We published our original Value Proposition on Ariana Resources in January (click here to view) when we highlighted the Company's defined plans to progress from Gold explorer to Gold producer. It is well worth another scan, if only to see how progress on all fronts has consistently met with the Company's stated objectives. We are now working on updating the Value Proposition, taking into account all development to date; a fully updated version will be published shortly.
In the meantime, we took this opportunity to put a few quick questions to Managing Director, Kerim Sener to give him the chance to expand on today's exciting news!
MM: From our understanding, it appears you had already started working in partnership informally prior to JV completion. Can you tell us the significance of the JV news today both in terms of the project and your partnership with Proccea?
KS: That is correct. Ariana and Proccea have been working steadily on the project over the last several months, ensuring that our understanding of the project developed in line with our progress on the shareholders agreement. In this time the partners have had the opportunity to grow our relationship and to learn more about each others strengths and capabilities. The JV news today marks the formalisation of this relationship and the shareholders agreement provides the guidelines under which the partners will operate the JV. The real work starts now and the partners are keen to get cracking with the feasibility study and the EIA.
MM: In phase 2 of the project it has been stated that Zenit will need to seek estimated funding of $25 million, what are the options available to the JV company for this funding?
KS: We are primarily looking at Turkish bank finance, but have not ruled out international finance or certain other funding options. We will aim to secure the best terms available to the company once we have the feasibility study and EIA completed. There are various mechanisms by which this finance could operate and at this point it would be too early to comment any more specifically. Our scoping study indicated a total capital cost of US$25 million although our JV target capital cost is currently set at US$20 million. We are aiming to do whatever is necessary to minimise the start-up costs of the mine without compromising on efficiency of output, environmental footprint and operational safety.
MM: You indicated at the AGM that there are potential opportunities for the new mining company Zenit. Can you expand on the nature of these opportunities and your joint vision for Zenit.
KS: The greatest opportunity presented by the formation of the new mining company, Zenit (which is Zenith or Summit in Turkish), is the fact that the partners have created a vertically integrated entity perhaps unique for its size. The Ariana/Galata side of the equation provides the geological and exploration skill set, while the Proccea/CH Consultants side of the equation provides the metallurgical, processing plant design and construction skill set. This combined set of capabilities is more typical of significantly larger companies, and as a result enables us to evaluate opportunities outside of the original remit of the Red Rabbit Project. While our focus will remain on Red Rabbit, we are not going to be blinkered in our approach to other opportunities inside or outside of Turkey. The other aspect of this is that as a Turkish mining company, Zenit will be better leveraged than most foreign companies operating in parts of eastern Europe or the Middle East. This has huge significance given the potentially delicate geopolitics of the region.
MM: The JV is funded by Proccea to the greatest extent so how do you see the demands on Ariana's cash-flow moving forwards?
The JV is funded by Proccea to the end of Phase 1 and then partly through Phase 2 (plant construction). The JV company will seek finance to ensure plant construction and commissioning can occur by the end of Phase 2. As to Ariana’s cashflow demands...these will be dictated primarily by the intensity of our exploration efforts, outside of the Red Rabbit project area, and our exploration project development schedule. We also remain on the look-out for new opportunities across Turkey and are pursuing some of these dynamically.
MM: What news-flow can investors expect from Ariana in the next 6-12 months?
KS: As I have previously demonstrated to investors in Ariana, we have never failed to deliver on our goals. We have always been conservative in our approach and measured in our output. Our mantra is to set realistic goals and to deliver without fail. We recognise that the road to ultimate success is a long and difficult one, and that patience and stamina are key to all that we do. Our news-flow over the next year will be as steady and continuous as it has ever been, and will have two broad thrusts: 1) further updates on the progress of the Red Rabbit JV and 2) exploration and new project identification.
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