Ariana Resources PLC Ariana Resources Plc : Excellent Results From Tavsan Scoping Study
November 10 2016 - 2:01AM
UK Regulatory
TIDMAAU
10 November 2016
AIM: AAU
EXCELLENT RESULTS FROM TAVSAN SCOPING STUDY
Ariana Resources plc ("Ariana" or "the Company"), the exploration and
development company operating in Turkey, is pleased to announce the
completion of a scoping-level assessment for the Tavsan Project*
("Tavsan" or "the Project") undertaken by independent geological,
metallurgical and mining consultants. Tavsan is part of the Red Rabbit
Joint Venture with Proccea Construction Co. and will be 50% owned by
Ariana once mine construction at the Kiziltepe Sector is completed in
Q416.
Highlights
-- Results show potential for strong financial returns, with NPV (8%) at
US$41.9M, with payback secured within 1.1 years over the Life of Mine
("LoM") at a gold price of US$1,250/oz.
-- LoM C1 gold equivalent cash-cost of US$559-630/oz, across model range
with a pre-tax IRR of 80% at a gold price of US$1,250/oz.
-- Average LoM production of approximately 30,000 ounces of gold per annum
over approximately 4 years; potential to increase the resource with
drilling.
-- Capital expenditure estimated at US$20 million, which would involve
development of a very low strip ratio open-pit mine and heap-leach.
-- Planned as a semi- stand-alone operation to Kiziltepe, potentially
sharing much of the same infrastructure including the gold stripping and
carbon regeneration facility, and gold room.
-- Additional drilling and metallurgical test-work being planned on the
Project as part of a Pre-Feasibility Study ("PFS") scheduled for 2017.
Dr. Kerim Sener, Managing Director, commented:
"This is an excellent result which reinforces our view that the Tavsan
Sector will become a valuable additional source of revenue within the
context of the Red Rabbit Joint Venture with Proccea Construction Co.
The addition of Tavsan to our mining schedule will enable the Company
the opportunity to increase production from approximately 20,000 oz pa
to 50,000 oz pa between two operations.
We are investigating options for the fast-tracking of further
exploration and development work at Tavsan, targeting completion of a
PFS in 2017. As part of this programme of work we are currently
planning and budgeting for a dedicated drilling programme at Tavsan and
further metallurgical test-work."
Scoping Summary
Ariana and its consultants have completed a scoping-level assessment for
the development of the Company's JV project at Tavsan, in Kutahya
Province, western Turkey. The scoping study provides initial estimates
for costs and financial returns, based on the current Mineral Resource,
which includes JORC 2004 classified Indicated and Inferred material as
per the SRK Consulting (UK) Ltd Mineral Resource estimate, completed in
2008 (Table 1).
Table 1: SRK Mineral Resource statement (2008) for Tavsan.
Tonnage
Classification Zone (Mt) Grade Metal
Au (g/t) Ag (g/t) Oz Au Oz Ag
Indicated Main 1.7 1.6 4.2 87,000 229,000
Main +
Inferred Satellites 3.2 1.1 3.7 117,000 380,000
Project scoping was conducted independently by mining consultancy
Auralia Mining Consulting Pty. Ltd. ("Auralia"), which has extensive
experience in gold mining project development and assessment worldwide.
For more information visit www.auralia.net.au.
Whittle Optimisation
Major parameters for the scoping study were derived from previous work
undertaken for the Company, completed in 2008, by SRK and SGS on Mineral
Resource estimation and metallurgical test-work respectively. For the
purposes of the Whittle optimisations, a revised block model was
prepared independently for a sub-set of the original Mineral Resource by
Odessa Resources Pty. Ltd. New topographic data and certain corrections
to drill hole collar coordinates were also taken in to account for the
revised block model. A base-case and set of range runs were carried out
on the Tavsan project utilising the Whittle optimisation software
package. The base-case inputs applied in Whittle are outlined in Table
2 below.
Table 2: Summary inputs of the Whittle base case optimisation.
Whittle Input Parameter Value Units
Overall Slope Angle 50 Degrees
Reference Mining Cost 1.0 US$/t
Mining Dilution 10%
Mining Recovery 95%
Processing Cost 12.0 US$/t
G & A Cost 11.0 US$/t
Processing Recovery (Au) 80%
Processing Recovery (Ag) 24%
Sell Price Gold 1,060 US$/oz
Sell Price Silver 15 US$/oz
Sell Costs Royalties as required US$/oz
Discount Rate 8%
Processing Constraint 0.75 Mtpa
The physical parameters of the base-case Whittle Revenue Factor (RF) 1
shell is summarised in Table 3 below.
Table 3: Summary outputs of the modified Whittle base-case optimisation
(rounded figures with mining recovery and dilution applied) at
US$1,060/oz Au.
Parameter Output
Total rock 8.1 Mt
Ore 2.7 Mt
Strip ratio 2:1
Average gold grade 1.6 g/t
Average silver grade 3.0 g/t
Gold ounces recovered 109,000 oz
For the purposes of determining mining inputs into the Whittle base-case
run, the study assumed conventional drill, blast, load and haul methods
with excavation planned to be carried out by 30t excavator and 25-35
tonne rigid body truck fleets. Due to the geometry of the
mineralisation in relation to the topography, a flat US$/t unit rate
mining cost was applied, based on Ariana's Red Rabbit Gold Project.
Whittle range runs were carried out as part of the study. They
displayed standard expected linear movement and sensitivities to
altering input parameters. Although only at a scoping level, the
resulting runs indicate the project is most sensitive to sell price
fluctuations, but is physically robust to change on variance away from
key base-case parameters. This can be seen in Table 4 below.
http://hugin.info/138153/R/2055817/769953.pdf
Table 4: Whittle range run outputs, RF 1 worst-case shells used for
comparison purposes. All figures are rounded.
Mine Design
The topography at the Tavsan Project is dominated by a gently rolling
hills. Much of the Mineral Resource lies within the Main Zone, referred
to here as the 100 Zone and several satellite zones, referred to as the
200, 300 and 600 zones (Figure 1). As much of the mineralisation occurs
within a gently dipping and largely outcropping unit of mineralised
jasperoid, the bulk of the current Mineral Resource varies in depth from
0m to 30m below the surface.
This physiography would potentially enable the development of several
open-pits which would be initiated from the lowest point, with mining
progressing sequentially up the hill-side with side-casting or dumping
of waste behind the working face (Figure 1). The open-pit could
essentially be back-filled as mining progresses, minimising
environmental impact and eliminating the requirement for a large
permanent waste rock dump, which would also keep capital costs to a
minimum. Based on the high level scoping study Whittle shells, the
overall strip ratio for the project is likely to be approximately 2:1,
so little waste will need to moved within the pits.
http://hugin.info/138153/R/2055817/769947.pdf
Figure 1: which can be accessed from the link above shows a plan view of
conceptual open-pit design for all pits at Tavsan (left) with the Main
(100) Zone at Tavsan (right). The mineralised zone is shown in yellow
(left), sitting within the conceptual pit designs shown in brown. The
conceptual designs were based upon the side casting and back-filling
premise as discussed above. For the Main (100) Zone, Mineral Resources
at >0.5g/t gold are displayed in pink in the diagram on the right,
looking north-east, with topography shown in green.
Mine Schedule
A conceptual mining schedule was completed for the life of the project
using the RF1 Whittle shells for each ore zone (Figure 2). As the
deposit has a low strip ratio with ore at or close to the surface, very
little pre-strip is required and therefore for the purposes of
conceptual scheduling it is reasonable to use averaged ore delivery
figures for the life of the project. More detailed future studies will
provide an opportunity to further optimise pit designs and scheduling so
as to deliver the best overall cash flow for the project.
http://hugin.info/138153/R/2055817/769949.pdf
Figure 2: which can be accessed from the link above shows high level
mining schedule including tonnes processed and input gold grades.
Process Route
Preliminary metallurgical test-work conducted in 2008 by SGS Lakefield
Research Limited confirmed that processing using heap-leach methods
would be suitable for the Tavsan mineralisation. Recovery rates on
average grade gold mineralisation (1.4 g/t Au) of 80% for gold and 26%
for silver are expected based on column-leach test-work, although
further test work is required, particularly for higher than average
grade gold mineralisation (4.2 g/t Au). Initial test-work showed that
higher grade mineralisation demonstrated lower recoveries (67% for gold
and 22% for silver), though the limited distribution of such
mineralisation is not considered extensive enough to be a metallurgical
concern at this stage.
A four-year processing schedule is expected based on an all-materials
schedule. The silver contained with the mineralisation is not economic
on its own, but adds credits as an output given the requirement to mine
and process it along with the gold recovered (where the gold grade
exceeds the economic cut-off). Of approximately 136,000 ounces of gold
input to the heap leach, approximately 109,000 ounces of gold is
recovered at an 80% gold recovery rate. A cut-off grade of
approximately 0.96 g/t Au was established for the base case at
US$1,060/oz Au.
It is envisaged that processing would commence on a small starter pad
developed outside of the Main Zone. After mining had progressed
sufficiently within this zone, part of the pit could be converted to
heap leach pads for the remaining mine life. This would substantially
reduce the environmental footprint of the operation, as the pads and
much of the waste could be recycled back in to the pits, the operation
would be largely self-rehabilitating.
It is expected that loaded carbon could be potentially trucked to the
Kiziltepe processing plant for carbon elution and recovery of gold. In
this case, there would be no requirement at Tavsan for gold stripping
involving carbon elution and regeneration, electro-winning or a gold
room, which would substantially reduce the capital cost. Further work
is required to determine the potential for such infrastructure to be
shared in this manner.
Infrastructure
The Tavsan project benefits from well-developed infrastructure and an
established mining culture in the vicinity of the proposed mine. A
combination of sealed and un-sealed roads provide access to the project
from the nearby town of Balikoy (8.5km away). Nearby towns and villages
provide a source of both skilled and un-skilled labour for the project.
Labour costs are significantly lower in Turkey than in comparable
jurisdictions. Power would be supplied from the grid for which costs
are expected to be approximately 11 c/kWh. A 31KV power line runs
adjacent to the property and water would be derived from nearby sources.
Project Costs
Capital costs have been estimated by Auralia for the mining and
processing components of the operation based on cost estimates that have
been compiled based on metrics demonstrated by similar mining operations
in Turkey and elsewhere. The capital cost for the process plant,
heap-leach pads and ancillary infrastructure is US$20 million at an
estimated accuracy of +/-30%.
Operating costs for the heap-leach plant are estimated at US$10.00/t,
based on quoted pricing received by Ariana for the company's Salinbas
project. It should be noted that the mine optimisation work utilised a
processing cost of US$12/t ore, based upon a 0.5Mtpa initial case, but
this was subsequently revised for the modified base-case to US$10.00/t
based on an enhanced production rate of 0.75Mtpa.
Across the model range, C1 gold equivalent cash costs are expected at
approximately US$559-630/oz for the (averaged) LoM, based on the scoping
study level Whittle shells.
Financial Model
A high level indicative pre-tax financial evaluation showing sensitivity
to gold price (Table 5) was prepared on the basis of the Whittle outputs
for the NPV (8%) scenario and the modelled NPV (10%) based on the RF1
Whittle shell derived at NPV (8%). Total capital expenditure on the
project has been deducted from the NPV figures. All values were derived
pre-tax due to the complexity and variability of tax on mining projects
in Turkey, which are subject to investment incentives provided by the
Government of Turkey.
It is important to note that for the high level financial analysis, the
G&A parameters used in Whittle were amended from the original base-case
to better reflect the economics of the project and the fact that Tavsan
is likely to function as a satellite operation to the established
Kiziltepe project, which will absorb the majority of the company's
corporate overheads. The G&A figure was revised down to a still
conservative US$9/t for the financial analysis.
Table 5: Summary high level indicative financial model and sensitivity
of the project to gold price. The NPV at 8% and 10% discount rates are
shown after deduction of the total capital expenditure. Estimated C1
cash costs are inclusive of royalty costs and calculated using the
following formula: (Au Sell Price x Rec oz Au + Au equiv Rec oz Ag) -
Undisc Cash Flow)/(Rec oz Au + Au equiv Rec oz Ag). All figures shown
are rounded.
Approx.
Ave. Est. C1
Gold Price NPV (US$M) Pre-Tax inc. IRR% Payback Cash Cost*
(US$/oz) CAPEX (Pre Tax) (Years) (US$/oz)
8% D/R 10% D/R
1250 41.9 39.1 80 1.1 630
1150 32.6 30.2 67 1.3 619
1060 24.4 22.5 55 1.5 606
950 14.6 13.1 39 1.8 586
850 6.1 5.1 23 2.2 559
Approvals and Incentives
The Joint Venture holds the relevant mining licences for the project
through Zenit Madencilik San. ve Tic. A.S., but would require an
Environmental Impact Assessment ("EIA") to be completed, in addition to
other permits required for mining, in order for the project to be
developed. Preliminary EIAs are already in place for additional
exploration and trial mining.
Turkey has adopted policies aimed at encouraging development of the
mining sector through specific incentives. Corporate tax rates are
competitive, with a headline rate of 20% but with various tax incentives
potentially reducing effective rates to 4% or less for initial periods
of production.
This announcement contains inside information for the purposes of
Article 7 of EU Regulation 596/2014.
Contacts:
Ariana Resources plc Tel: +44 (0) 20 7407 3616
Michael de Villiers, 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 8300
Jon Belliss
Panmure Gordon (UK) Limited Tel: +44 (0) 20 7886 2500
Adam James / Tom Salvesen
Editors' note:
The information in this report that relates to Mineral Resources is
based on information compiled by Mr. Alfred Gillman of Odessa Resources
Pty. Ltd., who is a fellow of the Australasian Institute of Mining and
Metallurgy. Mr. Gillman is a consultant to Ariana Resources plc and has
sufficient experience relevant to the styles of mineralisation and type
of deposit under consideration and to the subject matter of the report
to qualify as Competent Person and defined in the 2012 edition of the
Australasian Code for the Reporting of Exploration Results Mineral
Resources and Ore Reserves (JORC Code). Mr. Gillman consents to the
inclusion in the report of the matters based on his information in the
form and context in which it appears.
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 c. 525,000 ounces of gold
equivalent.
Beaufort Securities Limited and Panmure Gordon (UK) Limited 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.
Disclaimer:
The open pit mining study carried out by Auralia Mining Consulting Pty
Ltd referred to in this document is classed as high level only, and
although constitutes a scoping study it does not meet the criteria of a
pre-feasibility or feasibility study. Due to this, the subsequent
material inventories resulting from this work do not constitute or imply
Ore Reserves. The estimates and beliefs applied in undertaking the
scoping study, either stated or implied, by the Company and its
consultants are based on a combination of quoted data, industry best
practise and assumptions that may involve known and unknown risks and
uncertainties which may result in future outcomes that differ to any
expressed or implied estimates or projections derived from this scoping
study. Given the level of study, any data resulting from this scoping
study refers solely to potential and does not guarantee that future work
will result in the determination of Ore Reserves. This document
describes references to JORC classified Indicated and Inferred Mineral
Resources. Inferred Mineral Resources have a greater amount of
uncertainty as to their existence and greater uncertainty as to their
economic feasibility. It cannot be assumed that any, or all, parts of
the Inferred Resource will be upgraded to a higher Mineral Resource
category or converted to Proven or Probable Ore Reserves.
Glossary of Technical Terms:
"Ag" the chemical symbol for silver;
"Au" the chemical symbol for gold;
"g/t" grams per tonne;
"Indicated resource" a part of a mineral resource for which tonnage,
densities, shape, physical characteristics, grade and mineral content
can be estimated with a reasonable level of confidence. It is based on
exploration, sampling and testing information gathered through
appropriate techniques from locations such as outcrops, trenches, pits,
workings and drill holes. The locations are too widely or
inappropriately spaced to confirm geological and/or grade continuity but
are spaced closely enough for continuity to be assumed;
"Inferred resource" a part of a mineral resource for which tonnage,
grade and mineral content can be estimated with a low level of
confidence. It is inferred from geological evidence and has assumed, but
not verified, geological and/or grade continuity. It is based on
information gathered through appropriate techniques from locations such
as outcrops, trenches, pits, workings and drill holes that may be
limited or of uncertain quality and reliability;
"IRR" Internal Rate of Return;
"JORC" the Joint Ore Reserves Committee;
"m" Metres;
"M" million;
"Mt" million tonnes;
"Mtpa" million tonnes per annum;
"NPV" Net Present Value;
"oz" Ounces;
Ends
FIGURE 1: http://hugin.info/138153/R/2055817/769947.pdf
TABLE 4: http://hugin.info/138153/R/2055817/769953.pdf
FIGURE 2: http://hugin.info/138153/R/2055817/769949.pdf
This announcement is distributed by Nasdaq Corporate Solutions on behalf
of Nasdaq Corporate Solutions clients.
The issuer of this announcement warrants that they are solely
responsible for the content, accuracy and originality of the information
contained therein.
Source: Ariana Resources plc via Globenewswire
http://www.arianaresources.com/s/Home.asp
(END) Dow Jones Newswires
November 10, 2016 02:01 ET (07:01 GMT)
Copyright (c) 2016 Dow Jones & Company, Inc.
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