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Saturday 30 January 2010

Ariana Resources: Going for Gold in "Turnkey" Turkey - 2010 Presentation

 At the beginning of January we presented a value proposition for Ariana Resources, the Turkish gold developer which has its sights on near term production through a 50/50 joint venture with Proccea a major Turkish engineering and construction firm.

We also noted that under the prevailing market conditions during  2009, the company elected to spend most of the year focussed on corporate and operational activities, putting on hold their promotional efforts until such time as the market would be more receptive and perhaps even even up for a punt!

So for Ariana's management, the new year kicked off with a presentation on Wednesday to the Association of Mining Analysts, which by all accounts was well received. The schedule of presentations and exhibitions is set to continue throughout  Q1( for a list of the events planned click here ) which also looks likely to be a period of active news flow.

However, for shareholders, there is one piece of news which is eagerly anticipated, and thats the  finalisation of the Proccea JV agreement, which will mark a transformational event for the company and will see Ariana firmly on its way to its goal of near term gold production in Turkey.

To view the latest 2010 presentation from Ariana , click here 

To view the Miningmaven value proposition on Ariana (03/01/10) click here








This summary represents the views and opinions of Miningmaven, has been prepared for information and educational purposes only and should not be considered as investment advice or a recommendation. All opinions expressed in this weblog are those of the author and should not be construed as being made on behalf of any featured Company.
Readers are advised to do their own extensive research before buying shares which, as with all small cap exploration stocks, should be viewed as high risk. Investors should also seek the advice of their investment adviser or stockbroker, as they deem appropriate.



All rights reserved. Users may print extracts of content from this blog for their own personal and non-commercial use only. Republication or redistribution of Miningmaven content, is expressly prohibited without the prior written consent of miningmaven. However, linking directly to the Miningmaven blog is permitted and encouraged.



Copyright © miningmaven 2009

Thursday 28 January 2010

Edison Gold Report 2010 - How to Value those Ounces in the Ground


As regular readers will know, when reviewing gold miners, we have often paid tribute to the Edison Research gold report from October 09. This report analysed 41 companies listed on the London market and provided a weighted average metric for attributing a value to their measures, indicated and inferred ounces in the ground.

This was the first time a report of this type ( directly focussed on  the value of ounces in the ground), had been seen during this market cycle and it provided investors with a very useful tool for research and reference purposes.

We are therefore delighted to see than Edison have now updated their research and expanded their coverage to include 132 gold companies (with a combines resource of 2 billion ounces) in each of the four major global mining finance centres - London, Canada, Australia and Johannesburg.

The new report is now able to compare valuations not only within, but also between the four major markets.
As far as valuations are concerned, the story hasn’t changed all that than much (that said, "indicated" ounces in London have had a bit of a filip - up from $30 to $159 per ounce!). But with the coverage now going Global, it will certainly have a much broader reach.

We think it makes for very worthwhile reading and if you appreciate the Edison valuation metric, you will no doubt find the extended cover even more relevent (you may want to link this into your favourites). The conclusions drawn should not come as any surprise either. As the report title suggests: Gold - Valuation Benchmarks are obsolete!

To see the full Edison report, click here ; Gold - Valuation Benchmarks are obsolete!


This summary represents the views and opinions of Miningmaven, has been prepared for information and educational purposes only and should not be considered as investment advice or a recommendation. All opinions expressed in this weblog are those of the author and should not be construed as being made on behalf of any featured Company.
Readers are advised to do their own extensive research before buying shares which, as with all small cap exploration stocks, should be viewed as high risk. Investors should also seek the advice of their investment adviser or stockbroker, as they deem appropriate.



All rights reserved. Users may print extracts of content from this blog for their own personal and non-commercial use only. Republication or redistribution of Miningmaven content, is expressly prohibited without the prior written consent of miningmaven. However, linking directly to the Miningmaven blog is permitted and encouraged.



Copyright © miningmaven 2009

Monday 25 January 2010

Shanta Gold – Going back to the seventies??




We spend a fair amount of our time scouring the mining and exploration sector to find golden nuggets or, more to the point, mining and exploration companies that have real potential value that is not yet fully articulated in a company’s market capitalisation. There are quite a few around, but it’s fair to say that some stand out more than others...

So this mornings news from Shanta Gold  (AIM:SHG) reminded us of another potential nugget in the rough and we thought we should make a few preliminary comments. We hope to find time to look more closely at Shanta Gold in the near future and bring you a full Value Proposition for the company.

Shanta currently sits with a JORC defined Gold resource of some 2.6million ounces. Within this 1,504,205 ounces are inferred, 633,693 ounces are indicated and 480,546 are measured (figures taken from the Shanta website click here for a direct link

Now at this very early stage we have two specific points to make and these are, we think, worthy of further consideration:

1. The resource covers three project areas and appears to be substantial and by all accounts capable of further material increase going forward. In particular the measured resource of 480,546 ounces interests us. We often draw on the Edison Gold sector report,  which suggested that, on average, measured resources should make up a value of $381 per ounce in the market capitalisations of Explorers. If Shanta were to be valued on the basis of $381 per measured ounce would equate to a capitalisation of $183million or £113million (that is £1.08 per share). We know that is a simplistic calculation of course and further analysis of resource geology, cut off grades, mining potential etc, are all required;

2. The company has, during 2009, stated an intention to develop mining operations within their exploration areas. In particular, in their 2.11.09 news release they note that a Mining Licence application has been submitted to the Zambian authorities in respect of the Chunya project. This announcement also notes an initial capital cost of just $5million for a gravity and carbon in leach ore treatment plant.

It’s worth mentioning that Shanta Gold reached the heady heights of seventy pence plus per share in mid 2006. Could it return to that level again? Perhaps. The measured resource theory above suggests this could be feasible. And the added bonus of potential near term producer status will be a major attraction for investors.

As a result we need to look a bit deeper and we suggest perhaps readers also research this stock sooner rather than later.

This summary represents the views and opinions of Miningmaven, has been prepared for information and educational purposes only and should not be considered as investment advice or a recommendation. All opinions expressed in this weblog are those of the author and should not be construed as being made on behalf of any featured Company.

Readers are advised to do their own extensive research before buying shares which, as with all small cap exploration stocks, should be viewed as high risk. Investors should also seek the advice of their investment adviser or stockbroker, as they deem appropriate.



All rights reserved. Users may print extracts of content from this blog for their own personal and non-commercial use only. Republication or redistribution of Miningmaven content, is expressly prohibited without the prior written consent of miningmaven. However, linking directly to the Miningmaven blog is permitted and encouraged.



Copyright © miningmaven 2009

Saturday 23 January 2010

JP Morgan behind last weeks precious metals sell off?


Once again Ted Butler puts an interesting spin on what yanked this weeks precious metals trading so hard to the down side - $2 off silver and $50 off gold.

Could this have been a set up by bank shorts in the wake of the historic CFTC position limits meeting on 14th January??

A link to the webcast of the meeting is provided below; be warned its two and a half hours long and rather heavy going. The questions are a bit more interesting, when they start talking about precious metals around 50 minutes in…


In a nutshell, this CFT met on the 14th January to discuss the introduction of position limits (mainly affecting short positions) in the Energy markets on the COMEX , the outcome of which would also inevitably impact on the precious metals markets. At the moment the big banks are not limited in the size of the positions they can take, so with unlimited funds available to them, they can effectively swamp the markets with speculative shorts. Thats the theory anyway.

Do you buy the possibility that JP Morgan and a few other big banks actively work to suppress PM prices on the COMEX?? Ted Butler certainly does and according to him and many of his readers, President Obama’s speech last week was a clear call on big bank manipulation of the precious metals markets on the COMEX.
According to Ted, if you have to look for a reason as to why the precious metals we down sharply on the week, "you look to the Comex and you look to JP Morgan". Have a listen to the interview linked below to hear his rationale.

Ted butler is an internationally renowned Precious Metals analysts and has been researching the precious metals markets for over 30 years. His Butlerresearch LLc news letter has been going for many years in the USA.

Todays interview with Ted Butler on King World News is less than 10 minutes. Well worth a listen.

This summary represents the views and opinions of Miningmaven, has been prepared for information and educational purposes only and should not be considered as investment advice or a recommendation. All opinions expressed in this weblog are those of the author and should not be construed as being made on behalf of any featured Company.
Readers are advised to do their own extensive research before buying shares which, as with all small cap exploration stocks, should be viewed as high risk. Investors should also seek the advice of their investment adviser or stockbroker, as they deem appropriate.
All rights reserved. Users may print extracts of content from this blog for their own personal and non-commercial use only. Republication or redistribution of Miningmaven content, is expressly prohibited without the prior written consent of miningmaven. However, linking directly to the Miningmaven blog is permitted and encouraged.



Copyright © miningmaven 2009

Thursday 21 January 2010

Jim Rogers - Commodities in a Bubble??? Are you crazy???

This is a great little interview on CNBC Asia with Jim Rogers. Watch his reaction to the suggestion that commodities are in a bubble.

Seems he is too much of a gentleman to tell the CNBC Anchor what he really thinks of that question!

Feel free to add your comments below.........Enjoy!






This summary represents the views and opinions of Miningmaven, has been prepared for information and educational purposes only and should not be considered as investment advice or a recommendation. All opinions expressed in this weblog are those of the author and should not be construed as being made on behalf of any featured Company.
Readers are advised to do their own extensive research before buying shares which, as with all small cap exploration stocks, should be viewed as high risk. Investors should also seek the advice of their investment adviser or stockbroker, as they deem appropriate.


All rights reserved. Users may print extracts of content from this blog for their own personal and non-commercial use only. Republication or redistribution of Miningmaven content, is expressly prohibited without the prior written consent of miningmaven. However, linking directly to the Miningmaven blog is permitted and encouraged.


Copyright © miningmaven 2009

Tuesday 19 January 2010

Red Rock Resources (UPDATE) - So what have Red Rock Resources ever done for us???

Remember the scene in the movie ‘The Life of Brian’, where Reg (played by John Cleese) the leader of the Peoples' Front of Judea (not to be mistaken for the Judean Peoples' Front!) asks his followers the question “What have the Romans ever done for us”? Then, after an exchange where the supporters outlined the many things Rome had provided, he retorts with; “yes but apart from the, sanitation, medicine, education, wine, public order, irrigation public health, etc etc etc, what have the Romans ever done for us”?

So it’s true of Red Rock Resources (AIM:RRR). Despite a period of amazing development the question still persists; “yes but apart from investments worth far in excess of market cap, potentially enormous future royalties, a 1.2million ounce gold JORC in an African gold project near production, etc etc, what have Red Rock Resources ever done for us”?

Here’s the problem (perhaps); the market mistakenly thinks Red Rock Resources is an investment company and that’s a BIG BIG mistake, I think.

In fact it’s that bad that I have an image of Andrew Bell leaning out of his boardroom window at 115 Eastbourne Mews shouting, “We are not an investment company!!” You get the point.

So here perhaps we have a simple case of mistaken identity. Your typical micro cap explorer would never be mistaken for an investment company. They usually operate in a one sector (e.g. gold exploration), in a narrow geographic region and under one corporate vehicle. So the market ticks the box marked “Junior Explorer” and all is well with the world.

But what if your business is a more sophisticated animal and not so easy to categorise? The Market would then need to pay more attention and dig a bit deeper to get a better understanding - but markets move fast and are not exactly known for their application and attention span.

So here’s where you run the risk of being mistaken for your closest look-alike. And in the case of Red Rock Resources (AIM:RRR) that would be a “Mining Investment company”. Which brings us back to Andrew Bell’s big challenge – how to get his message across to the market – RRR is not an investment company – well not as such!

So you have to have some sympathy. Since floating Red Rock off from Regency Mines (AIM:RGM) in 2005, he has continually been working his proprietary brand of alchemy; identifying exciting mineral resources, driving them up the value curve and then crystallising value by hiving them off into discrete tradable packages whilst retaining a significant/controlling stake.

These entities are spawned, nurtured and grown to the point where they can operate as standalone projects. They are in all the right sectors (steel feed, uranium & gold) and they all have huge growth prospects built into their DNA. Oh, and they also end up in self-funding tradable vehicles, which should the markets permit, will appreciate in value independently of the main business. Does that sound like the remit of your typical mining investment company?? Not exactly!

That’s the business model, or the main part of it. So what does the market think? Well as I said, it really doesn’t know what to think. It looks at the company at any moment in time, scratches its head and just sees the holdings as generic constituents of an investment portfolio. It then fixates on distressed valuations for the component parts, and accordingly attributes the generic discount to NAV.

So, despite a portfolio which includes a 25% holding in an ASX listed Iron Ore company, which alone is worth nearly £11.8 million, Andrew’s company has a total market capitalisation of just £8.2million (on 23/12/09).

Welcome to the frustrating world of Andrew Bell, Chairman of Red Rock Resources!

The undervalued assets brush is tarring much of the mining and exploration sector right now. But not many can boast a potential 81% discount to NAV (according to the latest Edison Research update on the companies website). Such extremes make this a most suitable candidate for the value investors slide rule. It must have made an impact as The Financial Times even picked up on the story last Friday

One thing is certain though; when such micro cap stocks do finally get their message across, they can attract enormous interest and the re-rating process can be quite dramatic.

That said, one area where the company has been recently criticised has been its use of a rather inventive instrument called a SEDA (Share Equity Distribution Agreement). This can be a dual edged sword. It gives the company an effective £3m line of equity funding and cash can be raised on a flexible basis, albeit at a discount to the prevailing market price. Great news if you on the look out for distressed assets, as indeed are Red Rock.

However, as a shareholder one has constantly to run the gauntlet of market sentiment and the latest placing, raising just £120,000 (at 1.3p) for the company and incurring just a 2% dilution, seems to have triggered a mini sell-off which saw the share price fall back from 1.9p a week ago, to just under 1.5p at close on Friday 18th December. This occurred just at a time when the share price looked set to breach the 2p line in the sand. Yes, a week is a long time when you’re a Red Rock shareholder!

The company will hopefully be super cautious about raising more funds through this route in the future, although funds raised to date have purchased some exciting and arguably exceptionally under-priced assets.

So what is so special about Red Rock Resources? Or put it another way “What has Red Rock ever done for us?”

Well let’s break the ‘portfolio’ down (apologies Andrew for repetition of the investment term ‘portfolio’) and try to identify where the current market cap is detached from the inherent value within the business.


You will need to travel back in time to the July 2005 admission announcement to find first details of the company’s options over Mt Ida, Mt Hope and Mt Alfred, three iron ore tenements in the Central Yilgarn area of Western Australia. Thereafter it was a long road of development the salient elements of which are captured below.

Red Rock transferred Mount Ida, Mount Hope and Mount Alfred tenements (and also Oakover Manganese tenements) into Jupiter Mines in a series of transactions that completed in the summer of 09. This provided Red Rock with a 25% holding in one of the larger Iron Ore/Manganese explorers on the Australian Securities Exchange (ASX). Interestingly the other major holders read like a who’s who of the steel feed business and include Brian Gilbertson's Pallinghurst Resources who own a similar size stake to Red Rock. Korean steel giant POSCO has a strategic stake and even Hancock Prospecting’s name has now popped up on the share register (Hancock is run by Aussie Billionairess Gina Rinehart, daughter of Iron Ore magnate Lang Hancock).

The current share price of Jupiter Mines stands at 22.5c meaning the 93 million shares owned by Red Rock are worth A$21million or around £11.8million. That alone equate to 2.13p per Red Rock share.

Those with a finger in the steel feed business seem to think that Jupiter Mines is unlikely to contract and in 2010 very likely to expand apace. On this assumption the share price of Jupiter Mines could experience significant upward momentum which would be great for Red Rock where every cent on the Jupiter price adds another half a million pounds to Red Rock’s NAV. Now that’s what you call leverage!

One could say that alone would be enough, but Red Rock has many more goodies in its “portfolio”. On the transfer of Mount Ida and Mount Hope into Jupiter, Red Rock also negotiated 1.5% gross production royalty for all production from the prospects (i.e. 1.5% off the revenue, no deductions – and no buy outs!). Not bad but what does that really mean? Well Jupiter helped us there by recently releasing a conceptual model showing a conservative estimate of 1.1 – 1.3 billion tonnes of magnetite ore at Mt Ida. This is before the high-grade magnetite areas have been explored and thus is likely to be revised upwards in the fullness of time.

So there appears to be a very substantial ongoing royalty payment that will flow to Red Rock if one assumes production starts at Mt Ida. And, for the sake of clarity, that royalty is on top of the stake Red Rock holds in Jupiter Mines itself!

Just one more thing; on the transfer of Mt Alfred into Jupiter in November 2008 the agreement specified that were Jupiter to define an Iron Ore JORC in excess of ten million tonnes at Mt Alfred, the excess would be multiplied by $2 and the cash amount translated into shares to be split between Red Rock and Pallinghurst. So, say they defined a resource of 50million tonnes, the cash amount would be A$80million which if we assumed at that point Jupiter Mines were valued at 50c per share would give Red Rock another 80million shares. Another good reason why Jupiter should want to see their share price higher than it is right now!

The magnitude of the Jupiter transactions are not easy to quantify precisely, but they certainly point towards enormous upside potential for returns to Red Rock through its direct holding, the royalty from Mt Ida and the bonus option from Mt Alfred.

Brian Gilbertson's Steel Feed Corporation (SFC) strategy in the Jupiter Investor Presentation September 2009 is well worth a listen


Red Rock currently owns approximately 24% of Resource Star, which, in line with its business model, it originally acquired by hiving off its Uranium Assets into the business.

Originally an online business called Retail Star, Resource Star has taken its time to galvanise and get moving. The global economic crisis and evaporation of funding for uranium juniors was much to blame, preventing the company raising sufficient funds at the time to really make progress.

It seems all this imminently set to change. Resource Star, currently suspended, is due to relist on the ASX in January 2010 and is in the process of raising $4.4million at 20c per share.

The company has Uranium and Rare Earth prospects in Malawi and Australia and has just signed a deal with Globe Metals and Mining (ASX:GBE) whereby Globe can earn up to 80% of the Machinga rare earth project in Malawi, subject to certain expenditure and progress commitments, leaving a nice 20% free carry there for RSL.

On relisting, Red Rock will secure an additional 3million shares at 20c each in settlement of outstanding loans and other contractual commitments to Resource Star. That should equate to around 21% (13 million shares owned) of the entire business post fund raising, representing a healthy stake in an ASX listed company in the Uranium and Rare Earth sector.


Cue Resources, a Toronto Securities Exchange (TSX) listed Uranium explorer has a 100% holding in the Yuty Uranium project in Paraguay. But Cue is more than just an explorer, they have a resource of around 10m lb of uranium in-situ, and significant exploration upside potential, according to Uranium Investing News .

Known for speculative investing, on 2nd November Red Rock announced they had purchased the thick end of 10 million shares in Cue Resources in a private placement, giving the company a near 16% stake. The placement also carries a 1 for 2 warrant entitlement which, on a fully diluted basis, would increase the stake further.

Shortly after this announcement an interesting development occurred. Red Rocks largest shareholder & parent company Regency Mines announced that they had purchased a further 4.2 million shares in an off market transaction, giving the concert parties between them approximately 23.01% of the capital, on a partially diluted basis and after the exercise of warrants held by Red Rock, approximately 34.50% of the company’s share capital – forming an effective control block..

The holding reinforces Red Rock’s interest in value Uranium plays but also stokes speculators to consider what Red Rock might do with this holding. Perhaps ultimately this is destined for the Resource Star stable or maybe it was just a great value proposition to be held and disposed of when the market better reflects the value of Cue’s assets some way down the road. Either way, Red Rock has secured a healthy stake in another exciting area and ‘watch this space’ definitely applies.

Chiwefwe (Zambian Manganese)

Oh Chiwefwe?? Once the darling of the Red Rock portfolio it has gone very quiet recently.

Talk of a substantial manganese resource a couple of years ago was further supplemented by an eagerness to enter production at Chiwefwe through a processing deal with a local operator. An agreement was struck in August 2008 for further exploration and ground acquisition and at one point all this activity was suggesting material value was being created in the Zambian territory.

However, we haven’t heard much more about Chiwefwe since the Final Results announced in December 2008.

The smoke signals seem to indicate there may be some activity again in this area of the portfolio and, if this proves correct, it could signal a resurgence in the importance of manganese once more in the Red Rock mix. But with other activity in the forefront and Management time at a premium, it would be best to adopt a wait and see approach here.

Migori (Kenyan Gold Prospect)

So apart from Jupiter Mines, Resource Star, Cue Resources and Chiwifwe, what has Red Rock Resources ever done for us? ……well how about adding a nice 1.2million ounce gold resource to the portfolio? This resource, at Migori in Kenya, is quantified at the “indicated” level with some actually “measured”; which demonstrate a higher level of certainty that a resources at the “inferred” level.

Red Rock really have created a nugget of value here. On 17th September 09 they announced the acquisition of 15% of the Migori project and the right to increased that interest to 60% by completing a bankable feasibility study within 6 years.

On 30th November Red Rock announced the purchase of 10 million shares in Kansai Mining (direct owner of the Migori Licence area), and then on 3rd December announced they had acquired an option over an additional 29 million shares taking their holding up to 39 million shares or 35% of the company’s entire share capital.

It is worth noting that the 35% stake was purchased for just $400,000, which given the size of resource at Migori, has to be considered something of a bargain. As with the Mt Ida transaction Red Rock has also secured a two way interest. In this case it can build up direct project ownership at Migori and also retains a 35% interest in the entire Kansai company.

Going by the company's 23rd December AGM presentation, Migori is set to be in the forefront of activities for 2010. Also worth noting is the stated intention of Red Rock to fast track the Migori project into production at the earliest opportunity. The prospect is considered to be amenable to a low cost open pit mining operation with a low stripping ratio. Initial indication suggests they expect cost effective production to be achieved without too much difficulty.

On 14th January 2010 the company announced an update on Migori stating that once results are in from the drilling 2009 campaign, (which will also include additional samples taken from the previous operators interrupted program), the company will start to carry out a revision of the NI 43-101 resource estimate. By carrying out a revised NI 43-101 resource estimate, the company will be not only targeting an increase in the size of the resource, but also looking to move more of the resource up from the indicated to the measured category.


Whilst Red Rock has to let Jupiter Mines get on with business, the ardent stated focus of the company is now Migori and no doubt there will be further exciting developments to come here.



Many Investors expect 2010 will mark the turning point for Red Rock, where the rewards of Andrew’s hard worked business strategy start to flow back to the company. Until then, his biggest challenge will no doubt be to convince the market that Red Rock is much more than “just” an investment company.

For our part, miningmaven will be following this company very closely in the New Year, and if expectations are met, shareholders will certainly be looking on the bright side of life!


So in summary Red Rock Resources has given us:

- A major stake in Jupiter Mines, a leading Iron Ore and Manganese explorer in Western Australia, currently worth £11.8million or 2.13p per share. Also the potential to increase that holding substantially at no additional cost should Mt Alfred prove up a resource in excess of 10 million tonnes;
- A substantial potential royalty stream from Mt Ida Iron ore production through their 1.5% gross production royalty;
- A 21% stake in Resource Star an ASX listed Uranium and Rare Earths exploration company;
- A 15% stake in Cue Resources a TSX listed Uranium exploration company;
- A stake in Zambian Manganese at Chiefwe (currently under the radar but the latent potential remains);
- A major stake in the Kenyan Migori gold prospect, with a stated desire to enter production at the earliest opportunity;
- A market cap of £8.2million which is at a one third discount to the value of the Red Rock holding in Jupiter Mines.

Example Risks (not comprehensive):

- Exploration work fails to identify economic deposits;
- Country/Regulatory risk;
- Financial risk (sufficiency and stewardship of working capital and investment capital in particular);
- Commodity price exposure;
- Key person exposure (risk of losing key members of the team).

Company information:







Red Rock Resources : AIM:RRR
Website: http://www.rrrplc.com/
23rd December AGM Presentatation
AIM Rule 26 Information
Shares in issue - 566,353,142
Market cap (08.02.10) - £8.04million.



This summary represents the views and opinions of Miningmaven, has been prepared for information and educational purposes only and should not be considered as investment advice or a recommendation. Readers are advised to do their own extensive research before buying shares which, as with all small cap exploration stocks, should be viewed as high risk. Investors should also seek the advice of their investment adviser or stockbroker, as they deem appropriate.




All rights reserved. Users may print extracts of content from this blog for their own personal and non-commercial use only. Republication or redistribution of Miningmaven content, is expressly prohibited without the prior written consent of miningmaven. However, linking directly to the Miningmaven blog is permitted and encouraged.
The author owns shares in Red Rock Resources plc.
Copyright © miningmaven 2009




Copyright © miningmaven 2009

Range Resources – Cinderella, your Carriage Awaits!


In our Value Proposition  on 6th January we identified the main areas of the Range Resources' business, namely Texas USA, Georgia and Puntland Somalia. The potential was significant and we likened the Range scenario to a Cinderella story, always working hard in the background and finally it seemed, able to go to the ball!

The downside of going to the ball is that you will certainly need a new dress. But without a fairy godmother to foot the bill,  (alas, she lost her magic wand in 2008), where would you expect to get the money from?

Well in the case of Range Resources the funding has now arrived by way of a placing of A$2million announced on 5th January 2010 and also a further A$7million via a rights issue covered in the same announcement.

The problem however is that rights issues can be a little hit and miss. What you need to see is a fully underwritten rights issue whereby no matter how many holders take up rights the company is guaranteed to receive the money. Well that piece of the jigsaw was confirmed today in the latest news release  and the overall funding of A$9 million is confirmed.

Range have now built a portfolio which would turn many oil and gas Execs green with envy:

1. Texas USA (25% Range) – a commercial oil and gas discovery expecting to enter production in the coming weeks and a resource estimate due shortly;

2. Georgia (50% Range) – seismic testing underway and results expected shortly in an exciting oil and gas environment;

3. Puntland Somalia (Onshore 20% Range / Offshore 100% Range) – following signature of PDAs and parliament ratification, onshore drill ready targets are in place and spudding of the first well is expected in a few months. Not forgetting the search for a third party for the offshore licences the results of which are expected in the coming months also!

Now, with A$9million in funding confirmed, they have the resources to secure progress in all three areas, something that should certainly inspire investors over the coming weeks and months. And what impresses Mining Maven is the fact that private investors are able to participate in this fundraising (at a discounted price) through the rights issue. Such private investor participation is something we would like to see more companies embrace.

Exciting times ahead for Range Resources!


This summary represents the views and opinions of Miningmaven, has been prepared for information and educational purposes only and should not be considered as investment advice or a recommendation. Readers are advised to do their own extensive research before buying shares which, as with all small cap exploration stocks, should be viewed as high risk. Investors should also seek the advice of their investment adviser or stockbroker, as they deem appropriate.


All rights reserved. Users may print extracts of content from this blog for their own personal and non-commercial use only. Republication or redistribution of Miningmaven content, is expressly prohibited without the prior written consent of miningmaven. However, linking directly to the Miningmaven blog is permitted and encouraged.

The author owns shares in Range Resources plc.
Copyright © miningmaven 2009

Friday 15 January 2010

Red Rock Resources: Growing those Gold Ounces....

 

We originally published our value proposition on Red Rock Resources (AIM:RRR) in December, and we really didn’t expect to re-visit this so soon. However the company has just announced an update on progress at the Migori gold prospect in Kenya, and it contains some rather interesting news.

Unsurprisingly the drilling program has now recommenced in earnest after the holidays, full details of which are provided in the announcement; and it all appears to be on track.

However, more significant in our eyes is the news that once results are in from the 2009 drilling  campaign, (which will also include additional samples taken from the previous operators interrupted program), the company will carry out a revision of the NI 43-101 resource estimate. This was the part that caught our attention, as this is where significant additional value can be built in very short order.

The company's 23rd December AGM presentation indicates that Migori is set to be in the forefront of activities for 2010, and in our value proposition we note their stated intention to fast track the Migori project into production at the earliest opportunity. The prospect being considered amenable to a low cost open pit mining operation with a low stripping ratio.

As detailed in the Edison Research note, most of Migori’s, 1.2m ounce resource is currently in the indicated category, with a small amount (9.7k ounces) in the Macalder tailings actually measured

By carrying out a revised NI 43-101 resource estimate, the company will not only be targeting an increase in the size of the resource, but also looking to move more of the resource up from the indicated to the measured category.

Just to remind readers that measured ounces carry the highest level of confidence and ounces in this category will command a significantly higher “in the ground” value than those on a lower category. What value? Well, as the Edison Gold Sector report from last October suggested, $381 attributable per measured ounce and $30 for indicated ounces. In other words 10,000 measured ounces would book in at $3.8m, 100,000 measured ounces to $38m and so on.

It’s a bit soon to start crunching the numbers, but there seems to be a lot of scope here not only to increase the scale of the resource but also the confidence in the ounces of gold in the ground. Add that to a fast track production scenario and you can why this news is worth highlighting!

The Red Rock value proposition has now been updated to reflect this new development. 

This summary represents the views and opinions of Miningmaven, has been prepared for information and educational purposes only and should not be considered as investment advice or a recommendation. Readers are advised to do their own extensive research before buying shares which, as with all small cap exploration stocks, should be viewed as high risk. Investors should also seek the advice of their investment adviser or stockbroker, as they deem appropriate.



All rights reserved. Users may print extracts of content from this blog for their own personal and non-commercial use only. Republication or redistribution of Miningmaven content, is expressly prohibited without the prior written consent of miningmaven. However, linking directly to the Miningmaven blog is permitted and encouraged.



Copyright © miningmaven 2009

Tuesday 12 January 2010

Gold price could go parabolic in 2010 - Hang on to those gold stocks!!






Click here to read the transcript of the Keynote Speech presented by Nick Barisheff at the Empire Club’s 16th Annual Investment Outlook Luncheon. For an indication of whats in store for gold, silver and the mining shares, its a must read and you certainly wont need to refer to your crystal Ball!


This summary represents the views and opinions of Miningmaven, has been prepared for information and educational purposes only and should not be considered as investment advice or a recommendation. Readers are advised to do their own extensive research before buying shares which, as with all small cap exploration stocks, should be viewed as high risk. Investors should also seek the advice of their investment adviser or stockbroker, as they deem appropriate.


All rights reserved. Users may print extracts of content from this blog for their own personal and non-commercial use only. Republication or redistribution of Miningmaven content, is expressly prohibited without the prior written consent of miningmaven. However, linking directly to the Miningmaven blog is permitted and encouraged.


Copyright © miningmaven 2009

Saturday 9 January 2010

There is no such thing as bad weather – only the wrong clothes...





....a very profound and rather apt observation credit for which goes to the wit and wisdom of Billy Connolly!



Greetings Mavens!

What do we have lined up for January?? Well, we currently have a bit of a backlog! A few articles are awaiting final review and signing off, amongst them is a value proposition on a rather interesting Australian Iron Ore & Nickel exploration company which we feel may experience, dare I say, significant transformational growth potential in 2010!

We are also putting together a review on Rare Earth Elements (REE) together with a guide on where to look to find investment opportunities. According to some very astute commentators, this tiny sector is set to explode with fortunes to be made over the next few years! With few players outside of China (china accounts for 97% of the world REE production) the investment case looks very compeling to say the least. Make sure to watch this space!!

Or better still subscribe - join us on Facebook or Twitter to get priority updates as soon as they are released.

On Thursday we set up the Miningmaven Facebook Group. Numbers are still a bit thin as we wait for word to start to spread. We set this up as a true “open source” hub for people to network, exchange views & ideas, advertise your own blog, show or events and put forward your own suggestions and value propositions.

Wherever you are in the world, please spread the word and join us in creating an Investor hub where we can all actively help promote interest in investing in the Natural Resource sector.

This week saw Gold put in an impressive performance and robust recovery closing at $1138.70. Here is an excellent Moneyweek article by Dominic Frisby on what we can expect next for the gold price.

If you haven’t discovered Dominic yet, you don’t know what you've been missing! His interviews on Frisby's Bulls & Bears. are always insightful, laced with good humour and really entertaining.

And to complete your weekends info-tainment, here are a couple of great interview out today from Kings World News:

2. GATA "round-table" on Gold  9th January

Have a great weekend all and I would suggest make sure you wrap up warm, but after speaking to one Maven yesterday who is still sunning himself in 40c in Barbados, better advice perhaps would be to make the most of whatever weather you're getting - and dress appropriately!


MM



This summary represents the views and opinions of Miningmaven, has been prepared for information and educational purposes only and should not be considered as investment advice or a recommendation. Readers are advised to do their own extensive research before buying shares which, as with all small cap exploration stocks, should be viewed as high risk. Investors should also seek the advice of their investment adviser or stockbroker, as they deem appropriate.



All rights reserved. Users may print extracts of content from this blog for their own personal and non-commercial use only. Republication or redistribution of Miningmaven content, is expressly prohibited without the prior written consent of miningmaven. However, linking directly to the Miningmaven blog is permitted and encouraged.



Copyright © miningmaven 2009

Wednesday 6 January 2010

Range Resources: Cinderella you shall go to the ball.....


Strange thing this exploration business; one day you have nothing but hope and the next day, well.....


Let’s say the next day you have a bit more than just hope, you have some real evidence of value within your prospects. Your operating environment has changed for the better. Your ability to achieve your corporate objectives finally, after much delay, start to look like they could become reality....

Your business has been growing wings but previously you were prohibited from flying. You had earned the right to succeed but not, so it seemed until this point, the permission. You were all dressed up, and until December 2009, had nowhere to go.

This rather confusing opening picture is the environment currently occupied by Peter Landau, Executive Director of Range Resources (ASX:RRS)(AIM:RRL).

But it seems Cinderella, or in this case Range Resources, shall at last go to the ball! What happened in December 2009 was transformational for the business; it’s just the market hasn’t realised the magnitude of transformation....well not yet anyway.

It’s a bit of a protracted story, but, in a nut shell, this is where we are at present:

1. has a 25% stake in a Texan prospect from which drilling has identified a commercial oil and gas find;

2. has, with their operating partner Crest Resources, recently increased the size of their Texan oil prospect licence area by some 50% (1120 acres to 1680 acres);

3. has just commenced a seismic review operation in Georgia targeting substantial oil prospects (project revenue share 50/50 with Georgian government pre cost recovery and 35% Range after costs recovered, no tax deducted thereafter);

4. has just received the go ahead for drilling of the Puntland (northern Somalia) onshore oil licences estimated to contain 2-10billion barrels in one basin and a similar amount in a second with drilling now due to commence in 2010. Range hold a 20% interest and are free carried for the first $50million of exploration costs by their partner Africa oil (see comments below re free carry status);

5. holds 100% of offshore oil/gas exploration licences and plan to secure a partner to fund exploration programme in 2010;

6. has a market cap of A$36.5million or £21.1million based on 563million shares currently in issue.

The stock market has a long memory and, like the proverbial elephant, it never forgets. Where a company has erred it takes a while before the market forgives, and even then failure remains in the back of an investor’s mind and management have to behave impeccably to maintain the confidence to move beyond any historic difficulties.

Now we could drone on about management changes, delays, information flow etc ..... ad infinitum. Or we could focus on what Range Resources has right now and the value delivered to shareholders in the final weeks of 2009.

I vote the latter, and to help keep us positive, a quote from the first page of the Range Resources 2009 website presentation:

“If you can find a path with no obstacles it probably doesn’t lead anywhere”

You can see why they chose that one for the front page cant you!!

So straight on we go with a brief overview of what they have created. Spot the value here. We believe there is lots of it and Mining Maven is quite excited about what could happen to Range Resources and its share price in 2010.


After reaching target depth with the Smith1 Well in the North Chapman ranch area of Texas in November the markets were made to wait until 21 December 2009 before an rns confirmed a commercial oil and gas discovery.

Initial test results showed flow rates of 2.4million cubic feet of gas and 191 barrels of oil per day. No estimates were given as to the side of the finds but Range is to conduct additional testing of the well into the sales line whilst finishing completion. The company has confirmed that reservoir size and reserve figures will be released once completion operations are finalised this month (January 2010). Also, first production and sales are expected to commence later this month. So Range will become, at some time in the next few weeks, a revenue earning producer. Quite a change given the difficulties of the past.

Drill costs are supplemented by costs to production and Range has incurred expenditure of just A$1.3million, a figure they expect to recover in around nine months from their share of production and sales revenues. Quite a feat!

Now here’s a few extra points to note. Firstly, the initial well test measurements were conducted using a small choke size, so the full potential flow rate could be materially higher. Secondly, only one of the three pay zones has been perforated and tested, so more upside there. Thirdly, they are planning additional wells thus speeding up the potential production and sales revenues (of course they have to fund their share of cost for all wells drilled).

And finally, Range and its partners have just increased their Texan acreage from 1,120 acres to 1,680 acres, a 50% increase. Evidently they like what they see!!

There is much speculation as to the extent of reserve and of course speculation can lead to desperation. That said it’s worth noting that the original target for the drill campaign was to find a minimum of 80 billion cubic feet of gas. Initial speculation is that the find could exceed this target substantially and of course, there is also the oil to consider, something of a bonus.

Many investors are optimistically hoping for 200 billion which sounds a stretch until you consider that the Mobil David field just north of North Chapman ranch produced 250 billion cubic feet and over 10 million barrels of oil. Food for thought, but without doubt, the Texas success could be a mini company maker in its own right!


Onshore

Speaking of company makers how about Puntland onshore licences? Here Range Resources have a 20% interest with Africa Oil (as operator)(TSX:AOI) holding 65% and Lion Energy 15%. The Joint Venture Agreement covers the Dharoor Valley block and the Nogal Valley block.

Puntland is an autonomous state within Somalia and no doubt straight away the geopolitical risk warning flags will be waving in front of your eyes!

In reality the large remaining oil reserves of the world seem to be sat in the middle of geopolitical storms and despite this, significant returns can be made by investing in such territories.

That said, for a high-risk environment Puntland has made some significant progressive steps in recent years. Elections have been held in Puntland since 2001 and the recent (Jan 09) elections passed peacefully. Range makes a firm point that it has a positive constructive relationship with the Puntland government.

Evidently Puntland is cogniscent of the importance of Foreign Direct Investment and the need to address security issues. The recent appointment of a Kuwaiti security firm to protect those operating in the country was regarded as significant evidence to that effect.

Range has been trying to move forward the Puntland programme for some years now. Therefore there was some relief when a news announcement, released on 14 December, confirmed that the company, Africa Oil and the Puntland State of Somalia had reached agreement over modification to the Production Sharing Agreements. The revised agreements were still subject to Parliamentary ratification but this was achieved and confirmed via a news announcement on 21 December 2009.

The modifications allow Africa oil to drill one hole in each of the Nogal and Dharoor Valley exploration areas or two in the Dharoor Valley. In consideration of the amended agreements the parties have agreed to relinquish 25% of the original agreement area in January 2010 and make a $1million payment to the Puntland government on each commercial discovery within each of the exploration blocks. Other terms include enhanced environmental safety measures and a one off payment by Africa Oil of $1,050,000 for development of infrastructure.

Africa Oil has stated an intention to commence operations immediately. Worthy of mention is that Africa oil has reviewed data prepared by the Puntland government and Range Resources. They have reinterpreted existing seismic data and have drill targets identified. Rig mobilisation for Dharoor is expected in Q1 2010 with a view to spudding the first well in mid 2010.

As part of the Joint Venture Agreement Africa Oil committed to paying the first $22.8mn of exploration expenditure within each block (Nogal and Dharoor). With respect to Dharoor in the fourth quarter of 2008 Africa Oil satisfied this requirement and going forward Range will be required to contribute against its 20% participation. With respect to Nogal, Africa Oil has spent $4.3 million of the $22.8mn sole funding commitment (to end September 2009).

Puntland is considered to be world class acreage and a continuation of the prolific Yemen Rift system. Reflecting this and the work undertaken to date the onshore campaign is targeting 2 - 10 billion barrels of oil, potentially within each basin.

Offshore

Range has completed an offshore seismic/well database and through this has identified reservoir and source rock targets.

Offshore licences are still 100% owned by Range Resources however the company is in discussion with joint venture seismic partners to move this forward. It is anticipated that, subject to Puntland Government approval, joint venture partners will be agreed and an offshore licensing round undertaken, possibly within Q1 2010.


Georgia benefits from a democratically elected government and a business environment that demonstrates significant cross border investment and multinational trading.

On 9th July 2009 Range announced an agreement with Strait Oil and Gas re the acquisition of a 50% interest in two Georgian Oil and Gas exploration blocks (Blocks VIA and VIB). To earn this 50% interest Range are committed to completion of Phase II of the PSA applicable to the specific blocks, consisting of 350km of 2D and 3D seismic and well selection.

The budgeted costs for Phase II are $4-5million and against this Range planned a $2.5mn placement (see comments re ‘Rights Issue’ below) to cover initial Georgian costs to December 2009 ($1mn) and also for Puntland related expenditures.

This is a substantial licence area with the two blocks representing a contiguous area of 7,000 square kilometres (or over 10% of the surface area of Georgia).

The blocks have been the subject of extensive exploration, particularly during the Soviet era and are considered to be highly prospective for both oil and gas discoveries. Fourteen prospects have been identified on Block VIA with a gross unrisked potential of more than 380 million barrels.

Range will now undertake 350kms of 2D seismic to identify drill ready targets in due course.

Georgia itself is an existing oil and gas producer with the Samgori field holding approximately 200 million barrels of recoverable reserves. In addition three major pipelines cross the country supporting the transportation of hydrocarbons.


Fundraising:

It’s worth mentioning that Range has just announced an entitlements (rights) issue along with a placement. The entitlements issue is to raise approximately $7mn with investors on the record date able to buy one share at 5c for every four held. The placement of $2mn is to fund ongoing Texan and Georgian commitments and has been placed with institutional and ‘sophisticated’ investors.

One can assume that the $7mn, which will hopefully be fully underwritten, is to cater for Puntland related costs (re general operations and contributory Dharoor costs).

This fundraising enable the company to move to a revenue generation model through Texas, which in itself thereafter should provide a material incoming cash flow which can be re-invested in Georgia and Puntland helping to build the value of the company asset base.

So the Portfolio again......

1. has a 25% stake in a Texan prospect from which drilling has identified a commercial oil and gas find;

2. has, with their operating partner Crest Resources, recently increased the size of their Texan oil prospect licence area by some 50% (1120 acres to 1680 acres);

3. has just commenced a seismic review operation in Georgia targeting substantial oil prospects (project revenue share 50/50 with Georgian government pre cost recovery and 35% Range after costs recovered, no tax deducted thereafter);

4. has just received the go ahead for drilling of the Puntland (northern Somalia) onshore oil licences estimated to contain 2-10billion barrels in one basin and a similar amount in a second with drilling now due to commence in 2010. Range hold a 20% interest and are free carried for the first $50million of exploration costs by their partner Africa oil (see comments below re free carry status);

5. holds 100% of offshore oil/gas exploration licences and plan to secure a partner to fund exploration programme in 2010;

6. has a market cap of A$36.5million or £21.1million based on 563million shares currently in issue.


Example Risks (not comprehensive):

- Exploration work fails to identify economic resources;

- Country/Regulatory risk;

- Financial risk (sufficiency and stewardship of working capital and investment capital in particular);

- Commodity price exposure;

- Key person exposure (risk of losing key members of the team).



Company information:

Range Resources is listed on the Australian Securities Exchange (ASX:RRS) and the Alternative Investment Market (AIM:RRL).

Shares in issue - 563,000,000 (fully diluted – 954,000,000 reflecting 391million options at 5c per share)

Current share price – ASX 6.5c and AIM 3.75p.

Market cap (4.1.10) – ASX A$36.5million and AIM £21.1million.

Company website is found at: http://www.rangeresources.com.au/





This summary represents the views and opinions of Miningmaven, has been prepared for information and educational purposes only and should not be considered as investment advice or a recommendation. Readers are advised to do their own extensive research before buying shares which, as with all small cap exploration stocks, should be viewed as high risk. Investors should also seek the advice of their investment adviser or stockbroker, as they deem appropriate.


All rights reserved. Users may print extracts of content from this blog for their own personal and non-commercial use only. Republication or redistribution of Miningmaven content, is expressly prohibited without the prior written consent of miningmaven. However, linking directly to the Miningmaven blog is permitted and encouraged.

The author owns shares in Range Resources plc.Copyright © miningmaven 2009





Sunday 3 January 2010

Ariana Resources: Buy me a Gold Mine in Turkey!


For some,  running a Gold Exploration Company may be easier than for others. However running a gold exploration company that has any chance of success is quite a different matter.

You will always need to articulate your message, have a prospect or two and secure that all important funding.

But to achieve success its more about hard work and how you allocate your resources. So be prepared for a rigorous ongoing exploration programme and a proactive development strategy; namely, identifying an initial gold resource, building on it, driving it up the value curve and then selling the asset or even (heaven forbid!) actually produce your own gold from it!

So running a successful gold exploration company is never going to be a walk in the park and regrettably, for the vast majority of juniors, the only gold they will ever see is when the MD returns from the jewellers with his (or her) new Gold Rolex watch!

Fortunately for Kerim Sener, Managing Director of Ariana Resources (AIM:AAU), that rather broad analogy does not apply - and that’s because Ariana have already produced their first gold!

At the November 2009 Mines and Money show in London, I visited the Ariana stand. Kerim, very articulately talked me through the company’s activities, its operations and its potential. He then pulled out of his pocket a one-ounce bar of Ariana Resources own gold! This bar was produced during trial mining activities undertaken in 2009.

The Ariana story has been building for some time. The company has diligently focused on a no-fluff approach by steadily building a 400,000 ounce resource base which we outline further below. And not just any old resource base, but one that includes a good slug of JORC compliant “Measured” gold (Measured being the highest level of confidence of the 3 JORC compliant categories).

Its also worth noting that in October 2009 Edison Investment Research provided a Gold Report in which they re-ran their analysis to differentiate between Measured, Indicated & Inferred ounces and to define a value for each. It concluded a realistic average value of $380 per ounce to gold ounces in the measured category. Such a valuation would therefore suggest that for measured ounces alone, Ariana could justify a market capitalisation of $40million or £25million, equating to 15 pence per share! Such simplistic valuation methods can be crude, but still not a bad indication, given the current mid share price of just 3.25p (Thursday 31/12).

But why the need to build such a reliable resource base? Well because they want to get to production fast and for that, they need the assurance that there is actually enough economically mineable gold in the ground to support their proposition. This approach has recently paid big dividends with an MoU signed with Proccea Construction in Turkey in October 09 to develop their own mine at the Red Rabbit project in western Turkey.

This agreement covering the development of Sindirgi and Tavsan (now together named the ‘Red Rabbit’ project) in effect will lead to a new 50/50 company into which Ariana will place the properties. Proccea have provided a good will payment of $500,000 to Ariana and will fund the Joint Venture business with $8million to be committed to feasibility and plant development. The balance of $4m for plant cost is expected to be raised through debt finance as per the October 2009 announcement. (full details click here).

So a clever little non-dilutive deal, which completely de-risk's the venture for Ariana and should reassure shareholders that they are now well within reach of near term production.

A recent update confirmed that Red Rabbit is moving forward apace. An NI43-101 compliant resource is being calculated, new metallurgical test work completed and environmental scoping is underway. In fact it seems that both parties are pushing ahead of the strict scheduled timetable and, it is expected that the Joint Venture Agreement will be signed off in the first quarter of 2010. The feasibility work is to take place in 2010 and production, if all matters progress as expected looks set as soon as 2011. And in the world of gold mining, that is fast!

Alongside their gold producer ambitions they also have a Joint Venture with European Goldfields (AIM:EGU) on their properties in north eastern Turkey. (For those unfamiliar, European Goldfields is a Canadian CDN$1.2Bmarket gold company. They also hold a 16% stake in Ariana).

After all, if you're a small exploration company, its often best to de-risk yourself and hand over exploration responsibilities to a larger, more able partner with deep pockets. Riding on the coat tails of their success with a stake in something which could one day end up materially bigger – namely a decent third party funded discovery.

Operationally the company has consistently delivered on its promises and has achieved the goals it has set itself. So a big pat on the back is rightly deserved. However the environment over the last two years has been testing especially in terms of raising finance, and although Ariana has all but made it through the woods in tact and now looks to be well funded for all its planned activities, the stigma of two consecutive discounted placements can be a hard one to shake off.

The Company has also come in for some criticism regarding their lack of promotional activities. Whilst news flow to the Market over the last 2 years has shown solid progress on the ground, and Kerim is certainly not one to hide away from his shareholders, promotional activity has, to say the least been somewhat lacking.

As private investors will testify, the initial excitement of a positive RNS delivered to an expectant market can fade fast unless backed up by an ongoing coordinated PR campaign to keep up levels awareness. To be fair to the company, in last years prevailing climate with limited funds available, Promotion was probably not at the top of their agenda.

Nonetheless they now find themselves in a place where, starved of the oxygen of publicity, this enticing story has so far reached a very limited audience.

But all that seems set to change in 2010. In a New Year communiqué to shareholders, Kerim stated that the Company intends to ramp up the PR machine and create greater investor awareness, with events and presentations planned such as The Association of Mining Analysts, Proactive Investors EventsMinesite Forum, & Master Investor Show .

A revitalised PR budget for 2010 should certainly help prepare the ground  for the significant news flow and transformational developments expected in Q1 and beyond.

Before we get into the meat of Ariana’s portfolio, it’s worth talking a little about Turkey as a region in which to operate. After all, geopolitical risk is a key element when assessing the prospects for junior explorers.

A new more liberal mining law implemented in 2004, along with a competitive state royalty and corporation tax regime, with certain VAT exemptions on gold and silver exploration has encouraged foreign investment in the sector and a positive operating environment.

If you ever needed convincing of the importance of Gold to Turkey and its economy, a chat to the people at the Istanbul Gold Exchange should leave you in no doubt that Turkey, better than most, really understands gold and its ever growing significance in global investment and monetery terms. Everyone (and I mean everyone!) in Turkey understands gold and appreciates its value. Yet if you were to ask your avarage London stockbroker what the midday fix was on Gold, he would probably have no idea (or interest!).

Turkey is the largest gold market in Europe, with domestic consumption of 153 tonnes in 2008. Turkey is also a major manufacturing centre and the largest exporter of gold to the Middle East and in more recent years to Russia and Ukraine.

A recent report from the Turkish Ministry of Energy and Natural Resources points to the fact that Turkey's own gold resources currently fulfil just 5 percent of its domestic demand, the rest of which is filled by imported gold.

The rising domestic demand for gold means that companies producing in the region will have a growing market eager to buy their metal. On a global scale, Turkey's increase in gold imports means an even tighter gold supply, which can only be considered as bullish for investors.

So as Ariana’s stated objective is to target a 1m-ounce resource in Western Turkey, whilst also making giant strides towards fast track production through its JV with Proccea, and only 5% of demand satisfied by domestic production, can you see a rather compelling bigger picture starting to emerge??

Red Rabbit – Gold Project Development at Sindirgi and Tavsan:

Right back in 2005, on admission, the company came to market with Sindirgi, a gold project acquired from Newmont Mining in January of that year and hosting some 45km of gold bearing epithermal quartz veins (or a decent gold prospect for the less technically inclined).

During recent years exploration work on only a small portion of the vein system has provided a JORC compliant resource of some 186,000 ounces at Sindirgi (48,000 inferred 32,500 indicated and 105,500 measured) and Ariana are targeting a 250,000 ounce JORC. Recent exploration work at Kepez (see rns 13.5.09 and 3.9.09) demonstrate that expansion of the resource is perfectly feasible.

Supplementing Sindirgi Ariana acquired the Tavsan project licences in April 2008 from TSX listed Odyssey Resources. Tavsan, located in Western Turkey, was a perfect addition to the company portfolio and currently has a JORC compliant resource of some 214,000 ounces (124,000 inferred and 91,000 indicated) and the company sees potential to increase this to 300,000 ounces in due course.

In total the company thus has a JORC compliant resource of 400,000 ounces of which 26% is measured, 31% indicated and just 43% inferred.

One has to consider the status of operations and here too Ariana is somewhat ahead of the game. In 2009 metallurgical testing and trial mining was undertaken from Kiziltepe (Sindirgi) enabling the company to pour its first gold production. Not material in volume terms but the significance of actually producing gold has apparently been lost on the market.

Though the market failed to recognise this milestone, it certainly managed to draw attention locally. As detailed previously, in October 2009 the company announced the Memorandum of Understanding, leading to a 50/50 Joint Venture agreement with Proccea Construction, expected to be concluded in Q1this year.

Ardala – Joint Venture with European Goldfields:

This Joint Venture, to explore the Ardala copper gold porphyry and eleven other licences in north eastern Turkey, was announced to the market by the company in February 2008.

The agreement provided for exploration work to be funded by European Goldfields providing them with a 51% interest in the licences, increasing to between 80 and 90% for each relevant project on completion of a Bankable Feasibility Study.

The deal also saw a placing in Ariana shares to European Goldfields totalling some £890,000 at 5 pence per share.

This Joint Venture appears to be making steady progress and the news in November 2009 highlighted trench results at the Salinbas project of 33 metres at 9.6g/t and 46 metres at 8.3g/t. More importantly this latest discovery now seems to have impressed European Goldfields as their new management set about re-evaluating the significant potential of their JV with Ariana.

More news will no doubt follow from this Joint Venture and of course with European Goldfield funding all exploration up to feasibility, the benefits come at no cost to Ariana.

Additional Exploration:

Alongside the material progress being made through the Red Rabbit project and the progress in the north east with European Goldfields, Ariana is also developing its own exploration portfolio.

Ivrindi and Demirci are two 100% owned projects in western Turkey. At Ivrindi Ariana now has drill ready targets in place on the Kinik gold project. Demirci is a gold/nickel project with interesting gold and nickel drill data available from the Goveli prospect.

Further details of both projects are available from the company website.

In addition, in April 2009 Ariana announced the acquisition of the Muratdag gold project from Newmont with Newmont retaining a 1% net smelter return should the project proceed to gold production at some stage in the future.

So the Portfolio again........

- 400,000 ounces (105,500 measured) of JORC compliant gold resources in western Turkey;

- Metallurgical work and trial processing completed with first gold poured in 2009;

- A MoU and potential Joint Venture with Proccea whereby the partner will invest $8million to conduct feasibility studies and plant development.

- An exploration Joint Venture with European Goldfields in north eastern Turkey;

- An exploration portfolio including established and recently acquired gold and nickel targets;

- A market cap of £5.6million.

It was evident at Mines and Money that the company are extremely committed and focused on the production route. Gold explorers have two principal routes with discoveries, either sell or develop. For those that choose to develop the road can be relatively long and troublesome, but the extra effort and commitment can pay enormous dividends. For Ariana much of the risk has been mitigated with the choice of a “third way” through the joint venture route. Should Ariana succeed with its chosen development option then shareholders should expect to be handsomely rewarded.

Example Risks (not comprehensive):

- Exploration work fails to identify economic deposits;

- Country/Regulatory risk;

- Financial risk (sufficiency and stewardship of working capital and investment capital in particular);

- Commodity price exposure;

- Key person exposure (risk of losing key members of the team).

Company information:






Ariana Resources (AIM:AAU)

AIM Rule 26 info

Shares in issue - 171,049,239 (fully diluted 227,491,469).

Market cap (2.1.10) - £5.6million.




This summary represents the views and opinions of Miningmaven, has been prepared for information and educational purposes only and should not be considered as investment advice or a recommendation. All rights reserved. Users may print extracts of content from this blog for their own personal and non-commercial use only. Republication or redistribution of Miningmaven content, is expressly prohibited without the prior written consent of miningmaven. However, linking directly to the Miningmaven blog is permitted and encouraged.

The author owns shares in Ariana Resources plc.

Copyright © miningmaven 2009