Mariana launches PEA on high-grade Hot Maden project, Turkey

TORONTO (miningweekly.com) – Australian gold explorer Mariana Resources has launched a preliminary economic assessment (PEA) on its high-grade Hot Maden project, in north-east Turkey this week, hoping that the completed study would be a catalyst for increased investor interest.

The Sydney-based company on Monday advised that it had appointed mining advisory and consulting services provider RungePincockMinarco (RPM) to lead the study and prepare a Canadian National Instrument 43-101-compliant technical report on the project by early July, which was a requirement for the Aim-listed company to be able to also take up a new listing on the TSX-V.

“The completion of the PEA will be a truly defining milestone for Mariana and the Hot Maden project," CEO Glen Parsons told Mining Weekly Online during an interview.

He explained that the PEA would for the first time represent integrated PEA‐level evaluation of development options and financial modelling of the Hot Maden deposit for the life of mine. The study will focus on low-footprint sustainable mining options, adopting first-class international technical and environmental standards specific and appropriate for the Hot Maden project.

According to Parsons, the PEA will be the first publicly available independent and comprehensive economic study for Hot Maden, which would define a quantifiable net present value for life of mine.

Mariana had signed a joint-venture agreement with Turkish miner Lidya Mining, which had earned a 70% interest in the project, with Mariana co-contributing 30%.

“This initial PEA study will give our shareholders and the market a better understanding of the significance of this high-grade gold/copper Hot Maden project as we continue to advance along the project development curve," he stated.

Under guidelines issued by the Canadian Securities Administrators, a PEA is a study, other than a prefeasibility study or feasibility study, that includes an economic analysis of the potential viability of mineral resources.

RESOURCE OPTIMISATION
Parsons said the PEA would assess the best means of extracting ore and examine whether the project would start out as an openpit and later transition to underground operations. Importantly, it would also place a capital expenditure figure on the project, which was expected to drive increased investor interest.

The current resource was about 300 m long, 250 m deep and 300 m wide. The resource started about 3 m from surface.

RPM completed an initial mineral resource on Hot Maden in August 2015, calculating a total indicated resource of 2.03-million ounces of gold equivalent contained in 4.71-million tonnes at a grade of 10 g/t and 2% copper, giving a gold-equivalent grade of 13.4 g/t.

Hot Maden also held an inferred resource of 968 000 oz of gold equivalent held in 3.65-million tonnes at 5.5 g/t gold and 1.8% copper, for a gold-equivalent grade of 8.2 g/t.

Significantly, Mariana had late last year discovered a new zone about 400 m to the south of the current resource, containing a quartz-like mineralised material different to the breccia-style mineralisation found in the defined resource model.

Parsons stressed that continuous drilling had detected veins that could lead to new unknown zones of mineralisation.

“The ability to grow the resource is significant,” he affirmed. At the moment, two drills were turning on site, with continuous drilling planned for the rest of the year.

Parsons pointed out that Hot Maden had another future opportunity, in the form of a tailings dump left by Russian miners in the 1920s, which could potentially provide a future reprocessing opportunity.

"Hot Maden represents an opportunity with low costs to get cash flow going, from which the project could grow further," he advised, pointed to other Turkish operations having average all-in sustaining costs of about $700/oz, which could bode well for this high-grade deposit.

Further, the play also had zinc content that could come into play later on in the mine's life.

TSX-V LISTING
Parsons explained that the rationale for seeking a listing on the TSX-V was twofold: It would allow for greater valuations of the project when compared with the ASX or Aim, as these mainly institutional investors tended to have a better understanding of these kinds of high-grade projects being developed in such a short time frame.

It would also help the company build out its institutional investor base, compared with the more retail-focused investors the Aim provided exposure to. "We see a greater capital pool available in North America that would potentially be able to boost our liquidity," he said.

The company had some high-profile shareholders, including Sandstorm, which had bought a net smelter return royalty on the project and was further increasing its stockholding in the company. Sprott Global Resource Investments had also taken a position, while mining-focused private equity firm Resource Capital Funds was also supporting the company.

"It’s a significant boost of confidence and could attract more Canadian investors to make financing easier down the line. We are getting the right institutions to support us and we can only hope that the London-based institutional investors will pick up in future," Parsons he.

He explained that Turkey remained an attractive investor destination. Hot Maden was located north-east of the country, away from the geopolitical turmoil in the south.

"Despite Turkey being in the news for the wrong reasons, we have a strong partner in Lidya," he said. Lydia also held a 20% interest in Canadian miner Alacer Gold's Çöpler gold mine, which was significantly expanding operations.

In step with a buoyant gold price, Mariana's Aim-listed stock had appreciated more than 155% so far this year and on Thursday closed at £0.0435 apiece.