AIM-listed gold producer in Turkey, Ariana Resources (AAU) has released a 2020 Production Results and General Update RNS. So did it make its 2020 target of 18,000 oz gold production from the joint venture Kiziltepe plant? Well, the answer is yes – the total came in at 18,645 oz. Always good to under-promise and over-deliver. But given that the total at Q3 was 14,933 that means that Q4 production was perhaps a trifle disappointing at 3,712 oz. But...
We knew that the higher grade ore at Arzu South had been finished (at least for now) and replaced as ore source by the lower grade Derya and Arzu North pits. So maybe we should not be too surprised. The better news was that the production capacity expansion at Kiziltepe is now underway, and should be completed in the second half of this year. So although the ore grade has dropped, given that this expansion will increase processing capacity by 300% over its feasibility design and there is plenty more gold to go for, my hope is that the result will mean a decent increase in production going forwards, and I am hoping to see 30,000 a year or more once expansion is complete. And with more drilling at Arzu South, there is the possibility of higher grades once again featuring in the fullness of time, alongside other drilling aimed at increasing Kiziltepe’s life of mine well beyond the current target of 2026. So overall, this is an encouraging report even if it suggests that production might slip this year until the new capacity is brought in.
We are reminded of the corporate transaction which will see a special dividend of maybe 0.75p per share, and the development of Tavsan and Salinbas should be helped by the good relationship with Turkiye Finans Banaksi, given that $36.7 million of debt has now been repaid. Both new projects are targeted under the expanded joint venture with new partner Ozaltin and my hope is that Tavsan wil see an early go-ahead decision once the new JV has completed. We are also told that production reports will become 6-monthly affairs, now that Ariana’s interest in the JV has dropped. But perhaps the interesting thing in this morning’s report comes within this; Meanwhile the Company is continuing to progress its exploration and development activities across its portfolio, which includes a drilling programme being undertaken within the joint venture and the start-up of field activities elsewhere. Notably we are expecting to increase the pace of our involvement in Venus Minerals, with the expectation that a diamond drilling programme at the Magellan Project can commence by Q2 2021; the current limitations imposed by travel restrictions notwithstanding. We are also fast-tracking some other exciting copper-gold project opportunities in the region, further details of which will be announced in due course.
I always suspected that CEO Kerim Sener had something up his sleeve for a good bit of the cash coming the company’s way from the deal with Ozaltin (and Proccea). So what are these exciting copper-gold project opportunities? We shall have to wait and see! Meanwhile, I continue to rate the company’s shares as a buy at the current 5.1p and up to 5.5p as the wait for the special dividend to us loyal shareholders goes on. Target price currently remains 7.5p.
Filed under: Ariana Resources, Umuthi, Sosandar, ASOS, Hostelworld, Orwellian Covid Cops, TomWinnifrith.com
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