Feasibility Study and EIA Update

Ariana Resources plc ("Ariana" or "the Company"), the gold exploration and development company focused on Turkey, is pleased to announce that its consultants Wardrop, a Tetra Tech Company (“Tetra Tech”) have completed core components of its Pre-Feasibility Study (“PFS”) on the Kiziltepe Sector of its Red Rabbit Gold Project in western Turkey (“Red Rabbit” or “the Project”).  The PFS is being completed ahead of the Company’s Feasibility Study (“FS”) on the Project, which is itself scheduled for delivery before the end of 2011, ahead of anticipated commencement of production in late 2012.

 

Highlights:

 

• PFS findings have increased mine life at Red Rabbit to over 8 years, improving the fundamentals of the Project
• Increased in-pit resources to 1,177,800 tonnes corresponding to 118,200 ounces of gold and 1,452,600 ounces of silver
• Targeted production of 150,000 tonnes of ore per year, corresponding to approximately 20,000 ounces of gold per annum during the first 5 years
• Environmental Impact Assessment (“EIA”) studies progressing well and a project summary document has been prepared ahead of being submitted to Ministry of the Environment and Town Planning

 

Dr. Kerim Sener, Managing Director, commented:

 

“The results from the PFS provide us with further evidence of the significant potential of the Red Rabbit Gold Project as we gear up towards production.  Importantly, the increase in mineable tonnage and, in turn, total mine life to in excess of 8 years, reinforces the Company’s ability to generate significant revenues from Red Rabbit.  This statement holds true even if we take a conservative approach to long-term gold prices as demonstrated by the pit optimisation, which was undertaken using a US$1,058/oz base case.

“In tandem with the Feasibility Study being completed before the end of 2011, exploration at Red Rabbit remains a core focus for Ariana as we are confident of the wider area’s potential to host in excess of 1 million ounces of gold equivalent.  New discoveries such as the Gamze Vein, where continuous high-grades of up to 10.7 g/t gold equivalent were identified; and the Hande Vein, where grades of up to 7.74 g/t gold equivalent were reported, underpin this confidence.  This strategy ensures near-term revenue generation whilst also benefitting from the significant uplift potential new discoveries will bring to the Company.”

 

Pre-Feasibility Study

 

Following on from the scoping study results announced on 4 April 2011, and ahead of the FS completion, the Company is now documenting key components of its PFS, which has been completed by Ariana’s consultants, Tetra Tech.  These involve aspects of the study that are unlikely to change during the FS, and include, the open-pit optimisation and design, site layout, production schedule and processing plant design.

 

Open-pit Optimisation and Design

 

The mineral resource estimate announced on 28 October 2010, remains unchanged.  However Whittle Pit Optimisation Software has been run on this resource to determine that part of the total resource that could be extracted economically (Table 1).  The combined resource within the selected pit shapes, including the Arzu South, Arzu North, Derya, Banu and Kepez pits, is estimated at 1,177,800t at an average of 3.12 g/t Au and 38.36 g/t Ag.  This resource is based on a fully diluted vein model and takes in to account the probable dilution of higher-grade vein material by lower-grade host-rock material in the hangingwall and footwall of the vein.

 

Table 1: History of pit optimisation results, comparing the scoping study with the PFS outputs.

Output	Unit	Scoping Study	Pre-feasibility
Selected Pit Resource	Tonnes	1,034,600	1,177,800
Au Grade	g/t Au	3.56	3.12
Ag Grade	g/t Ag	41.57	38.36
Au Metal	Oz Au	109,600	118,200
Ag Metal	Oz Ag	1,382,700	1,452,600
Waste Movement	Tonnes	11,373,000	15,740,000
Strip Ratio	waste:ore	10.9	14.5

 

Based on the Whittle pit optimisation results, a series of open-pits were designed for the Arzu South, Arzu North, Banu and Derya veins (Figure 1).  No pit was designed for the Kepez area, as this will probably be extracted using only mechanical methods.  Table 2 lists the selected pit resources by mineralised zone based on the designed pits; the cut-off grade is estimated at 0.96 g/t Au equivalent¹ based on a gold metal price of US$1,058/oz and a silver metal price of US$16.6/oz.  For this base case only resource blocks of Measured and Indicated category are used.

 

The listed tonnes and associated grades in Table 2 represent the portions of the resource that could be extracted economically from the pit designs based on the selected Whittle pit shapes derived from the Whittle Pit Optimisation Software results.  Mineral reserves have not been finalised at PFS level but the resources outlined here are those that could be converted to reserve category.  At the cut-off grade of 0.96 g/t Au equivalent, the percentage extraction of the total resource is 69% and 60% for gold and silver respectively.

 

Table 2: Summary of resources within pit design at a 0.96 g/t Au eq. cut-off grade.  Silver grades at Kepez (*) have not currently been accounted for at the PFS stage but will be included for the FS.

 

Vein	Tonnes	Au Grade (g/t)	Ag Grade (g/t)	Contained metal (oz)
				Au	Ag
Arzu South	614,300	3.99	44.57	78,800	880,300
Arzu North	266,700	2.00	36.26	17,100	310,900
Banu	110,300	2.04	39.50	7,200	140,000
Derya	126,500	1.50	29.86	6,100	121,400
Kepez	60,000	4.90	n/a*	8,900	n/a*
Total	1,177,800	3.12	38.36	118,200	1,452,600

 

 

Figure 1: Three-dimensional projection of vein models (in blue), surrounded by their corresponding designed pit shapes based on the output of Whittle pit optimisation.  These designed pits provide an average strip ratio of 14.5:1.

 

Site Layout

Site layouts have been finalised for the purposes of the PFS stage.  It is unlikely that there will be significant further changes in the final site layouts and design for the purposes of the FS.  The currently envisaged site layout is shown in Figure 2.  The layout minimises the environmental footprint of the plant and related mine infrastructure.

Figure 2: Site layout as envisaged for the PFS, showing the location of the designed open pits, the preliminary waste rock dump and the tailings dam design outlines.  Access and haulage roads are shown as bright green lines and mine building locations shown in red.

 

Production Schedule

 

The mine will be based on one central pit located at Arzu South with satellite pits at Arzu North, Banu, Derya and Kepez.  The location of the selected pits (excluding Kepez) is shown in Figure 2.  The mine will target production of 150,000 tonnes per year of ore over a mine life of 8.1 years, operating for six days a week (Table 3).  The production will be scheduled with mining starting at Arzu South and progressively shifting to the Kepez, Arzu North, Banu and Derya pits as grades decrease later in the mine life.  The final material to be processed will be a small quantity of low-grade stockpile that will be accumulated over the mine life from the various open pits.

Material from the open pits will be split in to three categories, run-of-mine ore grade (>0.96 g/t Au equ.), low-grade ore (<0.96 g/t Au equ.) and waste.  The division between low-grade ore and waste will be determined during grade control and be influenced by the minimum mining width (1.5m) and the expected dilution width (0.25m either side of the vein).

Table 3: Outline mining schedule for the various mineralised zones.  Tonnages for each pit are expressed in ‘000s tonnes.

Pit	Yr 1	Yr 2	Yr 3	Yr 4	Yr 5	Yr 6	Yr 7	Yr 8	Yr 9
Arzu South	150	150	150	150	14
Kepez					60
Arzu North					76	150	41
Banu							109	1
Derya								126
Stockpile								22	14
Au Grade (g/t)	2.99	4.10	4.44	4.42	3.06	2.04	2.18	1.38	0.68
Ag Grade (g/t)	32.39	45.34	50.80	49.38	14.41	39.77	43.53	26.86	8.49
Oz Au (000s oz)	14.4	19.7	21.4	21.3	14.7	9.8	10.5	6.7	0.3
Oz Ag (000s oz)	156.2	218.7	245.0	238.1	69.5	191.8	209.9	129.5	3.9

 

Processing Plant Design

 

A conventional hydrometallurgical process will be used for the project.  The confirmed configuration will involve a six tank Carbon-in-Column circuit, proceeding to a two aerated pre-leach tanks and finally a five tank Carbon-in-Leach circuit (Figure 3).  The plant will be placed on a slope to allow for gravity-flow assistance between tanks and to save on pumping costs.  This process offers the best recoveries of gold and silver at the lowest capital and operating costs.  At full production, the process will treat up to 500 tonnes per day of run-of-mine (ROM) ore.  Assuming a 90% availability the process is scheduled to operate 323 days per year.  The estimated metallurgical recoveries are 87% for gold and 64% for silver.

Figure 3: Plan view of the feasibility stage processing plant layout and design.  Ore will be fed from the bottom left side of the plant, sequentially through a jaw and cone crusher before being conveyed to a ball mill at the centre of the diagram.  The CIC and CIL circuits can also be seen.

Environmental Impact Assessment

Environmental Impact Assessment studies are ongoing while the environmental baseline is drawing to a close.  A project summary document has been prepared in accordance with Turkish government regulations and will be submitted in due course to the Ministry of the Environment and Town Planning.  In the meantime, applications have been made to the relevant authorities for drill permits required in order to complete geotechnical drilling for the Tailings Storage Facility (“TSF”).  Due to changes to the environmental guidelines announced during 2011, the TSF will now need to be designed and approved by a recognised engineering firm in Turkey.  This development is expected to add some delay to the delivery of the final FS document, but will not immediately impact the schedule of work being completed by Tetra Tech on the feasibility.

Contacts:

Ariana Resources plc	Tel: +44 (0) 20 7407 3616
Michael Spriggs, Chairman
Kerim Sener, Managing Director
Beaumont Cornish Limited	Tel: +44 (0) 20 7628 3396
Roland Cornish / Felicity Geidt
Fairfax I.S. PLC	Tel: +44 (0) 20 7598 5368
Ewan Leggat / Laura Littley
St Brides Media & Finance Ltd	Tel: +44 (0) 20 7236 1177
Hugo de Salis / Susie Geliher

Editors’ note:

 

The Competent Persons responsible for this study are as follows:

 

For the Resource Estimate, Paul Gribble, FIMMM, C.Eng., a senior geologist with Tetra Tech in Swindon, UK.

 

For the mining studies, Richard Hope, MIMMM, C.Eng., a senior mining engineer with Tetra Tech in Swindon, UK.

 

For the processing studies, Dr. Arun Vathavooran, PhD., MIMMM, C.Eng., a senior processing engineer with Tetra Tech, Swindon, UK.

 

The above persons have reviewed this press release and consent to the inclusion of data and text taken from the study report 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 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 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 European Goldfields Limited in north-eastern Turkey.  European Goldfields owns 51% of this joint venture and, as the operator, is fully funding all exploration work on the JV properties until delivery of a feasibility study.

 

The Company's flagship assets are its Sindirgi 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 of the Company stands at 448,000 ounces of gold equivalent.

 

Ariana also has a strategic investment in Tigris Resources Limited (www.tigrisresources.com), a private Jersey-based exploration company, which is focused on the exploration of copper and gold deposits in southeastern Turkey.  Ariana retains approximately 13% of Tigris Resources Limited.

 

Fairfax I.S. PLC are 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.

 

Glossary of Technical Terms

 

¹ Gold equivalence is derived from the formula:

{(Ag g/t*Ag Recovery*Ag price*0.032)/Au oz Price}/Au Recovery=Au equivalent oz/t

Au recovery by testwork 87%, Ag recovery by testwork 64%

 

"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" grammes per tonne;

 

"low-sulphidation" a style of gold mineralisation which is typically found distal to volcanic centres and is characterised by adularia-sericite alteration and quartz veins;

 

"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;

 

"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 drill holes.  The locations are spaced closely enough to confirm geological and grade continuity;

 

"Nearest Neighbour" a methodology used to derive the value of an attribute from surrounding sample data on the basis of point-to-point proximity;

 

"Ordinary Kriging" is a geostatistical approach to resource estimation.  Instead of weighting nearby data points by some power of their inverted distance, OK relies on the spatial correlation structure of the data to determine the weighting values.  This is a more rigorous approach to modelling, as correlation between data points determines the estimated value at an unsampled point;

 

"oz" Ounces;

 

"porphyry" an igneous rock with larger crystals contained within a matrix of much smaller crystals;

 

"stockwork" a mineral deposit in the form of a branching network of small irregular veins;

 

"top cut" the maximum gold content for samples used to calculate an average gold content for a resource;

 

"variographic" the use of semi-variograms (a mathematical technique) as part of the geostatistical methodology used to derive resource estimates;

 

"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.

 

Ends