Half-yearly report

 | Source: Ariana Resources plc Ariana Resources plc

12 August 2008
AIM / PLUS Markets: AAU
ARIANA RESOURCES plc
 
HALF-YEARLY REPORT FOR SIX MONTHS TO 30 JUNE 2008
 
Ariana Resources plc ("Ariana" or "the Company"), the gold exploration company focused on Turkey, announces its unaudited half-yearly results for the six months ended 30 June 2008.
 
Highlights:
 
  • Joint Venture initiated with European Goldfields Limited
    •  
    • David Reading, CEO of European Goldfields, joins the Board
     
    • 326,000 oz Au equivalent in JORC resources
     
    • In-house drilling team established
     
    Dr. Kerim Sener, Managing Director, commented:
     
    "It has been another six months of solid progress for the Company.  Our efforts have resulted in a JORC resource of over 326,000 oz gold equivalent and it is clear that the potential to delineate more ounces continues to improve.  In north-eastern Turkey the JV team is actively exploring a highly prospective area for which we have high hopes.
     
    "We have exceeded our initial resource target at the Kiziltepe prospect, with over 186,000 oz Au equivalent defined to date.  We expect that further exploration on this prospect and others in the Sindirgi Project over the coming year will identify additional near-surface resources that support the establishment of an open-pit operation.  The Company is evaluating its options for the commercial development of the project and has entered discussions with a third party regarding a potential off-take agreement.
     
    "The newly acquired 140,000 oz Tavsan project will be evaluated over the coming months in order to develop the project as a stand-alone heap-leach operation.  The first stages of this work, including a revised resource estimate, metallurgical testwork and environmental permitting are underway."
     
     
    CHAIRMAN'S STATEMENT
     
    Despite an uncertain and somewhat turbulent market, the Company has developed significantly in the last six months and has continued to deliver on its objectives.  Through its focused resource development strategy in western Turkey, it has established over 326,000 oz in JORC resources at its flagship projects: Kiziltepe and Tavsan.  Elsewhere, our generative exploration programmes resulted in the Joint Venture of our exploration portfolio in north-eastern Turkey with European Goldfields Limited, a partner with an exploration and development philosophy closely matching ours. 
     
    Kiziltepe
     
    Exploration at the Kiziltepe prospect has focused on the Arzu South, Arzu North, Banu and Derya veins, upon which SRK (UK) Limited has recently prepared a JORC compliant mineral resource estimate of over 186,000 ounces gold equivalent based on a cut-off grade of 2 g/t Au.  The overall resource at Kiziltepe is now 950,000 tonnes at an average grade of 6.1 g/t of gold equivalent, of which 500,000 tonnes is potentially open-pittable on the Arzu South vein alone. 
     
    A geophysical survey is due to commence on the prospect this August.  This survey has been designed to test the entire 3 x 1km vein field along several 200m spaced survey lines.  Earlier in the year a trial survey over the Arzu South vein provided results that could be interpreted with ease and precision.  We envisage that the expansion of the programme across the whole prospect will yield several new drill targets in what is proving to be a more consistently mineralised vein field than previously realised. 
     
    In parallel with our exploration objectives for the prospect, economic studies are underway to further evaluate certain development scenarios that were initially examined in the mining options study undertaken by Wardrop Engineering.  Discussions are also in progress with a third-party for a potential off-take agreement, which could fast-track the project to production, albeit at a lower production rate than for a stand-alone operation. 
     
    Tavsan
     
    The purchase of the Tavsan project was closed with Odyssey Resources in June for a total consideration of US$500,000 in cash and 3,000,000 ordinary shares in Ariana at 5p per share, valuing the resources in the ground at about US$6 per ounce.  The project adds much value to the Company and, we believe, has the potential to be developed as a small heap-leach operation capable of producing 20,000 ounces of gold per year over seven years or more in the medium term. 
     
    Existing project data are being integrated into a comprehensive new geological model, which will be utilised to create a revised resource estimate.  Further metallurgical testwork on the ore is also underway.  Meanwhile, a resource drilling programme concentrating on the areas that were not included in the original 43-101 compliant resource is being planned, along with associated environmental permitting.  It is expected that this work will feed in to a scoping study later in the year.
     

    Joint Venture
     
    Our Joint Venture with European Goldfields Limited in the Black Sea region of north-eastern Turkey was initiated in May and the JV team has been actively exploring since June.  The JV builds upon previous generative exploration in the region and is focused initially on the Ardala copper-gold porphyry project.  We are encouraged to note that a pipeline of new targets is already being generated from this exploration. 
     
    European Goldfields is funding the exploration and development of the JV licences to a definitive feasibility study.  In parallel with the JV agreement, European Goldfields subscribed for 20% of the equity in Ariana and we are pleased to welcome their CEO, David Reading, to the Ariana board as a non-executive director. 
     
    We consider Ariana and European Goldfields to represent a powerful combination of talents and believe that this JV represents an important milestone in the development of the Company. 
     
    Outlook
     
    Through its rapidly expanding resource base, its strategic focus on defining potentially mineable resources and its ability to develop innovative deals, the outlook for Ariana remains very positive.  The recent establishment of our in-house drilling team is an example of our commitment and provides the Company with the tools to test our growing pipeline of exploration targets in a highly cost-effective manner. 
     
    The objective of the company remains to establish economic resources in the WAVE Project Area, notably at Kiziltepe and Tavsan, and then to develop these resources, either on our own or in partnership, in the shortest timeframe possible.  We look forward confidently to several further positive developments during the remainder of the year. 
     
     
    Michael Spriggs
    Chairman
     
    12 August 2008
     
     
    Contacts:
     
     
    Editors' note:
     
    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 remote-sensing database.
     
    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 western Turkey which are separated by a distance of 75km.  The projects are presently being assessed as to their economic merits. 
     
    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
    Condensed consolidated interim income statement
    For the six months ended 30 June 2008
     
     
     
     

    Ariana Resources Plc
    Condensed consolidated balance sheet
    As at 30 June 2008
     
     
     
     
     
    Ariana Resources Plc
    Condensed consolidated interim statement of changes in equity
    For the year ended 31 December 2007 and the six months ended 30 June 2008
     
     
    Ariana Resources Plc
    Condensed consolidated interim statement of changes in equity (continued)
    For the year ended 31 December 2007 and the six months ended 30 June 2008
     
     

     
     
    Ariana Resources Plc
    Condensed consolidated interim cash flow statement
    For the six months ended 30 June 2008
     
     
     
    Ariana Resources Plc
    Notes to the Half Yearly Report for the Six months to 30 June 2008
     
    1. General information
     
    Ariana Resources Plc (the "Company") is a public limited company incorporated and domiciled in Great Britain. The addresses of its registered office and principal place of business are disclosed at the end of this report. The Company's shares are listed on the Alternative Investment Market of the London stock Exchange. The principal activities of the Company and its subsidiaries (the "Group") are related to the exploration for and development of gold and other minerals in Turkey.
     
    Ariana Resources Plc's consolidated interim financial statements are presented in Pounds Sterling (£), which is also the functional currency of the parent company.
     
    The financial information set out in this interim report does not constitute statutory accounts as defined in Section 240 of the Companies Act 1985. The Group's statutory financial statements for the year ended 31 December 2007, prepared under IFRS, have been filed with the Registrar of Companies. The auditor's report on those financial statements was unqualified and did not contain a statement under Section 237(2) of the Companies Act 1985.
    1(a). Basis of preparation
     
    These financial statements have been prepared under the historical cost convention, and the accounting policies have been applied consistently throughout the Group for the purposes of preparation of these condensed consolidated interim financial statements.
     
    The financial information for the twelve months ended 31 December 2007 has been derived from the group's audited financial statements for the period as filed with the Registrar of Companies. It does not constitute the financial statements for that period. The auditor's report on the statutory financial statements for the year ended 31 December 2007 was unqualified and did not contain any statement under Section 237(2) or (3) of the Companies Act 1985.
     
    New IFRS accounting standards and interpretations not yet adopted
     
    The directors together with their advisers are in the process of evaluating the impact of standards and interpretations that have not yet become effective. Listed below are those standards and interpretations most likely to impact the Group:
     
    - IAS 1 Presentation of Financial Statements (revised 2007) (effective 1 January 2009)
    - IAS 23 Borrowing Costs (revised 2007) (effective 1 January 2009)
     
    - IAS 27 Consolidated and Separate Financial Statements (Revised 2008) (effective 1 July 2009)
    - Amendment to IFRS 2 Share-based Payment - Vesting Conditions and Cancellations (effective 1 January 2009)
    - IFRS 3 Business Combinations (Revised 2008) (effective 1 July 2009)
    - IFRS 8 Operating Segments (effective 1 January 2009)
    - IFRIC 11 IFRS 2 - Group and Treasury Share Transactions (effective 1 March 2007)
     
    IFRS 8 Operating Segments replaces the segmental reporting requirements of IAS 14 Segment Reporting. The key change is to align the determination of segments in the financial statements with that used by management in their resource allocation decisions. This standard is not expected to have significant impact on existing disclosure.
     

     
    New IFRS accounting standards and interpretations not yet adopted - continued
     
    The amendment to IAS 1 Financial statement presentation released in September 2007 redefines the primary statements and expands on certain disclosures within these. Once adopted the Group's primary statements will be amended to reflect the presentation required.
     
    Based on the Group's current business model and accounting policies it is felt that the other standards and/or interpretations are unlikely to have a material impact on the Group's earnings or shareholders' funds.
     
    IFRS 1 First time adoption of IFRS: the Group has elected the business combinations exemption, which allows the Company not to restate business combinations prior to 1 January 2006.
     
    The Group has elected to apply the transitional provisions under IFRS 6 which permits the existing accounting policy under UK GAAP for accounting for and capitalisation of mineral exploration costs, to be used for IFRS purposes.
     
    The Group has chosen not to restate items of property, plant and equipment to fair value at the transition date.
     
     
    1(b). Significant accounting policies
     Basis of consolidation
     
    The consolidated financial statements incorporate the financial statements of the Company and entities controlled by the Company. Control is achieved where the Company has the power to govern the financial and operating policies of an entity so as to obtain benefits from its activities.
     
    The results of subsidiaries and associates acquired or disposed of are included in the consolidated income statement from the effective date of acquisition or up to the effective date of disposal, as appropriate.
     
    Where necessary, adjustments are made to the financial statements of subsidiaries to bring their accounting policies into line with those used by other members of the Group.  All intra-group transactions, balances, income and expenses are eliminated in full on consolidation.
     
    Income and expense recognition
     
    The Group's only income is interest receivable from bank deposits.  Interest income is accrued on a time basis, by reference to the principal outstanding and the effective rate of interest applicable. The effective interest rate is the rate that exactly discounts estimated future cash receipts through the expected life of the financial asset to the net carrying amount of the financial asset. Operating expenses are recognised in the income statement upon utilisation of the service or at the date of their origin and are reported on an accruals basis.
     
     
    2. Tax
     
    The Group has incurred tax losses for the period and a corporation tax charge is not anticipated.
    3. Loss per share
     
    The calculation of basic loss per share is based on the loss attributable to ordinary shareholders of £327,000 divided by the weighted average number of shares in issue during the period, being 79,979,348.
     
    There is no dilutive effect of share options or warrants on the basic loss per share.
     
     
    The full Half-Yearly Report will be published on the Company's website: www.arianareasources.com