Mariana talks up positive results from Hot Maden tests

Exploration and development company Mariana Resources announced a “highly favourable” outcome for its preliminary economic assessment of the high grade Hot Maden gold-copper project in north east Turkey.

The AIM-traded firm said the study was prepared in accordance with Canadian National Instrument 43-101 Standards of Disclosure for Mineral Projects by independent mining consultant firm RungePincockMinarco.

It said the conceptual development for Hot Maden assumes an all-underground mining operation from a decline, and utilising mechanized transverse and longitudinal long hole open stoping with engineered fill mining methods.

Mining and processing rates of 0.8 million tonnes per annum, 1.0 Mtpa, and 1.2 Mtpa were considered, with the base case mining scenario being established at 1.0 Mtpa.

Total metal production of 2.6 Million ounces of gold and 142,000 tonnes of copper over a total project life of nine years were reported for the base case mining scenario.

Metallurgical testwork through flotation and concentration completed so far on the high-grade Main Zone mineralisation has indicated high recoveries of both gold and copper.

A variable processing recovery, dependant on grade, has been applied in the study resulting in a project weighted average recovery of 88% Au and 90% Cu.

Mariana said the current Hot Maden plant flow sheet assumes the production of two concentrates on site - one standard copper-gold concentrate, and a second gold-bearing pyrite concentrate.

Post-tax discounted net present value for the base case mining scenario of $1.37bn, excluding pre-development exploration costs.

The post-tax initial rate of return for the base case mining scenario would be 153%, excluding acquisition costs.

Total initial and sustaining capital expenditure was stated at $261m.

“The potential value is finally revealed from the high grade Au-Cu Hot Maden project with these PEA results from RPM,” said CEO Glen Parsons.

“We have always believed Hot Maden to be a world class deposit and, with a potential post-tax NPV for the base case mining scenario of $1.37bn and post-tax IRR of 153%, this is certainly proven correct.

“The high grade nature of this resource and relatively low capital and operating costs should result in the delivery of considerable cash flow and a short payback period - around 2.1 years, including underground mine development - on initial investment.”

Parsons said despite Hot Maden's rapid advancement from discovery to PEA in just 20 months, the decision by the Lidya-Mariana 70-30 joint venture to rapidly move to development is justified with the value of the project for shareholders reflected in the significant cash flow generative ability.

He said the result is expected to be a low cost, low environmental footprint, but highly profitable mine.

“A further 20,000m of drilling is budgeted and planned for this new year and we must remember that exploration drilling continues to focus on the discovery of new gold-copper resources at Hot Maden, especially to the south of the Main Zone within the old ‘Russian Mining Area’.

“The joint venture will also continue to work on the technical studies and optimisations required to underpin the PFS, which is anticipated to be completed during Q3, 2017.”

Parsons said the PFS will provide higher confidence level mine designs, mineral processing scenarios, and costings for the Hot Maden Project.

“Therefore this result could change over time based on the updated prices, resource and assumptions.”