs Fall and Gold Production Increases 

Vatukoula Gold Mines (VGM:AIM) today posted its operational update to the First Quarter ended 30 November 2013.

Investors and shareholders will be pleased to see a small rise in production but more importantly the fact that VGM has now stabilised its production costs to circa $1,300 oz per ounce.

For the 3 months ended 30th Nov 2013 cash costs per ounce were $1,363 and for the three months ended August 2013 they were $1,393 per ounce.

These figures are significant in that Vatukoula has always taken pride in its accounting policy, where factoring the majority of its direct operating costs into its cash cost per ounce.

Gold production was up by 2% in the quarter and importantly there was a 13% rise in the Sulphide ore delivered to the Sulphide Plant, with sulphide head grade now stabilising at over 5 grams per tonne (5.3) Q1 2013   (5.85) Q4 2013. Oxide head grade is 3.97 grams per tonne

With the Zhongrun financing now in place, VGM is now properly capitalised for really what is the first time in its history since it re-started the mine back in 2007.

VGM, like all gold miners, will be hoping to see a re-trace in the gold price to levels closer to 1,400 USD per ounce.

This could well be possible, given the fact US Equities are viewed by some commentators as over priced. It is clear that investors who flooded into gold during the financial crises have in 2013 reduced their investment exposure to gold and have been the main reason why the gold price has fallen in 2013. Demand for gold is increasing, particularly from Asia and production entering the market from new mines is only slightly increasing. Total gold supply to the market in Q3 2013 was down 3% compared to the same period in 2012, with recycling experiencing a decline of 13% or 158 tonnes.

Supply from gold mines is up 4% Q3 2013 compared to Q3 2012, 

With the VGM stock currently trading at 6p, and with the Fiji operation now properly capitalised, an upward gold price swing could have a real impact on VGM's share price further into 2014.

Fingers crossed

Vatukoula Gold Mines plc

("Vatukoula" or "the Company")

Operational Update for the First Quarter ended 30 November 2013

Vatukoula Gold Mines Plc. (AIM:VGM), the AIM-listed gold producer, is pleased to announce its unaudited preliminary operational results from its 100% owned Vatukoula Gold Mine in Fiji for the first quarter ended 30 November 2013 ("Q1").

·     Completed the first tranche of the US$ 40 million investment agreement with Zhongrun International Mining Co. Ltd ("Zhongrun") - US$20 million in November 2013

·     Quarterly production of 11,090 ounces gold, with 11,415 ounces shipped. This represents a 2% increase in gold shipped compared to the previous quarter

·     14% increase in underground ore mined to 62,073 compared to the previous quarter

Operating Results	3 months ended Nov 2013 (Q1)	3 months ended Aug 2013 (Q4)	3 months ended May 2013 (Q3)	3 months ended Feb 2013 (Q2)	3 months ended Nov 2012 (Q1)
Total underground tonnes mined (ore, waste & capital)	104,805	96,701	94,793	89,341	117,160
Strike drive development (metres)	315	395	405	342	540
Capital development (metres)	1,327	1,131	976	765	1,625
Ore processed (tonnes)	107,115	111,936	100,182	103,916	112,944
Average ore head grade (grams/tonne)	3.97	3.96	3.48	3.70	3.88
Total recovery	79.37%	79.44%	79.76%	74.82%	71.86%
Gold produced	11,090	11,442	9,005	8,861	10,549
Gold shipped	11,415	11,219	8,704	9,113	10,482

Unaudited Financial Highlights:	3 months ended November 2013	3 months ended November 2012
Revenue (£'000)	9,256	11,335
EBITDA (£'000)	(2,493)	380
Cash (used) / generated from operating activities (£'000)	(1,367)	834
Underlying operating (loss) (£'000)	(4,450)	(1,257)
Cash cost per ounce shipped (US$/ounce)	1,363	1,590
Average realised gold price (US$/ounce)	1,285	1,721
Basic loss per share (pence)	(2.00)	(1.17)
Capital Investment (£'000)	3,002	5,171
Cash and Cash equivalents (£'000)	9,382	3,998

David Paxton, CEO of Vatukoula Gold Mines, commented:

"The quarter was highlighted by the completion of the US$ 20 million equity portion of the US$40 million investment agreement with our majority shareholder Zhongrun.

With the funds we have placed the orders to return our stock levels of vital spares at the mine and have arranged for a comprehensive refurbishment program for the underground mining fleet.  These steps ensure that we can complete the essential development as detailed in our long term plans.  Other vital maintenance programs have been scheduled as required.

The US$40 million will provide us with the balance sheet flexibility to embark on our capital investment programme in this fiscal year and we look forward to working with Zhongrun as we deliver our Company strategy to grow our production to sustainable and profitable levels."

Operating Results

	3 months ended Nov 2013 (Q1)	3 months ended Aug 2013 (Q4)	3 months ended May 2013 (Q3)	3 months ended Feb 2013 (Q2)	3 months ended Nov 2012 (Q1)
Underground Mining
Total underground tonnes mined (ore, waste & capital)	104,805	96,701	94,793	89,341	117,160
Operating development (metres)	2,886	3,199	3,666	3,419	3,360
Strike drive development (metres)	315	395	405	342	540
Capital development (metres)	1,327	1,131	976	765	1,625
Total development (metres)	4,528	4,725	5,047	4,526	5,525
Sulphide Plant
Sulphide ore delivered (tonnes)	62,073	54,637	59,456	64,023	62,040
Sulphide head grade (grams/tonne)	5.30	5.85	4.53	4.55	5.19
Oxide Plant
Oxide ore delivered (tonnes)	47,593	57,076	40,424	41,017	50,530
Oxide head grade (grams/tonne)	2.06	2.15	2.36	2.36	2.28
Total (sulphide + oxide)
Ore processed (tonnes)	107,115	111,936	100,182	103,916	112,944
Average ore head grade (grams/tonne)	3.97	3.96	3.48	3.70	3.88
Total recovery	79.37%	79.44%	79.76%	74.82%	71.86%
Gold produced	11,090	11,442	9,005	8,861	10,549
Gold shipped	11,415	11,219	8,704	9,113	10,482
Cash Costs
Cash cost per ounce shipped (US$)	1,363	1,393	1,812	1,688	1,590
Cash cost per tonne mined and milled (US$/tonne)	145	140	157	148	148
Average realised gold price (US$/ounce)	1,285	1,317	1,474	1,636	1,721

Underground Production and Development

The initial funds from the Zhongrun investment were received in late October and early November, hence for the majority of the quarter capital was constrained and our planned capital development programme was not initiated as we restocked key supplies.

Total tonnes of ore, waste and capital mined for the quarter ended 30 November, 2013 decreased by 13% to 104,805 tonnes compared to the same period last year, but was 8% higher than the previous quarter ended August 2013.  Once again limited availability of the underground mining fleet due to cash constraints limited our underground production.  Total development, when measured by distance advanced was 4% lower than the previous quarter and 20% lower than the equivalent period last year.  Development advance was also affected by the limited availability of the underground mining fleet.

The ore delivered from underground for the quarter ended 30 November, 2013 was 62,073 tonnes, a 14% increase compared to the previous quarter and approximately the same level for the same period last year.

The average underground grade for the quarter ended 30 November 2013 was 5.30 grams per tonne 9% lower than the previous quarter and 2% higher than the same period last year.

We are currently mining a mix of historic low grade stopes and newer areas as they are opened.  The grade delivered will continue to be erratic until we have established sufficient new ore mining areas, which is the focus of the current development program.

Surface Production

Production from surface oxides and sulphide waste piles for the three months delivered was 47,593 tonnes at a grade of 2.06 grams gold per tonne.  Surface mining produces both oxide material from open pit mining and sulphide material from old waste dumps.  During the quarter we terminated the surface oxide mining, to focus on the higher grade sulphide waste dumps available in the mine area.  This ore is currently processed as sulphide material. The termination of the oxide mining led to drop of 17% in ore delivered from surface mining compared to the previous quarter.

Vatukoula Treatment Plant ("VTP")

During the three months, the VTP processed 107,115 tonnes of ore which was a 4% reduction compared to the previous quarter (111,936 tonnes), and a 6% reduction to the same period last year (112,944 tonnes).

Gold recovery for the three-month period was 79.37%, which was similar to the previous quarter (79.44%).  The composition of surface oxide ore has changed with more sulphide material in the surface waste dumps that has not been fully oxidised.  Although the surface waste material has a higher grade (2.06 grams per tonne), the gold recovery is much lower due to the locked gold in sulphide.

As previously detailed, surface waste dump material production is being maintained while the underground ore production is limited.  Mining of this material will cease once underground production is established.

Unaudited Financial Highlights

Revenue for Q1 was £9.3 million, lower than the same period last year (£11.3 million). This was primarily as a result of a decrease in the market price of gold, a 30% year on year decrease in US$ value. The average realised gold price was US$1,285 in Q1 compared to US$1,721 per ounce in the same period in 2012.

The net cash generated in operating activities decreased from £0.8 million generated Q1 last year to £1.4 million used Q1 this year. Prior to movements in working capital these figures are £0.9 million generated and £0.03 million used respectively. The large movement in working capital (cash used of £ 1.4 million in Q1) is a result of restocking of stores and returning the majority of our creditors to normal trading terms.

Capital investment decreased from £5.2 million in Q1 last year to £3 million in Q1 this year. This decrease is mainly attributable to a lack of working capital during the majority of the quarter while we completed the first tranche of the US$40 million investment agreement.

Cash costs for Q1 were US$1,363 per ounce shipped (Q1 last year: US$1,590 per ounce shipped). The main reason for the decrease in cash costs per ounce is the increase in grade and recovery from the mill and in addition a 2% decrease cash costs per tonne mined and milled from US$148 in Q1 last year to US$145 in Q1 this year.

Despite the decrease in the cost of sales the drop in gold price and changes in £ / F$ exchange rates (which resulted in a non-cash £1.5 million charge to our intercompany loan) resulted in a loss for the period of £4.4 million.

Ortac Resources (OTC:AIM) Secures Major Stake in Andiamo Exploration Ltd Securing Advanced Stage Eritrean, Volcanogenic Massive Sulphide (VMS) Gold & Copper Projects

Monday 13th January 2014, London

Ortac Resources (OTC:AIM)

Secures Major Stake in Andiamo Exploration Ltd

Securing Advanced Stage Eritrean, Volcanogenic Massive Sulphide (VMS)

Gold & Copper Projects

Ortac Resources, the AIM listed developer of the 1.32 million ounce, Šturec gold mine in Slovakia, today announced that it will make significant investments into Andiamo, a private UK registered company, who hold advanced stage, large scale VMS gold-copper exploration projects in Eritrea. Under the terms of the subscription, Ortac will invest US$ 1.5 million to acquire and initial 26.7% stake, with an option to increase their holding by 21% for a further investment of US$ 2.0 million, which if exercised, would take their total interest in Andiamo to 42.2%

Cantor Fitzgerald is acting as Ortac’s broker.

It is reported that for some time now, the board of Ortac have been looking to add another project that would deliver further shareholder returns, as the company continues to work towards the permitting of its flagship Slovakian Šturec gold mine project.

The decision by Ortac to invest in Andiamo, is one that investors should look at very closely, given the quality of technical, financial and mining expertise contained within the Ortac board, where this deal and the quality of Andiamo’s Eritrean portfolio, has been seen by Ortac as “Stand Out”

Andiamo has raised, privately, over US$ 10 million. Ortac has clearly been impressed by the quality of geological and technical work undertaken on their projects in Eritrea, where this deal now offers Ortac shareholders a margin of investment safety, whilst the company bides its time in the steadfast pursuit of permitting at Šturec.

Confirmation of the quality of Andiamo’s Eritrean portfolio can be traced back to the 21st January 2013, when AIM listed natural resources investment house, Paternoster Resources Plc (PRS:AIM) subscribed for 640,000 new ordinary shares in Andiamo at a price of US$ 50 cents per share, as part of a fund raising of up to US$ 3 million, representing an investment, in aggregate, of US$ 320,000, thus valuing Andiamo at US$ 12 million on a pre-investment basis.

At that time Paternoster Chairman, Nicholas Lee said, "The quality of the operation at Andiamo is seldom seen in companies of this size.  The potential of the deposits within the licence area are significant and it is expected that production can be achieved within the short to medium term with relatively low levels of investment”

Paternoster should now do more to promote their investment into Andiamo, given this news by Ortac:

As a mining and natural resources exploration jurisdiction, Eritrea is as good if not better than any of its African counterparts and is certainly “Investment Grade” Geologically, Eritrea sits on a patch of the Arabian Nubian Shield, the geological feature that stretches from Saudi Arabia and Yemen in the east, to Sudan and Egypt in the west.

“We are a small country, but over 60% of our land mass is covered by Nubian Shield rocks which are home to several rich gold and base metal mines in the region. I firmly believe that Eritrea is going to be one of the new entrants in the global mining arena. I am on record as saying that reserves identified in Eritrea so far are only the tip of the iceberg, and I stand by that viewpoint. In the next five to ten years I expect the number of mining companies exploring and producing in Eritrea to have at least doubled to more than 30.”

Director general of the department of mines in the Eritrean ministry of energy and mines, Alem Kibreab is quoted as saying back in October 2013, when Canadian Nevsun Resources (TSX:NSU) commissioned their new copper flotation plant at its Bisha gold-copper mine operation. Nevsun’s Bisha Mine began construction in September 2008 and declared commercial production in February 2011 at a rate of 2Mtpa. The mine produced low-cost gold-silver doré until mid-2013 when, through a $110 million copper expansion, throughput expanded to 2.4Mtpa and the product switched to copper in concentrate.

The Bisha mine, with 12 years of current reserves, ranks as one of the highest grade open pit mines in the world and, in 2012, produced 313,000 ounces of gold.

Other mining and exploration companies operating in Eritrea include fellow

Canadian company, Sunridge Gold Corp (TSX.V: SGC), who are developing their Asmara project. The Asmara Project hosts four deposits, three of which, Emba Derho, Debarwa and AdiNefas, have combined NI 43-101 measured and indicated resources totaling, 1.26 billion pounds of copper, 2.5 billion pounds of zinc,930,000 ounces of gold, and 28.3 million ounces of silver

A fourth deposit, Gupo Gold, contains an additional Inferred resource of 47,000 ounces of gold.

Other VMS discoveries in Eritrea include:

Jabal Sayid (Barrick Gold Corp, Saudi Arabia); Sukari (Centamin, Egypt); and Hassai (La Mancha Resources, Sudan).

The Upside for Ortac and Andiamo, Why Investors Should Take Comfort.

Eritrea’s recent track record in attracting Chinese investors is something Investors in Ortac should take some comfort from. For example, Chalice Gold Mines Limited (ASX: CHN/TSX: CXN) completed the sale of their Zara Gold Project in Eritrea back in 2012, to China SFECO Group for US$78 million plus a deferred payment of US$2 million. The Chinese clearly like what they see in Eritrea. Indeed Chalice is still active in Eritrea and has just announced a new VMS discovery,

Andiamo’s portfolio of projects look pretty breathtaking and show all the hallmarks of ones that, with some further drilling, could become attractive to the Chinese over the near term. Andiamo’s Eritrea exploration acreage is defined within their Haykota licence, held by the company since July 2009.

The shining star project in the licence area is Yacob Dewar, a near surface gold-copper VMS discovery ( just 55km form Bisha) where initial drill results have revealed some impressive numbers.

Drilling Record:

Gold

2010 - 2 short aircore holes

14 m @ 3.5 g/t gold

2011 - 32 diamond drill holes

16.2 m @ 5.0 g/t gold

2012 - 58 reverse circulation holes

25.2 m @ 7.3 g/t gold

2013 – 9 diamond drill holes

19.9 m @ 6.2 g/t gold

9.0 m @ 22.5 g/t gold

Copper

2011 32 diamond drill holes

13 m @ 1.8% Copper

2012 - 3 diamond drill holes

63 m @ 2.4 % Copper

Drill Programme Should Generate Significant News flow

Andiamo will now press ahead with an intensive drill campaign with a view to securing a resource classification this year. If results follow the promise already shown at Yacob Dewar, then Ortac should start to see increasing retail investor interest generated from what could well be a very positive year of new releases.

Ortac shares are down 58% over the last 12 months, the stock trades on average daily volumes of 19 million shares, is liquid and is trading just above its 52 week low at 0.00235p. This deal with Andiamo is likely to see a significant re-rate of the Ortac stock.

References:

http://andiamoexploration.co.uk

http://www.ortacresources.com   Market Cap 5.4 Million STG

Ariana Resources AIM:AAU Shares Jump on EIA Approval for Flagship Red Rabbit Turkish Gold Project as Mine Development Gathers Pace

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.