25 April 2016
SUBSTANTIAL INCREASE IN KIZILTEPE RESOURCE
Ariana Resources plc ("Ariana" or "the Company"), is pleased to announce an increase and update of its JORC compliant Mineral Resource estimate for the Kiziltepe Project following its recent drilling programme in Turkey. Kiziltepe is part of the Red Rabbit Joint Venture with Proccea Construction Co. and will be 50% owned by Ariana once mine construction is completed in H2 2016.
Dr. Kerim Sener, Managing Director, commented:
"Following the completion of an extensive review of our geological model and the addition of new drilling data, this result is a very pleasing update on our resource estimate for the Kiziltepe Mine. Importantly, the discovery cost of these additional ounces is approximately US$5 per ounce, which demonstrates the very cost-efficient exploration we are able to conduct on this project.
The resource update, in addition to Whittle optimisation work, demonstrates the potential for Kiziltepe to provide for a mine life of about 10 years at the designed throughput rate of 150,000 tonnes per annum. This also excludes several subsidiary veins on which we have already established resources, which with further work may add further to mine life.
With the enlarged resource and with expectations of further resource growth, we are now reviewing our options to potentially increase the mine throughput rate up to 200,000 tonnes per annum with our partners, Proccea. Meanwhile, construction at the mine is proceeding well, with delivery of the ball-mill to site occurring a few days ago."
* All Mineral Resource figures in the announcement are quoted gross with respect to the Red Rabbit Joint Venture. Ariana will own 50% of the production from the JV when the Kiziltepe Mine is operational.
Following the completion of a 1,208m Reverse Circulation ("RC") drilling programme in December 2015 (see 31 January 2016 Announcement), geological consultants Odessa Resources Pty. Ltd. undertook a resource estimate for Kiziltepe. The recent RC drilling coupled with certain diamond drilling completed in late 2011 and early 2012, totalling 1,290m, was used in the new estimation.
The new Kiziltepe JORC 2012 compliant Mineral Resource estimate has been defined by 213 drill holes and 125 rock-saw channels on 212 cross-sections with typically 10m section spacing (see JORC Table 1 below). Wireframes were constructed using sectional polylines defined by a cut-off of 0.5 g/t gold. Several lodes were created from the sectional interpretations, which are orientated NW and WNW and typically dip steeply at up to 85 degrees towards the northeast (Figure 1) comprising four main areas, Arzu South, Arzu North, Banu and Derya. Top cuts of 15 g/t Au and 200 g/t Ag were used and a variable bulk density ranging between 2.50 and 2.65 g/cm 3 were assigned to the appropriate solids and used for the resource estimation. Grade interpolation was by the Inverse Distance Squared ("ID2") method.
The previous estimate, completed in 2013 by Tetra Tech, identified a JORC 2004 compliant Mineral Resource of 1,502,000 tonnes at 3.12g/t gold and 46.97g/t silver on four main veins (excluding separate estimates on subsidiary veins and alteration halo mineralisation), based on drilling completed until 2011. The addition of 16 diamond holes and 19 RC holes undertaken for infill and extension drilling at Kiziltepe completed since late 2011, in addition to corresponding modifications of the geological model, has increased the Mineral Resource on these four main veins to 2,436,315 tonnes at 2.49g/t gold + 40.27g/t silver and has confirmed the potential extension of the Arzu structure under cover between Arzu South and Arzu North. This estimate specifically excludes several subsidiary veins on which Inferred resources have previously been established (for an additional 18,555 oz Au equivalent), such as Kepez, Derya West, Aybor, Ceylan and Arzu Far North, in addition to a potential 28,230 oz Au equivalent, referred to as "Alteration Halo" in the Tetra Tech estimate. Further drilling, modelling and economic assessments will be required on these subsidiary veins and alteration halo mineralisation to determine their potential to be included as Ore Reserves.
Table 1: Summary 2016 Kiziltepe JORC 2012 compliant Mineral Resource estimate, based on 125 diamond and 76 RC drill holes. This estimate excludes several subsidiary veins such as Kepez, which were a part of the previous resource estimate. Gold equivalent is the sum of the gold ounces and the gold equivalent ounces of silver based on a price ratio of 60:1. Reporting at a 1/g/t Au cut off, excluding Banu which is included in these figures at a 0.5 g/t Au cut-off. All figures are quoted gross with respect to the Red Rabbit Joint Venture.
|Classification||Tonnage (t)||Grade Au (g/t)||Grade Ag (g/t)||Au (oz)||Ag (oz)||Au equiv. (oz)|
Figure 1 , which can be accessed by clicking on or pasting the following link into your web browser: http://hugin.info/138153/R/2006265/741269.pdf , is the three-dimensional model of the Kiziltepe vein system (in yellow) looking north, showing the modelled ore zones and current drilling. The Arzu Central target area is shown in grey.
Whittle Pit Optimisation Software was used by Auralia Mining Consulting Pty. Ltd. to define pit shells on all-materials that contained grade within the resource block model. The optimisation work generated four pit shells at Arzu South, Arzu North, Banu and Derya respectively ( Figure 2 ). The Whittle base case optimisation work was run using the parameters provided in Table 2. The Arzu South pit shell is the largest with dimensions of 860 x 145 x 90m, followed by the Arzu North (530 x 175 x 85m), Derya (545 x 150 x 80m) and Banu (485 x 90 x 50m) pit shells. The output of the Whittle optimisations is provided in Table 3. It is important to note that actual pit designs may vary from these optimised pit shells based on a variety of modifying factors that will result from an increase in the accuracy and definition of future work, notably additional confirmatory and grade control drilling, geotechnical analysis and mine planning. The bulk of the Mineral Resource sits within these four pit shells and therefore has a high probability of being converted into Ore Reserve classification once these modifying factors are fully taken in to account.
Figure 2, which can be accessed by clicking on or pasting the following link into your web browser: http://hugin.info/138153/R/2006265/741270.pdf , is the three-dimensional model of the four main veins on Kiziltepe comprising the current resource estimate, showing new Whittle optimised base case pit shells (in red), the designed pits from the Definitive Feasibility Study (in light blue) and the new vein model (in yellow).
Table 2: Whittle optimisation parameters used for the Kiziltepe base case. Cut-off grades were calculated as per the formula: ECOG = (Mining Dilution x Processing Cost)/Processing Recovery x (Sell Price - Sell Costs). Note that a gold equivalent cut-off grade was not implemented in the base case Whittle optimisations.
|Whittle Input Parameter||Value||Unit|
|Overall Pit Slope||50||Degrees|
|Mining Cost (ore and Waste)||1||US$/t|
|Processing Recovery (Au)||87||%|
|Processing Recovery (Ag)||64||%|
|G&A Cost (haulage at $8.40/t plus G&A at $1.60/t)||11||US$/t|
|Metal Price Gold||1,060||US$/oz|
|Metal Price Silver||15||US$/oz|
|Total Selling Cost Au (NSR 2%)||34.84||US$/oz|
|Total Selling Cost Ag (NSR 2%)||0.69||US$/oz|
The Whittle base case optimisations were conducted on the basis that all JORC classified material, including Inferred and Unclassified, was included to be considered for processing.
Table 3: Output of Whittle base case optimisation, showing key parameters. Numbers are rounded to one decimal place.
|Ore t input to mill||1,520,000|
|Au grade input to mill||2.8 g/t|
|Ag grade input to mill||38.8 g/t|
|Waste t||21.8 Mt|
|Mine life @150ktpa mill throughput||10.2 years|
|Product Au||119,000 oz|
|Product Ag||1,214,000 oz|
|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|
|Loeb Aron & Company Ltd.||Tel: +44 (0) 20 7628 1128|
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.
Dr Kerim Sener, BSc (Hons), MSc, PhD, is the Managing Director of Ariana Resources plc. A graduate of the University of Southampton in Geology, he also holds a Master's degree from the Royal School of Mines (Imperial College, London) in Mineral Exploration and a doctorate from the University of Western Australia. He is a Fellow of The Geological Society of London and has worked in geological research and mineral consultancy in Africa, Australia and Europe. He has read and approved the technical disclosure in this regulatory announcement.
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 475,000 ounces of gold equivalent.
Beaufort Securities Limited and Loeb Aron & Company Ltd. 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 .
JORC Table 1
Ariana Resources Kiziltepe Project
The table below is a description of the assessment and reporting criteria used in the Kiziltepe Project Mineral estimation that reflects those presented in Table 1 of The Australasian Code for the Reporting of Exploration Results, Mineral Resources and Ore Reserves (The JORC Code, 2012). The Mineral Resource statement was prepared for the Kiziltepe Project.
Sampling techniques and Data
Drill sample recovery
Subsampling techniques and sample preparation
Quality of assay data and laboratory tests
Verification of sampling and assaying
Location of data points
Data spacing and distribution
Orientation of data in relation to geological structure
Audits and reviews of sampling and assaying
Estimation and reporting of Kiziltepe Mineral Resources
Estimation and modelling techniques
Mining factors or assumptions
Metallurgical factors or assumptions
Environmental factors or assumptions
Block Model verification
Audits or reviews
Discussion of relative accuracy/ confidence
Glossary of Technical Terms:
"Ag" the chemical symbol for silver;
"Au" the chemical symbol for gold;
"cut-off grade" The lowest grade, or quality, of mineralised material that qualifies as economically mineable and available in a given deposit. May be defined on the basis of economic evaluation, or on physical or chemical attributes that define an acceptable product specification;
"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;
"Inverse Distance Squared" a conventional mathematical method used to calculate mineral resources. Near sample points provide a greater weighting than samples further away for any given resource block;
"JORC" the Joint Ore Reserves Committee;
"JORC 2004" is the previous edition of the JORC Code, which was published in 2004. It has been superseded by JORC 2012;
"JORC 2012" is the current edition of the JORC Code, which was published in 2012. After a transition period, the 2012 Edition came into mandatory operation in Australasia from 1 December 2013;
"Measured resource" a part of a Mineral Resource for which tonnage, densities, shape, physical characteristics, grade and mineral content can be estimated with a high level of confidence. It is based on detailed and reliable exploration, sampling and testing information gathered through appropriate techniques from locations such as outcrops, trenches, pits, workings and drillholes. The locations are spaced closely enough to confirm geological and grade continuity.
"Whittle" computer software that uses the Lerch-Grossman algorithm, which is a 3-D algorithm that can be applied to the optimisation of open-pit mine designs. The purpose of optimisation is to produce the most cost effective and most profitable open-pit design from a resource block model.