Major increase in Kiziltepe Resource

RNS Number : 9730D

Ariana Resources PLC

03 May 2017

 

3 May 2017

AIM: AAU

MAJOR 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 a producing gold-silver mine that is part of the Red Rabbit Joint Venture with Proccea Construction Co. and is 50% owned by Ariana.

Highlights:

·    Increase in global Mineral Resource estimate to a total of c. 257,500 oz Au and 4.87Moz Ag contained metal on four main veins and several subsidiary veins (c. 338,500 oz Au equivalent).*

·    Substantial increase in tonnage to c. 3.8Mt following the inclusion of all subsidiary veins drill tested to date, which do not currently form part of the mine plan. 

·    Resource increase supports a substantially extended mine life at Kiziltepe based on current throughput rates, indicating significant flexibility to develop additional satellite open pits beyond those currently designed.

·    JORC Exploration Target of up to a further c. 1.25Mt @ 1.8 g/t Au and 31 g/t Ag established for vein extensions across Kiziltepe that have not yet been drill tested.

·    Total resource within the Red Rabbit Project Area and surrounding projects now stands at 605,000 oz gold equivalent.

Dr. Kerim Sener, Managing Director, commented: 

"Completion of our drilling programmes late last year confirmed for the first time that the Arzu vein system extends for a further 650m beneath cover rocks, which separate the Arzu South and North pits.  Following this work, the Company commenced revisions to its resource estimate for Kiziltepe to include the results of these recent drilling programmes.  These revisions also encompass several subsidiary veins at Kiziltepe outside of the four main veins to be mined as part of our current mine plan.

We are very pleased with this latest resource update, which has added approximately 100,000 oz gold equivalent to our resource base, in addition to establishing a new JORC Exploration Target of a further c. 90,000 oz gold equivalent.  At a c. 60% exploration target and resource to reserve conversion rate, which has historically held for this project, such increases in the resource could provide up to 12 years of mine life at current throughput rates. 

Now that Kiziltepe is in production and is one month in to the ramp-up phase of its development, we are very pleased to report that operations are proceeding well.  We will be reporting our gold and silver production and additional operational details on a quarterly basis, commencing from the end of June 2017."

* All Mineral Resource figures in the announcement are quoted gross with respect to the Red Rabbit Joint Venture.  Ariana owns 50% of the JV and 51% of the profit share.  Gold equivalent is the sum of the gold ounces and the gold equivalent ounces of silver based on a price ratio of 60:1.

Resource Estimate

Following the completion of two phases of Reverse Circulation ("RC") drilling programme during the second half of 2016 for a total of 6,748m, the joint venture geological team at Zenit Madencilik San. ve Tic. A.S. in conjunction with geological consultants Odessa Resources Pty. Ltd. undertook a new resource estimate for Kiziltepe.  The recent RC drilling coupled with certain historical drilling completed largely since 2009 on several subsidiary veins at Kiziltepe were used for the estimation.

The new Kiziltepe JORC 2012 compliant Mineral Resource estimate has been defined by 295 drill holes and 125 rock-saw channels on 355 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. The top-cuts of 15 g/t Au and 200 g/t Ag used in earlier estimations were abandoned for the purposes of the current estimate, as grade-control sampling from the Arzu South pit has shown that the high grades determined from drilling affect a substantially larger volume than the drill-hole intercepts.  In the 2016 resource estimate, modelled grades between 10820N and 10830N (mine grid) to 370RL averaged 1.5 g/t Au. Actual mining grades in the same volume returned an average of 11 g/t Au. On this basis it is considered that the application of a grade top cut is not required in the resource estimation.  A variable bulk density ranging between 2.50 and 2.65 g/cm³ was 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 2016 by Odessa, identified a JORC 2012 compliant Mineral Resource of 2,436,315 tonnes at 2.49 g/t gold and 40.3 g/t silver on four main veins and excluding all subsidiary veins, based on drilling completed until the end of 2015.  The addition of 58 RC holes undertaken for infill and extension drilling at Kiziltepe completed during 2016, in addition to corresponding modifications of the geological model and the modelling of all subsidiary veins, has increased the global Mineral Resource to 3,813,340 tonnes at 2.10 g/t gold + 39.7 g/t silver.  Further drilling, modelling and economic assessments will be required on these subsidiary veins to determine their potential to be included as Ore Reserves.  Whittle pit optimisation completed on the previous resource estimate (Figure 2) determined the potential to increase the size of the Definitive Feasibility Study ("DFS") level open pits and to extend mine life to a total of 10 years. 

A JORC Exploration Target in accordance with the 2012 JORC code has been established for various subsidiary veins and vein extensions of drill-tested veins based on geological mapping and three-dimensional modelling (Table 2).  Grade estimations were provided by along-strike extrapolation of average grades from drilled sections of the same vein systems.  Most of these exploration targets occur on veins that remain largely outcropping (apart from one target in the Arzu Central area) and are therefore important areas to test during the life time of the mine at Kiziltepe.  There may be potential in the future to define further open-pittable resources on some of these vein systems which would further enhance the life of mine. 

Table 1: Summary 2017 Kiziltepe JORC 2012 compliant Mineral Resource estimate, based on 148 diamond, 138 RC and 9 RAB drill holes.  This estimate includes several subsidiary veins, which have been drill-tested to varying degrees.  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 is based on a 0.5 g/t Au cut off.  All figures are quoted gross with respect to the Red Rabbit Joint Venture.  Figures in the table may not sum due to rounding.  Mineralised veins in the Kepez area are excluded from this table.  These figures are quoted gross with respect to the Red Rabbit Joint Venture, with the gold equivalent ounces (far right column) reporting the net attributable resources to the Company.

	Tonnes (t)	Grade Au (g/t)	Grade Ag (g/t)	Gold (oz)	Silver (oz)	Au equiv. (oz)	Au equiv. (oz) attrib.
Main Vein Zones
Measured	922,192	3.34	53.1	99,028	1,575,259	125,282	62,641
Indicated	1,342,055	1.89	38.8	81,550	1,673,281	109,438	54,719
Measured & Indicated	2,264,247	2.48	44.6	180,537	3,248,211	234,674	117,337
Inferred	1,292,054	1.53	32.4	63,557	1,346,742	86,003	43,002
Subsidiary Veins
Inferred	257,039	1.52	32.8	12,561	271,058	17,079	8,540
GLOBAL	3,813,340	2.10	39.7	257,463	4,866,059	338,564	169,282

Table 2: JORC Exploration Targets established for several additional vein systems and vein extensions based on geological modelling and grade estimations provided by along-strike extrapolation of average grades from drilled sections of the same vein systems. Figures in the table may not sum due to rounding.  Exploration Target range varies from lowest individual target tonnage and grade through to the total aggregate target tonnage and grade.  These figures are quoted gross with respect to the Red Rabbit Joint Venture.

Exploration Target	Tonnes	Grade Au (g/t)	Grade Ag (g/t)	Au (oz)	Ag (oz)
Arzu Central	244,000	1.8	34	14,000	263,000
Arzu North-Far North	134,000	1.4	33	6,000	140,000
Arzu South Parallel	233,000	1.2	29	9,000	218,000
Ceylan-AFN	190,000	1.4	25	9,000	150,000
Fidan-Gamze	98,000	1.8	28	6,000	88,000
Gamze Extension	273,000	2.7	41	24,000	356,000
Ipek Extension	81,000	1.8	8	5,000	20,000
TOTAL	1,253,000	1.8	31	73,000	1,235,000

See link below to Figure 1: showing three-dimensional model of the Kiziltepe vein system (in yellow) looking down and to the north, showing the modelled ore zones and current drilling. The Exploration Target areas are shown in grey.

http://www.rns-pdf.londonstockexchange.com/rns/9730D_-2017-5-2.pdf

See link below to Figure 2: showing three-dimensional model of the four main veins on Kiziltepe comprising the current resource estimate, showing 2016 Whittle optimised base case pit shells (in red), the designed pits from the DFS (in light blue) and the vein model (in yellow).  The cap rock sequence is shown in semi-transparent grey colour, to demonstrate the nature of the cover lying above Arzu Central.

http://www.rns-pdf.londonstockexchange.com/rns/9730D_1-2017-5-2.pdf

This announcement contains inside information for the purposes of Article 7 of EU Regulation 596/2014.

Contacts:

Ariana Resources plc	Tel: [phone]
Michael de Villiers, Chairman
Kerim Sener, Managing Director
Beaumont Cornish Limited	Tel: [phone]
Roland Cornish / Felicity Geidt
Beaufort Securities Limited	Tel: [phone]
Jon Belliss
Panmure Gordon (UK) Limited	Tel: [phone]
Adam James / Tom Salvesen

Editor's Notes

Competent Person:

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 originally selected on the basis of its in-house geological and remote-sensing database.

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, form part of a 50:50 Joint Venture with Proccea Construction Co.  The Kiziltepe Sector of the Red Rabbit Project is fully-permitted and is currently in production.  The total resource inventory at the Red Rabbit Project and wider project area stands at c. 605,000 ounces of gold equivalent.  At Kiziltepe a Net Smelter Return ("NSR") royalty of up to 2.5% on future production is payable to Franco-Nevada Corporation.  At Tavsan an NSR royalty of up to 2% on future production is payable to Sandstorm Gold.

In north-eastern Turkey, Ariana owns 100% of the Salinbas Gold Project, comprising the Salinbas gold-silver deposit and the Ardala copper-gold-molybdenum porphyry among other prospects.  The total resource inventory of the Salinbas project area is c. 1 million ounces of gold equivalent.  A NSR royalty of up to 2% on future production is payable to Eldorado Gold Corporation.

Beaufort Securities Limited and Panmure Gordon (UK) Limited 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.

Criteria	Explanation
Sampling techniques and Data
Sampling techniques	·      Reverse circulation (RC) chips were collected at 1m intervals and in some cases over 0.5m intervals over the mineralised zone. The chips were collected into plastic sample bags from a cyclone to ensure maximum recovery. The samples were split using a standard riffle-splitter to around 0.25 to 0.5 kg per sample and sent to an ISO-accredited laboratory in Romania for Au and Ag analysis by fire assay and latterly to a similar laboratory in Izmir. ·      Full core was split using a rock saw and half-core samples were taken at variable intervals. Core recovery was recorded into the database.
Drilling techniques	·      Percussion ·      Reverse Circulation (130mm diameter) ·      Diamond coring -  NQ diameter
Drill sample recovery	·      Core recoveries were monitored and were generally good (>95%). ·      RC recoveries were routinely monitored.
Logging	·      All RC and core holes were logged lithologically using a coded logging system for rock type, grain size, colour, alteration and any other relevant observations. ·      Mineralised zones were identified from the geological logging as well as handheld XRF.
Subsampling techniques and sample preparation	·      Samples from diamond drilling were collected as sawn half-core or in some cases full-core. ·      A combination of cyclone and riffle splitter to produce 0.25-0.5 kg subsamples of RC chips was used. Wet intervals were sub-sampled with scoop or spear. Samples were oven-dried at the laboratory if necessary.
Quality of assay data and laboratory tests	·      QC procedures employed in all recent drill programs included the insertion of certified reference standards (1:22), blank samples (1:22), pulp and crush duplicates (2:22) to monitor the accuracy and precision of laboratory data. ·      The overall quality of QAQC is considered adequate to ensure the validity of the data used for resource estimation purposes.
Verification of sampling and assaying	·      Samples collected by Ariana were submitted to  ALS Global preparation facilities in Izmir and analysis in Romania, Canada or Australia (ISO 9001 accredited).
Location of data points	·      All collar positions were located initially by hand-held GPS and later surveyed by a professional surveyor using DGPS equipment. ·      Downhole deviation surveys were not routinely carried out in holes of less than 100m depth. Deeper holes were surveyed using a standard electromagnetic deviation tool.
Data spacing and distribution	·      At Kiziltepe drill section spacing is typically  10 to 12.5m with several holes often being collared from a single site. ·      295 drill holes and 125 rock-saw channels on 355 cross-sections were used to model the vein systems.
Orientation of data in relation to geological structure	·      The dip of the mineralisation for most of the deposit is 75-85o towards the northeast. ·      Local grade continuity follows the dip of the mineralisation for the entire deposit. All drilling is angled, thus intersecting the mineralisation obliquely. ·      No biases are expected from the drilling direction.
Sample security	·      Samples are stored at a secure company facility (Sindirgi Depot) in a clean area free of any contamination. During an active drilling programme, samples are delivered to the laboratory once a week by Aras Cargo, Sindirgi.  ·      Chain of custody is demonstrated by both the company and ALS Global in the delivery and receipt of sample materials. Upon receipt of samples, ALS Global delivers by email to the company's designated QC Manager, confirmation that each batch of 22 samples has arrived, with its tamper-proof seal intact, at the Izmir sample preparation facility.  ·      Any damage to or loss of samples within each batch (e.g. total loss, spillage or obvious contamination), must also be reported to the company in the form of a list of samples affected and detailing the nature of the problem(s).
Audits and reviews of sampling and assaying	·      Ariana has implemented QA/QC programs covering all aspects of sample location and collection that meets or exceeds the currently accepted industry standards.  Ariana implemented a QA/QC programme based on international best practice during the initial exploration work and subsequent drilling programmes. The company has continued to review and refine the QA/QC programme as these exploration campaigns have progressed.
Estimation and reporting of Kiziltepe Mineral Resources
Database integrity		·      The Kiziltepe resource data is stored in a MS Access database and is managed using MS Access and Excel software.  ·      Data was logged onto field sheets which were then entered into the data system by data capture technicians. ·      Data was validated on entry into the database, or on upload from the earlier MS Access databases, by a variety of means including the enforcement of coding standards, constraints and triggers. These are features built into the data model that ensure data meets essential standards of validity and consistency. ·      Laboratory data has been received in digital format and uploaded directly to the database. ·      Original data sheets and files have been retained and are used to validate the contents of the database against the original logging. ·      Zenit Madencilik and Independent consultants Odessa Resources Pty Ltd performed a visual validation by reviewing drillholes on section and by subjecting drillhole data to data auditing processes in specialised mining software (e.g. checks for sample overlaps etc.).
Site visits		·    Zenit Madencilik staff are permanently on site. ·    Two site visits have been undertaken by Odessa Resources Pty Ltd. ·    Ariana staff have visited the site on numerous occasions in order to observe drilling and sampling operations in order to ensure proper QAQC and sampling protocols are maintained.
Geological interpretation		·      Veins the Kiziltepe prospect, comprise WNW-NNW trending, sub-parallel, low-sulphidation style veins and related stockworks are hosted by dacite and dacitic pyroclastic units. ·      At Arzu North and Banu the veins appear to bifurcate. ·      Interpretations of geological surfaces derived from 3D modelling of drillhole lithological data.
Dimensions		Arzu South ·      In plan orientation, the deposit is approximately 700 metres long and 2-10m metres wide. ·      One primary lode trending 320 degrees and 150m northerly-trending southern section separated from main lode by interpreted fault ·      Lodes vary from 2-10m in thickness with main lode averaging 5m thickness ·      Mineralisation has vertical extents ranging between 385 and 220mRL.  Arzu North ·      The deposit is approximately 560 metres long and comprises several steeply-dipping parallel and partly overlapping 310 degree trending lodes. ·      Mineralisation has vertical extents ranging between 405 and 220mRL.  Derya ·      The deposit is approximately 400 metres long and comprises several steep north-dipping sub-parallel and partly overlapping, 290 degree trending lodes. ·      Mineralisation has vertical extents ranging between 400 and 240 mRL (average 90m down dip distance) Arzu Central ·      The deposit is approximately 500 metres long and comprises several vertical 305 degree trending lodes. ·      Mineralisation has vertical extents ranging between 410 and 300mRL.  Banu ·      The deposit extends over a strike length of 500 metres and comprises a single sub-vertical 330 degree trending lode. The lode is disrupted by possible fault/shear zone that breaks up the lode into several sub-parallel segments. ·      Mineralisation has vertical extents ranging between 395 and 265mRL.  Other Veins ·      Fidan 500 m and Arzu South Parallel 400 m. ·      Gamze, Ceylan, Aybor, Vein 9, Arzu Far South, Arzu Far North, Derya West each 100 metres in length. ·      Vertical lodes with a general 320 degree trend. ·      Mineralisation has vertical extents ranging between 400 and 200mRL.
Estimation and modelling techniques		·      Drillhole sample data was constrained within: ·      Kiziltepe: manually constructed wireframes defined by nominal 0.5g/t Au cut off. ·      Several <0.5g/t Au intervals were included to maintain geological continuity. ·      Sample data was composited to a 1 metre downhole length using a wireframe-intersection compositing method. Residual samples (those composite intervals for which there was less than 50% of the composite length) were not considered biased and hence were included in the estimate. ·      An analysis of the grade distribution characteristics of the domain composites for each deposit was undertaken.  In each case one of the following was identified: noticeable high grade inflection points on log-probability graphs and/or significant gaps on disintegration plots.  ·      Top cuts were not applied. ·      Isotropic search ellipses and ranges were used. ·      The block models were constructed using a 5mE by 5mN by 5mRL parent block size. ·      Estimation was carried out using inverse distance squared (ID2) at the parent block scale using a three estimation pass using all available composite. ·      A percentage model was used to report precisely the volume of material within each block.
Moisture		·      Tonnes have been estimated on a dry basis.
Cut-off parameters		·      Indicated and Inferred Resources have been reported above a 0.5 g/t Au cut-off grade.
Mining factors or assumptions		·      No mining factors (i.e. dilution, ore loss, recoverable resources at selective mining block size) have been applied.
Metallurgical factors or assumptions		·      No metallurgical assumptions have been built into the resources. However, metallurgical test work concludes that recoveries of up to 87% and 64% for gold and silver respectively can be achieved (Tetra Tech DFS).
Environmental factors or assumptions		·      Statutory forestry permits have been approved by the Prime Ministry and issued by the Department of Forestry for the Kiziltepe Sector of the Red Rabbit Project.
Bulk density		·      Bulk density data was sourced from the Tetra Tech (2013) model. ·      Assigned bulk density of has been applied according to the following table: Vein SG Arzu South 2.50 Arzu North 2.65 Arzu Central 2.50 Banu 2.55 Derya 2.55 Other veins 2.55
Classification criteria		·      Mineral Resources have been classified on the basis of confidence in geological and grade continuity using the drilling density, geological model and modelled grade continuity. ·      Measured Mineral Resources have been defined by a search radius of 5m ·      Indicated Mineral Resources have been defined by a search radius of 5-25m ·      Inferred Mineral Resources have been defined by a search radius of 25-50m
Block Model verification		·      For each deposit, the ID2 model was validated against the input drillhole composites for each domain by visual comparisons carried out against the composited drillhole samples for each domain against the modelled block grade.
Audits or reviews		·      The estimated grades were validated against average Au and Ag grade statistics for each lode.
Discussion of relative accuracy/ confidence		·      Odessa Resources Pty Ltd place a relative accuracy of +/- 20% (and 90 % confidence level) in the Mineral Resource estimate at the global level for the Indicated Resources based on the estimation technique and data quality and distribution.  Inferred Resources would have a lower level of confidence outside of this range.

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;

"m" Metres;

"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.

"oz" Ounces;

"t" Tonnes;

"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.

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