HALF-YEARLY REPORT FOR SIX MONTHS TO 30 JUNE 2010
8 September 2010
AIM / PLUS Markets: AAU
HALF-YEARLY REPORT FOR SIX MONTHS TO 30 JUNE 2010
Ariana Resources plc ("Ariana" or "the Company"), the gold exploration and development company focused on Turkey, announces its unaudited half-yearly results for the six months ended 30 June 2010.
Highlights:
- Positive economic and environmental scoping studies completed for Kiziltepe
- Resource drilling programme concludes on Kiziltepe
- Placing completed for GBP 1,000,000 gross
- Post-period completion of the Red Rabbit JV agreement
Dr. Kerim Sener, Managing Director, commented:
"The six months under review were busy and exciting. Our plans for the development of the Red Rabbit project continue to crystallise and activities within the newly incorporated JV company, Zenit Madencilik, are progressing solidly. Recent resource drilling at Kiziltepe was concluded on a positive note with vein extensions now proven beneath cover. This adds to our confidence that the current resource base across the project will grow from the current base of 401,000 oz gold equivalent.
In late March the Company raised £1,000,000 (before expenses) in order to continue funding our project commitments on Red Rabbit and to allow for investments in new project opportunities and further exploration. The Company has several exploration initiatives underway and we look forward to updating shareholders on these in due course.
In July the Company completed a shareholders agreement with partners, Proccea Construction Co. ("Proccea") of Turkey. Proccea are earning in to 50% of the Red Rabbit Project on the commitment of US$1.4 million towards bankable feasibility and environmental studies, and a further US$ 6.6 million for the initiation of plant construction following feasibility and environmental 'green-lights'. We are very much looking forward to the work ahead and are aiming to complete feasibility of the project within a year."
CHAIRMAN'S STATEMENT
The year began on a high note following the delivery of positive independent economic and environmental scoping reports for the Kiziltepe sector of the Red Rabbit Project. These studies demonstrated the viability of the envisaged operations at Kiziltepe. Negotiations with Proccea Construction Co. ("Proccea") on our Red Rabbit joint venture continued during the period and were concluded successfully in early July. During this period, project development work on Kiziltepe continued so as not to lose momentum while negotiations proceeded. This decision proved wise as the company is now very well positioned to commence the formal feasibility study.
In northeastern Turkey, our joint venture with European Goldfields Limited on the Ardala copper-gold porphyry project is progressing well, with drilling underway during the review period. This drilling is focused on the Ardala South porphyry extension and on the high-grade Salinbas prospect. Meanwhile, Ariana continues its own exploration programmes in western Turkey and is in the process of regional target definition and follow-up. This work will ensure the company holds the most advanced and modern exploration datasets for this region. The database will be used to identify new licence acquisition or joint venture opportunities for the Company.
Red Rabbit Project
The Red Rabbit Project represents the combination of the Kiziltepe and Tavsan sectors into a single integrated project. This allows for specific operational synergies to be created between the sectors and will maximise the potential return from the project as a whole. The Company is planning for the development of the combined project via the staged mining of Kiziltepe and Tavsan, with mining commencing at the high-grade Kiziltepe deposit and concluding with the mining of the low grade Tavsan deposit.
The Company is targeting a mining operation at Kiziltepe producing 25,000oz Au and 350,000 oz Ag per annum over a mine life of approximately six to seven years. The scoping study demonstrated that cash costs of US$ 350-400/oz and that the total capital investment requirement is in the region of US$25 million. The Company is aiming to complete a bankable feasibility study and environmental impact assessment for the Kiziltepe Sector during 2011.
According to current project development plans, mining of the Kiziltepe sector is to commence in 2012 while Tavsan continues to be developed and further explored. Kiziltepe will involve one central open pit located at Arzu South with satellites likely at Arzu North, Banu, Derya and Kepez. A Carbon-in-Leach plant, containing several semi-mobile elements, is to be established. At a later stage, following the conclusion of mining at Kiziltepe, the mobile plant components will be moved to Tavsan for mining to commence at this location.
Reverse Circulation (RC) resource drilling was completed on the Derya and Banu veins at the Kiziltepe sector in order to upgrade the existing resources on these veins to the Indicated category. Some of this drilling was focused on the far eastern end of the Derya structure where the vein is obscured by cap rocks. This latter drilling demonstrated that the vein is present beneath cover and that there is potential to further build on the global resource at Kiziltepe.
Further exploration at both Kiziltepe and Tavsan is planned with the object of increasing the combined resource base to at least 500,000 oz. Renewed exploration in the area between Kiziltepe and Tavsan has also begun, with the aim of identifying further resource potential in this highly prospective region.
Ardala Project
At the Ardala Project, exploration by our European Goldfields joint venture company has confirmed that porphyry Cu-Au mineralisation continues to the south of previously mapped and drilled outcrops. Drill-testing commenced on this area during the period and results from three holes demonstrate the continuity of porphyry Cu-Au mineralisation to the south. Further drilling is being considered to further test this porphyry extension.
Approximately 1.5km to the southwest of the main Ardala porphyry, a higher-grade gold zone named the Salinbas prospect has been identified by rock-chip and soil sampling. Detailed mapping and lithological sampling has identified a 400 metre long zone containing breccia and mineralised host rocks with widths of 5 to 15 metres at surface. Trenching undertaken in late 2009 identified zones containing 33m at 9.6 g/t Au and 46m at 8.3 g/t Au. Other high-grade but more sporadic occurrences are located along strike and parallel to this principal zone of interest. A programme of drilling commenced on this prospect in June and seven holes have been drilled in 2010 so far.
The JV is continuing to consolidate its ground holding in this part of the Pontide metallogenic belt and in several newly defined areas, with the aim of undertaking modern, systematic exploration for porphyry Cu-Au and related Au mineralisation. Ariana retains 49% of the JV and European Goldfields is continuing to fund exploration and development of the JV licences.
Outlook
Ariana remains fully committed and on track to deliver on its objective of establishing a gold-silver mine in Turkey. We have engaged with Proccea Construction Co., who are a highly capable management and construction team to complement our skills in resource development. Following the establishment of our joint venture company with Proccea, we are presently in the process of transferring licences from our direct subsidiary in to the joint venture company. At the same time we are due to formally commence our Bankable Feasibility Study and Environmental Impact Assessment. Aspects of the feasibility study are already underway including the mineral resource statement and processing plant designs. We are expecting to deliver the feasibility study by the third quarter of 2011.
Michael Spriggs
Chairman
28 September 2009
Contacts:
Ariana Resources plc Tel: 020 7407 3616
Michael Spriggs, Chairman
Kerim Sener, Managing Director
Beaumont Cornish Limited Tel: 020 7628 3396
Roland Cornish
Alexander David Securities Limited Tel: 020 7448 9820
Nick Bealer / David Scott
Loeb Aron & Company Ltd Tel: 020 7628 1128
Peter Freeman / Frank Lucas
Editors' note:
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 Southern Africa and Australia. 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 exploring 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 European Goldfields Limited in north-eastern Turkey.
The Company's flagship assets are its Sindirgi and Tavsan gold projects. Both projects 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. The total resource inventory of the Company stands at 401,000 ounces of gold equivalent.
Loeb Aron & Company Ltd. and Alexander David Securities 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.
Ends
Ariana Resources Plc
Notes to the unaudited consolidated interim financial statements
For the six months ended 30 June 2010
4. Additions and disposals of intangible assets
Exploration, evaluation and development of mineral resources
| Six months ended 30 June 2009 | £'000 |
| Opening net book amount 1 January 2009 | 3,401 |
| Additions | 310 |
| Closing net book amount 30 June 2009 | 3,711 |
| Six months ended 31 December 2009 | |
| Opening net book amount 1 July 2009 | 3,711 |
| Additions | 199 |
| Closing net book amount 31 December 2009 | 3,910 |
| Six months ended 30 June 2010 | |
| Opening net book amount 1 January 2010 | 3,910 |
| Additions | 394 |
| Closing net book amount 30 June 2010 | 4,304 |
Ariana Resources Plc
Notes to the unaudited consolidated interim financial statements
For the six months ended 30 June 2010
5(a). Fixed asset investments in wholly owned subsidiaries
The Company's investments at the balance sheet date comprise 100% ownership of the ordinary share capital of the following companies:
Subsidiaries Country of incorporation Nature of business
Ariana Exploration & Development Limited United Kingdom Exploration
Portswood Resources Limited British Virgin Islands Holding company
Galata Madencilik San. ve Tic. Ltd. Turkey Exploration
5(b). Interest in associates
Ariana Exploration & Development Limited investments at the balance sheet date comprise 49% ownership of the ordinary share capital of the following companies:
Associates Country of incorporation Nature of business
Greater Pontides Exploration B.V. Netherlands Holding company
Pontid Madencilik San. ve Tic. Ltd. Turkey Exploration
Pontid Altin Madencilik Ltd. Turkey Exploration
Greater Pontides Exploration B.V. was created in the Netherlands. This company, along with its wholly owned subsidiaries - Pontid Madencilik San. ve Tic. Ltd. and Pontid Altin Madencilik Ltd., private companies incorporated in Turkey - was established with European Goldfields Limited as part of the Joint Venture agreement on the Ardala Project. Ariana Exploration & Development Limited, a fully owned subsidiary of the Group holds 49% of the ordinary shares and European Goldfields Limited, the other party to the joint venture, holds the remaining 51% of the ordinary shares. The Greater Pontides Exploration B.V. Group is treated as an Associate investment for purposes of the Group consolidation as the Group has a significant influence over the financial and operating policy decisions but not control or joint control over these policies.
The Group's share of the adjusted loss, converted into Sterling, has been included in the Consolidated Statement of Comprehensive Income, and amounted to £nil (2009: £nil).
6. Called up share capital and share premium
Authorised share capital of the company is 500,000,000 ordinary shares at 1 pence each.
Details of issued capital are as follows:
| Number of shares |
Nominal Value |
Share Premium |
|
| At 1 January 2009 | 92,855,078 | 927 | 4,282 |
| Shares issued in period (net of expenses) for cash | 50,000,000 | 500 | (38) |
| Balance at 30 June 2009 | 142,855,078 | 1,427 | 4,244 |
| Shares issued in period (net of expenses) for cash | 28,194,161 | 282 | 494 |
| At 31 December 2009 | 171,049,239 | 1,709 | 4,738 |
| Shares issued in period (net of expenses) for cash | 50,684,862 | 508 | 437 |
| Balance at 30 June 2010 | 221,734,101 | 2,217 | 5,175 |
Ariana Resources Plc
Notes to the unaudited consolidated financial statements
For the six months ended 30th June 2010
6. Called up share capital and share premium - continued
On the 14th January 2009 the Company issued 50,000,000 new ordinary 1p shares for a total consideration of £500,000. The associated issue costs, amounting to £38,000 have been charged against the share premium reserve account.
On the 7th August 2009 the Company issued 855,216 new ordinary 1p shares to directors and staff for a total consideration of £19,500.
On the 14th September 2009 the Company issued 26,666,667 new ordinary 1p shares for a total consideration of £800,000. The associated issue costs, amounting to £63,000 have been charged against the share premium reserve account.
On the 31st March 2010 the Company issued 50,000,000 new ordinary 1p shares for a total consideration of £1,000,000. The associated issue costs, amounting to £70,000 have been charged against the share premium reserve account.
During April & May 2010 the Company issued 378,940 new ordinary 1p shares to staff and certain consultants for a total consideration of £10,500.
28,451,000 warrants were issued in June 2009, and at the period end 978,200 of these had been exercised resulting in the issue of 978,200 new ordinary 1p shares at a price of 3p per share for a total consideration of £32,344.
Potential issue of ordinary shares
Share options and warrants
At the 30th June 2010 the company had options and warrants outstanding for the issue of ordinary shares as follows:
Options Exercisable Exercisable Exercise Number Number at
Date of From To Price Granted at 310 June
Grant 2009
19th July 2005 19th July 2005 19th July 2015 8.8p 2,105,869 2,105,869
19th July 2005 19th July 2005 19th July 2015 8.8p 65,131 65,131
22nd August 2005 22nd August 2005 22nd August 2015 13p 870,000 870,000
22nd August 2005 22nd August 2005 22nd August 2015 13p 100,000 100,000
1st September 2006 1st September 2006 1st September 2016 13p 300,000 300,000
Total 3,441,000 3,441,000
Warrants
28th July 2005 28th July 2005 28th July 2010 15.5p 64,516 64,516
28th July 2005 28th July 2005 28th July 2010 12p 471,466 471,466
21st November 2007 21st November 2007 20th November 2010 8p 8,108,900 8,108,900
1st April 2008 1st April 2008 1st April 2013 13p 3,000,000 3,000,000
25th July 2008 25th July 2008 25th September 2012 8p 608,168 608,168
14th January 2009 14th January 2009 13th January 2013 1p 12,300,000 12,300,000
Total 24,553,050 24,553,050
Total Contingently Issuable shares 27,994,050 27,994,050
Ariana Resources Plc
Notes to the unaudited consolidated interim financial statements
For the six months ended 30 June 2010
7. NOTES TO THE CASH FLOW STATEMENT
Cash generated from Group operations
The following non-cash flow adjustments have been made to the pre-tax results for the period to arrive at cash generated from Group operations.
| 6 months 30 June 2010 |
6 months 30 June 2009 |
12 months 31 December 2009 |
|
| £'000 | £'000 | £'000 | |
| Operating loss for the period | (188) | (194) | (407) |
| Adjusted for: | |||
| Depreciation | 17 | 17 | 1 |
| Operating income before working capital changes | |||
| Change in trade and other receivables | 31 | 128 | 110 |
| Change in trade and other payables | (18) | (11) | 294 |
| Foreign exchange differences | 4 | (40) | 1 |
| _______ | _______ | _______ | |
| Cash generated from Group operations | (154) | (100) | (1) |
| _______ | _______ | _______ |
Ariana Resources PLC
Notes to the unaudited consolidated interim financial statements
For the six months ended 30 June 2010
Information
Directors
M J Spriggs
A K Sener
M J de Villiers
W J B Payne
Secretary
M J de Villiers
Registered Office
Bridge House
London Bridge
London SE1 9QR
Registered number 05403426
Auditors
Grant Thornton UK LLP
Grant Thornton House
Melton Street
Euston Square
London NW1 2EP
Bankers
HSBC
186 Broadway
Didcot
Oxfordshire OX11 8RP
Solicitors
Cobbetts LLP
Ship Canal House
King Street
Manchester M2 4WB
Brokers
Loeb Aron & Co Limited
Georgian House
63 Coleman Street
London EC2R 5BB
Alexander David Securities Limited
60 Lombard Street
London EC3V 9EA
Nominated Advisor
Beaumont Cornish Limited
2nd Floor, Bowman House
29 Wilson Street
London EC2R 7DE
Registrars
Computershare Investor Services Plc
P O Box 82
The Pavilions
Bridgewater Road
Bristol
BS99 7NH
