Red Rabbit Gold Project: Mine 100% Financed

31 July 2014
AIM : AAU

RED RABBIT GOLD PROJECT: MINE 100% FINANCED

Ariana Resources plc ("Ariana" or "the Company"), the Anglo-Turkish gold exploration and development company focused on Turkey, is pleased to announce a finance agreement to bring its Kiziltepe Gold-Silver Mine ('Kiziltepe') into production.  Kiziltepe is the initial mine targeted at the Red Rabbit Gold Project in western Turkey, a joint venture between Ariana and Proccea Construction Co. ("Proccea").  The finance agreement has been secured via the joint venture company, Zenit Madencilik San. ve Tic. A.S. ("Zenit").

Highlights:

• US$33 million overall credit agreement, inclusive of capital repayments and borrowing costs, completed with Turkiye Finans Katilim Bankasi A.S., an international award winning Turkish investment bank.

• US$236,000 first drawdown completed by Zenit.

• Additional equity contribution by Proccea of approximately US$5 million to earn-in to 50% of the project completes project funding.

• Loan repayments will occur over five years, with a two-year principal repayment holiday following first drawn down.

• Facility is non-recourse and comprises no hedging or currency swap requirements.

Dr. Kerim Sener, Managing Director, commented:

"With our partners, Proccea Construction Co., we are exceptionally pleased to have secured the support of Türkiye Finans Katilim Bankasi A.S. for the financing of our first mine at Kiziltepe.  This is a major leap forward enabling us to advance our plans for the construction of the mine.  We would like to take this opportunity to thank Proccea for the resolute focus they have shared with Ariana as we transform from development into production.  We also warmly appreciate Türkiye Finans Katilim Bankasi's confidence in our joint venture.  Ariana and Proccea are highly encouraged and energised by these developments.  Securing the finance will enable us to hit the ground running in H2 2014 pending the completion of final permitting. 

"This is a refreshingly straight-forward form of non recourse project financing that allows us to get on with developing the significant potential of the Red Rabbit project."

Finance Facility

A US$33 million finance facility has been agreed following negotiations with Türkiye Finans Katilim Bankasi A.S. ("Türkiye Finans").  The facility has been provided in the name of Zenit Madencilik San. ve Tic. A.S. ('Zenit") in order to fund the construction of the Kiziltepe Gold-Silver Mine.  This is in addition to a final equity contribution (approximately US$5 million) to the project by Proccea which will complete their earn-in on 50% of the project.

The facility will have a term of five years from the time of first draw down.  Repayment of the loan will occur via 36 monthly instalments following a two-year principal repayment holiday after first draw down.  The total repayments are capped at US$33 million, which covers all capital repayments and funding costs.  Net lending prevailing at time of first drawdown is US$24 million with the balance of the facility attributable to borrowing costs.  As the facility is based on a participatory banking model, repayments are calculated according to the amount and timing of each drawdown, and will be dependent on market conditions prevailing at the time of each drawdown.  However, over the term of the loan, the overall credit profit margin cannot be changed in terms of the credit agreement.

Proccea Construction Co. and Ariana's subsidiary, Galata Madencilik San. ve Tic. Ltd., have provided joint and several security over their shares in Zenit to the bank until such time that the loan has been repaid.  Additional security provided against the loan includes all freehold land owned by Ariana's subsidiary, Camyol Gayrimenkul, Madencilik, Turizm, Tarim ve Hayvancilik Ltd. There is no hedging, currency swaps or other overhead requirements that are normally associated with traditional western-style project finance arrangements. 

Ariana has no further financial commitment to the JV for development level funding although it will aim to continue its exploration programmes across the JV region in order to improve overall potential and extend the life of mine to the maximum.

First Drawdown

Zenit Madencilik has undertaken a first drawdown of US$236,000 following the completion of the credit agreement with Türkiye Finans. This first drawdown has been applied to detailed engineering work completed by Proccea. 

Contacts:

About Participatory Banking:

The participatory banking model derives from Islamic (or Sharia compliant) finance.  The core principal of this model concerns trade-based risk-sharing via the issue of ethical or "fair-play" loans.  The conventional, western banking model is based on risk-transfer, which is often weighted to favour the lender.  In participatory banking, the lender shares a component of the risk with the borrower to ensure that the borrower does not bear all of the risk and cost of failure.

About Ariana Resources:

Ariana is an Anglo-Turkish exploration and mine development company focused on advancing 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 Eldorado Gold Corporation in north-eastern Turkey.  Eldorado owns 51% of this joint venture and are fully funding all exploration work on the JV properties, while Ariana owns 49%.  The total resource inventory within this JV is 1.09 million ounces of gold.

The Company's flagship assets are its Kiziltepe and Tavsan gold projects that 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 at the Red Rabbit Project stands at 475,000 ounces of gold equivalent. 

Beaufort Securities Limited and Loeb Aron & Company Ltd. 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.

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