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Hi Paul, having their own source of oil and gas is pretty key. The depreciating lira has meant pump petrol prices, whilst cheap to us as a result of lower duties, have increased 50% in a matter of years.
This then has an inevitable knock on effect, hence the problem with rising prices.
There has also been a reduction in foreign investment, tourism, another source of foreign currency has taken a massive hit this year. So many places we visit may not be around next year.
Lastly, as we know, USD reserves have been drastically reduced to prop up the ailing lira, hence the restrictions on Turks holding foreign currency, particularly USD.
All in all, Turkey is not in a great place right now.
Cheers, Ash
M20ASH it would seem, for now, the exchange rate is not an issue due to such a narrow spread. Thankfully Turkey is an exporter country so awash with foreign currency, long may it last. Maybe soon they will have their own oil and gas fields of Cyprus so no need to buy it in with dollars.
Maybe the Australian mines have caught the imagination of investors and for some investing in mines is not as trendy as tech or block chains.
Thanks M20ASH, very reassuring.
Hi CK, it is definitely paid for in TL and then immediately exchanged for USD. The reasons why the price achieved is close to USD spot prices is because 1) the spot price in TL closely reflects the USD/TL FX rate and 2) the buying/selling spreads are very narrow here in Turkey, unlike the rip-off rates in the U.K.
GBP/TL FX today when I checked is 9.99 and if I were to change up sterling in our local jewellers or the hardware shop next door, I would get 9.9-9.95. Compare that to U.K. high street rates. Banks here offer similar rates.
Cheers, Ash
I would say the actual price being recieved suggests the payment is directly in us $
"The value of the Lira isn't overly important as the income is in US dollars (Bullion sales),"
The Istanbul refinery has first option on the gold and silver and they buy it in Turkish Lira which gets converted into US dollars.
Where Ariana changes their lira to dollars would be of interest, who wants them?
Yes Turkey is an exporter and probably in US Dollars, so somewhere in there is where the swap gets facilitated.
I feel if this process becomes more transparent to the market then it may attract more investors.
"I thought it was the Turkey part of Cyprus so would still be a lira account"
Im not 100% sure but Turkish Cyprus is not a recognised country so it would jeopardise their AIM listing.
The value of the Lira isn't overly important as the income is in US dollars (Bullion sales),
Paul1Deano, I'm sure your right about market concerns over the geopolitics in Turkey but in 2019 the World Bank ranked Turkey 43 out of 190 countries in their 'Doing Business index' which isn't too bad !
I would hope and expect Ariana to convert Lira to US dollars as much as possible and hedge against the currency risk.
I thought it was the Turkey part of Cyprus so would still be a lira account
Dubs, the market recognises Turkey is geopolitically risky and the Lira is confetti.
Hence my feelings for Ariana to diversify risk into Cyprus as quick as possible and use all funds possible to expedite this process with haste and not pay a dividend.
Another good post Dubbs.
On ADVFN they are suggesting the dividend could be 1p per share.
An 8% rise is not to be sniffed at but I still feel that the market doesn't understand the opportunity/Asset Salinbas is and why the progress on the deal hugely derisks the feasibility of exploiting that asset. 1.5M oz gold identified already, possibility of 4m oz of gold to be proven up and mined. At today's prices (that I think will likely rise over the coming months/years) that's between c. $3 billion and $8 billion of revenue. If the profit on that was just a half (before cost of building the mine) that's between $1.5 billion and $4 billion. Assume the mine cost $900 million ($20,000 per tonne) that leaves a minimum profit before interest and tax of £600 million and Ariana would own 23.5% of it plus its other assets and cash. Ozaltin has the capacity and ability to finance and build the mine with Proccea. The ducks are now lined up. Ariana's share price/mcap should be at least twice what it is currently in my opinion.