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PEA places Mariana’s Hot Maden in world-class league

21st January 2017

By: Henry Lazenby

Creamer Media Deputy Editor: North America

     

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TORONTO (miningweekly.com) – Aim- and TSX-quoted exploration and development company Mariana Resources this week announced the positive results of a preliminary economic assessment (PEA) for its flagship Hot Maden project in Turkey, touting a net present value, at a 10% discount, of about $1.4-billion.

"The potential value is finally revealed from the high-grade gold/copper Hot Maden project with these PEA results,” stated CEO Glen Parsons on Tuesday.

"We have always believed Hot Maden to be a world-class deposit and, with a potential post-tax net present value for the base case mining scenario of $1.37-billion and post-tax IRR [internal rate of return] of 153%, this is certainly proven correct.”

Based on mining seven-million tonnes of ore over a nine-year project life, producing ore grading 11% gold and 1.9% copper, the project is expected to produce 2.6-million ounces of gold over the life of the mine and 142 000 t of copper.

“The high-grade nature of this resource and relatively low capital expenditure (capex) 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.

Upfront capex costs were estimated at $169-million, which rises to $261-million over the mine’s life.

The PEA also included a 2.6% state royalty, a 2% royalty to net smelter return royalty held by Sandstorm Gold and a corporate tax rate at 20%. The PEA was based on a gold price of $1 250/oz.

Hot Maden is a joint venture (JV) between Turkish firm Lidya (70%) and Mariana (30%).

Hot Maden has seen rapid advancement from discovery to PEA in just 20 months, and Parsons said the decision to rapidly move to development was justified considering the value of the project, especially with the significant cash flow generation potential illustrated in the study.

“The result is expected to be a low-cost, low environmental footprint, but highly profitable mine,” Parson stated.

Mariana would drill a further 20 000 m this year to shore up the resource base especially to the south of the Main zone within the old ‘Russian Mining Area’, the company advised.

The JV partners will now work on the technical studies and optimisations required to underpin a prefeasibility study, expected to be completed in the third quarter. The PFS is expected to include higher-confidence-level mine designs, mineral processing scenarios and costings, the company said.

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

Edited by Creamer Media Reporter

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