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Hi all,
April 2024
Ariana Resources
Kiziltepe/Tavsan: Crucial de-risking Resource and Reserve update providing for up to 10 years of production
I have been re-reading the RNS plus the Broker Notes from WH Ireland & Panmure Gordon.
I can see this is a major piece of work by various parties which has been underway for quite some years as they pulled together all the elements into one big Resource/Reserve. That is a major step forward and they must feel relieved it is completed especially as Reserves were getting worryingly low.
My discoveries indicate that Kerim is probably right in the way he has portrayed the numbers at this point in time, even if he could have made it a bit easier to understand.
What I have discovered is that the “depleted” Gold Reserve for the Kiziltepe Sector (that is Kiziltepe, Kepez, Kizilcukur, Karakavak and Ivrindi) is 47,700 oz of gold at an average grade of 1.8 g/t - the av. grade has fallen of course. The Reserve is down from 80,500 ozs @ 2.38g/t in Feb. 2022 when they said their expectations was for the mine to run to 2026.
I am not sure we fully appreciated quite how much the Kiziltepe Sector has been depleted over the last few years and how close we were to a “red flag”. As this was their only JORC Reserve, Kiziltepe was getting close to desparate for new feed to keep it in economic operation.
But now we finally have the all important “Interim” Tavsan Sector Resource (updated) and maiden Reserve numbers. Significantly, this is the first time we have had a Reserve for Tavsan, so that in itself is a major de-risking milestone. I hadn’t appreciated that I must say! The new numbers are after completion of 10,285.7m of drilling. In respect of the Resource, these reveal a circa 15% increase over the 2020 numbers which is perhaps a bit disappointing given the amount of drilling and use of a lower cut-off grade of 0.5g/t as opposed to 0.7g/t. (Lower grade material is now considered economic given higher gold prices.) The grades have also declined - (1.76g/t to 1.26 g/t). But and importantly there is more to come. These are just the quote, “Interim” numbers.
We are told further results are pending for 444.7m of drill core from the North and Main Zones and further “optimisation and planning” will be carried out once they have these results, so it is reasonable to expect the Tavsan Reserve will improve.
The calculated current Reserve for the Tavsan Sector is 200,900 ozs @ 1.4 g/t.
ADD THIS TO THE DEPLETED KIZILTEPE SECTOR RESERVE OF 47,700 ozs & WE GET THE STATED 248,600 ozs (the rounded 249,000 ozs).
Obviously there is also silver.
EXPLORATION POTENTIAL:
KIZILTEPE: Ariana say that remaining exploration potential on additional Vein systems at Kiziltepe could yield 800,000 ozs at 1 g/t which they suggest would give an additional Reserve of c. 25,700/38,400 ozs
TAVSAN: They also say the exploration potential at Tavsan on the periphery of the system could yield
Landed in Basmane Izmir by the train station, could not find my hotel tucked up a side street. A transgender and lady of the night helped me to locate, 3 nights here then hire a car and onto Cesme & Bodrum.
We are the Ariana boys and we are here!
Moving from Istanbul to Izmir today in a Kamil Koc bus so will be passing near to our Western Turkey operations, I’ll give the boys a wave.
Thanks Troajan
I think now is the time to be raising the question of share consolidation and maybe share buybacks if the board do consider dividends!
Stranger, LoB
For once I am reluctant to say anything because the RNS is a clear as mud to me. The only thing I feel for certain is there ain't no way on Gods green earth that 25k of gold is going to be produced per annum for the next 10 years from the Kiziltepe plant using only Western Turkey assets excluding Tavsan.
I think this RNS is good news, I suspect that lack of a more positive reaction is because potential suitors are declining to press buy because they are thinking 'Eh?'
Or cheques!
Nice one for the BoD!
When will we see the 500m £ or $ cap!
It would be nice to see 50m.
☹️
@Strangerstill......if you're right, that means about £10m profit each year for the next 10 years before any benefit from silver credits or any other of the projects coming on stream. In turn that ought to mean a regular dividend policy could be introduced, say 0.1p (costing about £1m which doesn't seem unreasonable/unfeasible and wouldn't/shouldn't hurt ongoing investment in the business).
Maybe I'm reading things wrong....wouldn't be a first.....but like you, this does seem a very positive message, today (and a bit more than the usual 'Ariana is pleased....blah, blah, blah')
The latest RNS states that there is a Global JORC Resource of 10.9Mt @ 1.37g/t Au + 12.65g/t Ag for 483koz Au + 4.45Moz Ag, with opportunities identified for further resource growth. So, at a profit of at least $1000 per oz that would mean a profit for Kiziltepe and Tavsan of $483 million or £382 million. Ariana is entitled to 23.5% of this or about £89 million.
If I read the RNS correctly, which is difficult, then it looks like Kiziltepe is expected to produce 25,000 oz gold per year for the next ten years using ore from the local and satellite pits as well as high grade ore from Tavsan. There is about 90,000 oz Au in the high grade ore at Tavsan. Tavsan will go into production using heap leach and the lower grade ore to produce 30,000 oz of gold per annum as planned.
It also appears that Ariana is confident of significant increases to the resources following further exploration work.
If I am right then the JV will be producing over 50,000 oz of gold each year for the next ten years.
This looks like game changing news.
Does seem that when it does bounce upwards it does so quite positively now. Then you get this selling into any rise. When the selling stops there should be consolidation at a higher level, Whether that will be 3p is to be seen
AT least they're out of the way unless Starvest are sat on more, John.
I've just tried to find out if Starvest hold much more stock here but I can't see that they do. All I can say is they must be holding less than 3% of the issued share capital.
Anyhow we pretty much seem to have weathered the 'Starvest Divest'..............for now, at least
Just when things were going so well, 2 x 580k sales. Has to been the Starvest administrators/liquidators.
'The words pipe and dream come to mind !'
I can think of no better gold junior to be invested in, so many irons in the fire waiting for the right market conditions to prevail.
Happy to hold until 2027-2030 and consider my next moves.
Don't worry, John - I've plenty of things filling my days other than this (AAU) and that (BFC)
Think you need to take up a couple of enjoyable new hobbies, Burnley FC and AAU aren't cutting it!
I've been doing so much headshaking and sighing at what's going on here as well as with the Clarets it's nice to get a bit of time off from at least one of them, this weekend :)
Well at least you can relax over the weekend LoB, no Premier League!
Hi Morserouter
I agree, any reasonable rise in PoG will be good for AAU, I personally don't expect anything too dramatic then I wont get disappointed. AAU manages that all by itself!
Looking at PoG price over 10 years we mustn't grumble, especially as that is $ denominated and over the same time $/£ has gone from about 1.7 to 1.25 so that in sterling tern the PoG price rise is even more dramatic (think I've got that the right way round).
(shakes head, again)
Seems not LoB!
The words pipe and dream come to mind !
$4000 gold would be phenomenal due to the gearing effect, though obviously that would effect high cost producers even more.
Well, seems like something (good?) might be brewing just now.
RNS tomorrow?