We are still awaiting developments regarding the proposed corporate action for AIM-listed Ariana Resources (AAU) to bring Ozaltin into its Red Rabbit JV with Proccea along with Ariana’s wholly-owned Salinbas project in Eastern Turkey in return for $30 million, plus whatever Proccea ends up paying. We are told now that Ariana is focussed on finalising this in the coming weeks. While we wait, Ariana has popped up with some stonking drilling results from its Arzu South pit: it seems that there is more gold. We are told:
A new high-grade vein has been discovered in the hanging-wall of the Arzu South vein, providing the following results:
o 12.8m @ 6.09g/t Au + 107.58g/t Ag
o 2.10m @ 4.75g/t Au + 14.76g/t Au
-- Further significant results identify the potential for underground development at Arzu South, including:
o 10.8m @ 3.39g/t Au + 40.35 g/t Ag
o 9.60m @ 3.31g/t Au + 53.53g/t Ag
o 10.5m @ 2.18g/t Au + 31.68g/t Ag
Arzu South was the source of the first phase of gold/silver production at the Kiziltepe processing plant, and was a higher grade than that now being recovered from Arzu North. Ariana finished mining at Arzu South earlier this year, but we knew that there was potential for more and this latest news suggests there could be quite a bit more. CEO Kerim Sener tells us that there are opportunities to extend the existing Arzu South pit by at least 200 meters, and the company is also working on plans for underground mining. Whichever way things go, it looks as though Arzu South has plenty more to give and the company is formulating plans for further exploration and resource drilling. In other words, watch this space – but to me it seems a certainty that Arzu South will be yielding more decent-grade ore, whether by further open pit mining or by an underground operation. Goodie goodie!
Another tit bit offered was this: Following the receipt of the geotechnical data, the Company will commence a second and more detailed phase of the underground scoping study to assess the potential for underground mine development at Arzu South. In addition to this, a trade-off study between further open-pit development and underground mining will be completed in order to determine the relative economic merits of either option. This is particularly relevant following the increase in gold price which has occurred since late 2019 to the present, which represents an increase in value of approximately 33%. Furthermore this change in price represents an increase of over 50% above the feasibility base case for the Kiziltepe Mine. The underline is mine, but this is a significant statement because it suggests that drilling results previously ignored because they were sub-economic may now be very economic to mine, and the base case for underground operations will surely be far easier to meet, if Ariana chooses to go that way.
And, of course, it means that current production plans will be far more profitable than Ariana had first envisaged. All good news, and my confidence that Kiziltepe’s life be extended well beyond 2026 is greatly increased by the news. The shares have reacted very well, currently up above 6p – a price not seen since 2011 (very briefly) and before then 2007. But house Broker Panmure Gordon has updated its valuation to 6.73p, and that was before this latest news and does not take the proposed corporate action into account. OK, Panmure is house, but historically it has tended to be pretty conservative with Ariana and given developments yet to be taken into account, there still appears to be decent upside to be had here. My own position is that I am struggling again with the size of my holding. It has nothing to do with the quality of the company - which I consider first rate - but I have been saying for some time that I will need to cash in a few chips at 6p to keep my holding at a manageable size. Experience has taught me that on AIM you certainly can have too much of a good thing, and of course there is always the possibility of a Black Swan event. I like to sleep at night, so I will be offloading a small handful - around 10% of my holding - but be in no doubt that I am still holding the vast bulk of my shares for more. Anyone similarly overloaded may wish to consider the same, but with corporate action news on the way I suggest that is the only reason to be selling right now. Non-holders could do far worse and may wish to take a look. For the rest, my rating is very strong hold.
Filed under: Ariana, Asimilar, Limitless Earth, Centamin, Iconic Labs, Dozens Savings, Project Imagine Limited
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