18 February 2015
AIM: AAU
MINING LAW MODIFICATIONS APPROVED
Ariana Resources plc ("Ariana" or "the Company"), the Anglo-Turkish gold exploration and development company focused on Turkey, is pleased to announce that several modifications to the Mining Law were recently approved by the Turkish Parliament and have now been brought in to effect by the President. The Company believes this will hasten the mining permitting process in the country.
Highlights:
· Ground turn-over will be further encouraged and will reduce the number of areas currently sterilised to exploration due to under-utilisation.
· Licences areas will be auctioned and an effort made to define licence areas according to geological continuity of mineralised features; larger licences may become available in time.
· New royalty framework introduced, which scales according to commodity price.
Dr. Kerim Sener, Managing Director, commented:
"These and other modifications to the Mining Law have occurred following extensive industry consultation. The urgency with which these and related issues were debated, demonstrates how seriously the Turkish Government views the mining sector. As we watched the open vote unfold in Parliament, it was reassuring to note that the law was passed almost unanimously, indicating wide cross-party support.
"The changes to the law are viewed by many as representing the further evolution of the Turkish mining sector and will encourage further professional development of the industry. Increased ground turn-over will be an outcome of the new law, as only currently producing or relatively near term development projects will be retained due to enhanced costs associated with their maintenance. Increased requirements associated with holding exploration licences and their expenditure commitments will also ensure better and more serious exploration in the long run. In the past, large areas of the country were effectively sterilised to exploration because licences owners could hold ground at minimal cost and by undertaking limited work. The new law will fundamentally change for the better the way in which both exploration and mining is undertaken in the country in the medium to long term.
"We are now confident that these changes will also catalyse the permitting process for the mining sector in general. Our application to the Department of Forestry for access to the areas designated for construction at our Red Rabbit Project, remains in process at the Prime Ministry. This is in accordance with a Prime Ministerial Decree, which altered the way in which permits are granted over State land, irrespective of industry sector. We look forward to hearing positive news on our application in due course."
Mining Law
Law number 6592 was passed by the Turkish Parliament on 4 February 2015. This law primarily involved several modifications to articles within Law Number 3213, which is the Mining Law as passed in 1985. These modifications were approved by the President on 17 February 2015 and brought in to effect. Principle changes to the law that will have an impact on the business of the Company include:
1. Licence Fees: An area and exploration-stage dependent annual fee of between 1,000 and 5,000 TL for exploration licences and an area dependent fee of between 20,000 and 70,000 TL for operating licences will be due for payment at the end of January each year.
2. State Right: the royalty paid to the Government on gold will range from 2 to 16% of the Pit Head Sale Price, in parallel with a commodity price range from < US$800/oz to > US$2,225/oz. At current gold price the royalty paid would be 4%. This royalty rate is reduced by 50% if production is occurring within an owner-operated process plant. In the event no production occurs with an operating licence within any one year, a State Right charge of 10,000 TL will be made automatically.
3. Licence Auctions: Relinquished or abandoned licences will be auctioned, and it will no longer be possible to make direct applications in areas of free ground. The minimum auction bid price will be equal to the operating licence annual fee. Certain licences will be amalgamated prior to auction based on parameters such as geological setting and continuity of mineralised features. In these cases the existing area limitation of 2,000 Ha for a Group 4 licence (e.g. gold/silver) will not apply.
The Company views the above modifications as being generally positive for the industry, although noting that the cost structure associated with maintaining licences in good standing will increase. The Company considers this cost increase to be reasonable and manageable, based on current exchange rates. However, the cost of acquiring new licences in Turkey will be significantly higher than in the past, as licence acquisitions will be via competitive auction or licence transfer only. This is one aspect of the new law that could have a limiting effect on any greenfields-type exploration activity.
Contacts:
| Ariana Resources plc | Tel: +44 (0) 20 7407 3616 |
| Michael de Villiers, Chairman | |
| Kerim Sener, Managing Director | |
| Beaumont Cornish Limited | Tel: +44 (0) 20 7628 3396 |
| Roland Cornish / Felicity Geidt | |
| Beaufort Securities Limited | Tel: +44 (0) 20 7382 8300 |
| Saif Janjua | |
| Loeb Aron & Company Ltd. | Tel: +44 (0) 20 7628 1128 |
| John Beresford-Peirse / Dr. Frank Lucas | |
| St Brides Media & Finance Ltd | Tel: +44 (0) 20 7236 1177 |
| Susie Geliher / Lottie Brocklehurst | |
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 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 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 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.
Ends