Established 1835 Turkey mining-journal

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Mining Journal special publication – TurkeyNovember 2014

TURKEY

3

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CONTENTS

Advertisements:ALS Turkey 4Centerra Gold 11Eldorado 9Indaba 12 PDAC inside back coverPilot Gold 7Sandvik 2SRK outside back cover

Media

Turkey’s gold runs deeper Key mines helping to transform the country’s minerals sector 3

Turkey mineral projects at a glance Quick profiles on Turkey’s existing and emerging mining ventures 5

Pilot likes view in Turkey Low-flying gold price won’t trouble robust projects, says junior company chief 13

Red rabbit out of a hat Ariana maintains the steady pace of its exploration 14

Turkey’s gold runs deeperKey mines helping to transform the country’s minerals sector

The significant Kişladağ and Çöpler gold mines have not only been busi-ness cornerstones for their majority

owners, Eldorado Gold and Alacer Gold, re-spectively, in recent years, they have also cre-ated a robust platform for Turkey’s mineral-sector expansion in future years.

Amid gold sector turbulence and Eldorado and Alacer’s corporate transitions following mergers, the mines have underpinned sound

financial performances by the operators in the face of declining gold prices and less impressive contributions from other parts of their growing production bases.

Similarly, they have been shining eco-nomic lights for Turkey as its previous strong development run faltered and negative global headwinds checked mining invest-ment.

Kişladağ, Turkey’s largest gold mine, was a discovery made by Eldorado in the late 1990s during a regional grassroots exploration pro-gramme. Ongoing exploration in the district is aimed at defining and testing potential sat-ellite deposits, and identifying other por-

Staff reporter

• Population: 74.93 million (2013)• Life expectancy at birth: 75• Adult literacy: 94% • GDP (current US$): 820.2 billion• GDP growth (annual %): 4%• Inflation, consumer prices

(annual %): 7.5%• Total reserves (includes gold,

current US$): 131 billion• Access to electricity (% of

population): 100%• Internet users

(per 100 people): 46.3• Mobile phone subscriptions

(per 100 people): 93Sources: World Bank; World Energy Council

Snapshot: Turkey

Above: Alacer Gold’s Çöpler operation is set to tap deeper, higher-grade sulphide ore

pages_Turkey_2014.indd 3 26/11/2014 11:39

November 2014Mining Journal special publication – Turkey

TURKEY

4

“Çöpler would be …

one of the lowest-cost gold mines

in the world during 2014

and differentiate

Alacer as a gold

company providing

high-margin returns”

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17025:2005 Accreditation

phyry centres in the surrounding region.The 3.6Moz Çöpler deposit has been

Alacer’s bulwark as it digested and then discharged poorly-performed Australian assets that came out of its merger-birth (from Avoca Resources and Anatolia Minerals). At one stage forecast to produce 160,000-180,000oz in 2014, after yielding 271,063oz in 2013, Çöpler is now expected to end 2014 with 200,000-225,000oz gold product-

ion at all-in costs of US$730-780/oz.“The merger between Anatolia Minerals

and Avoca Resources unfortunately did not live up to expectations,” Alacer has said. “The poor operating performance of the Austra-lian assets, coupled with the declining gold price environment since the time of the merger, had been a distraction from the out-standing operating performance of the Çöpler gold mine in Turkey.

“The disparity between our low-cost Çöpler Gold Mine and our high-cost Australian mines resulted in an unbalanced asset port-folio that muddied Alacer’s investment case. This was one of the key reasons we made the strategic decision to sell the Australian assets and focus our efforts on Turkey.

“[The] company undertook many transfor-mational changes during 2013 in order to ensure the business is focused on delivering value from its Turkish assets.”

At forecast production and operating-cost levels, Çöpler would be “one of the lowest-cost gold mines in the world during 2014 and differentiate Alacer as a gold company pro-viding high-margin returns”.

A definitive feasibility study evaluating the treatment of sulphide ore via whole-ore pres-sure oxidation (POX) completed in 2014 highlighted the future potential of deeper reserves at Çöpler, also indicated by more than 1.3Mt of sulphide ore added to stock-piles in 2013, with an average gold grade of 4.94g/t; the grade “significantly higher than was predicted by the resource block models”. Following the anticipated receipt of required permits in early 2015, construction of a sul-phide ore processing facility is planned to start in Q2, 2015.

Alacer has been active in Turkey since 1996 and holds a significant land position, primar-ily in partnership with Lidya Mining. Lidya is part of Çalık Holding AŞ, a multi-billion-dollar Turkish conglomerate that is enthusiastic about Turkey’s mineral potential.

All Alacer’s exploration projects are within the Tethyan Metallogenic Belt in Turkey, widely acknowledged to have excellent min-eral potential. The Anatolian region has pro-vided various minerals since antiquity, but modern exploration is generally still at an early stage.

Çöpler is an epithermal gold-silver-copper deposit, 550km east of Ankara and 120km southwest of the city of Erzincan. The deposit is centred on a composite diorite to monzo-nite porphyry stock that has intruded into the surrounding metasediments and limestone-marbles. Crossing these units are two main parallel east-northeast striking faults with smaller northeast/northwest striking faults between them, providing a permissive envi-ronment for the hydrothermal mineralisa-tion.

Alacer’s exploration licences surrounding the Çöpler deposit cover most of a 15km by 25km area.

Eldorado Gold is targeting a US$90 million expansion of Kisladag to a 20Mt/y heap-leach operation by mid-2016. The operation pro-duced 222,085oz at total cash costs of US$454/oz in the first nine months of 2014.

The company’s high-grade Efemçukuru underground operation in Izmir Province in western Turkey produced 78,841oz at US$562/oz in the nine months to September

Above: Kişladağ, Turkey’s largest gold

mine, has been a standout performer

for Eldorado Gold


Mining Journal special publication – TurkeyNovember 2014 5

TURKEY

“Both of Eldorado’s Turkey mines have long lives on current reserves and the company is an active explorer in the country”

“Çayeli is the largest underground base metals mine in Turkey. It produced its first concentrate in 1994 and is expected to operate until at least 2019”

30, 2014, with its average 8.54g/t head grade contributing to the low-cost structure. Efemçukuru uses gravity circuits followed by flotation to produce a flotation concentrate and a gravity concentrate.

The high-quality deposit, also discovered by Eldorado in the 1990s, is an intermediate sulphidation epithermal gold deposit hosted within Upper Cretaceous phyllite and schist at the western end of the Izmir-Ankara Suture Zone.

Both of Eldorado’s Turkey mines have long lives on current reserves and the company is an active explorer in the country.

A 2013 examination of Turkey’s attractive-ness for mineral investment by international legal firm Norton Rose Fulbright said the country held 2.5% of the world’s industrial mineral resources and produced some 50 dif-ferent metals and minerals that were com-mercially viable for exploitation.

“Healthy commodity prices and changes in the Turkish investment regime, together with new mining laws enacted in 2005 and 2010, have resulted in an increase in mining and in mineral exploration activity in the country with a particular emphasis on copper, gold, nickel and zinc,” NRF said.

“Regulations and procedures have been streamlined and laws governing the econom-ics of mining joint ventures with foreigners have been improved. These more favourable laws combined with the market value of Tur-key’s known mineral resources (estimated at US$2.5 trillion) have created an attractive prospect for foreign investors.” Mining repre-sented about 4% of Turkey’s GDP.

Turkey mineral projects at a glanceQuick profiles on Turkey’s existing and emerging mining ventures

Project: AltıntepeCommodity: GoldOwnership: Stratex International (AIM) owns 45%, Turkish company Bahar owns 55% and is developing project under joint-venture agreement.Location: Near the town of Fatsa, close to the Black Sea in northern Turkey.

Geology: Predominantly a high-sulphidation epithermal gold deposit hosted within an advanced argillic lithocap over an area of at least 8km2 and has an in-house JORC compli-ant resource of 593,131oz, of which 491,426oz is oxide and transition material.

Status: Bahar has completed the feasibility study and has commenced clearing the Çamlik East zone ready for construction of the open-pit plant, and construction of the leach pad and processing plant. The Çamlik zone will be the first zone to be developed with first gold pour expected in late 2014. The zone is expected to yield more than 120,000oz Au, grading 1.34 g/t, plus some lower-grade material, over a 40-month period. The yield will be in the order of 90%

giving production of around 3,000oz/mth. Capital expenditure is expected to be in the order of US$38 million.

It is anticipated the additional zones will be brought into production at a later date using the same plant.

Latest: Stratex recently announced that con-struction is expected to be completed before the end of 2014 and first gold pour is antici-pated in the March quarter of 2015.

Project: ÇayeliCommodity: Copper-zincOwnership: First Quantum Minerals (TSX). Eti Holding A.S., wholly owned by the Turkish government, holds the operating licence for the property and has leased it to First Quantum subsidiary Çayeli Bakir Isletmeleri A.S.Location: Rize province, near the Black Sea coast in north-eastern Turkey.

Geology: The sharp relief of the area is due to the mountain ranges occupying the southern part of the region. Here, the Kaçkar Moun-tains trend in a SW-NE direction. The mine site is in the centre of a densely populated area, which is covered almost entirely by tea plantations.

Status: Çayeli is the largest underground base metals mine in Turkey. It produced its first concentrate in 1994 and is expected to operate until at least 2019.

Production in 2014 is expected to be 27,000-29,000t of copper and between 38,000t and 42,000t of zinc.

Throughput is expected to remain at 2013 levels but grades are expected to decline slightly as more low-grade ore from the foot-wall areas is mined.

Nadav Shemer

Eldorado Gold is targeting a US$90 million expansion of Kisladag to a 20Mt/y heap-leach operation by mid-2016



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Project: ÇöplerCommodity: GoldOwnership: Alacer Gold (TSX) owns 80% and Lidya Mining, a private Turkish company, owns 20%.Location: Some 6km southwest of the town of ĺliç and 550km east of the capital Ankara, in Erzincan province, central-eastern Turkey.

Geology: Çöpler is an epithermal gold-silver-copper deposit, centred on a composite dio-rite to monzonite porphyry stock that has intruded into the surrounding metasedi-ments and limestone-marbles.

Crossing these units are two main parallel east-northeast striking faults with smaller northeast/northwest striking faults between them, providing a permissive environment for the hydrothermal mineralisation.

Status: Open-pit mining at Çöpler is a typical drill, blast, load haul operation which is undertaken by a Turkish contractor, Çiftay İnşaat Taahhüt Tic AŞ. Mining of the Manga-nese Pit started during 2010 and mining of the Marble and Main Pits began during 2012.

The Manganese Pit has provided the majority of ore to date. However, the majority of ore is planned to be sourced from the Main Pit from the second half of 2014. The com-pany expects to end 2014 with 200,000-225,000oz gold production at all-in costs of US$730-780/oz.

Latest: In June, the company released results of ongoing resource reconciliation study for the mine, announcing probable mineral reserves of 57.9Mt at 2.1g/t gold, containing 3.8Moz.

Project: EfemçukuruCommodity: GoldOwnership: Eldorado Gold (TSX/NYSE)Location: Izmir province, western Turkey

Geology: Efemçukuru is an intermediate sul-phidation epithermal gold deposit hosted within Upper Cretaceous phyllite and schist at

the western end of the Izmir-Ankara Suture Zone in south-west Turkey.

The host rocks are locally silicified to horn-fels and cut by moderately N- to NE-dipping faults that are exploited by rhyolite dykes and epithermal veins.

Two major veins host mineralisation, Kes-tanebeleni and Kokarpinar, with the former containing the bulk of the ore. Vein mineral-ogy is variable but primarily consists of quartz, rhodonite (commonly replaced by rhodochrosite), adularia and sulphide assem-blages including pyrite, galena, chalcopyrite and sphalerite. Spectacular, high-grade banded crustiform-colloform textures charac-terise the veins in addition to multi-stage breccias that were likely the result of shallow-level boiling. Most of the gold is very fine (2.5 to 50 microns), occurring as free grains in quartz and carbonate, and as inclusions in sul-phide minerals.Lower-grade mineralised stockworks occur peripheral to the ore shoots, and are most strongly developed in hanging-wall rocks.

Status: Produced 90,818oz gold in 2013 at cash operating cost of US$580/oz. In 2014, expected to produce 90,000-100,000oz at US$575-590/oz.

Latest: Announced possible expansion from current 400,000t/y crushed ore to 500,000t/y; decision is to be taken on completion of a detailed cost-benefit analysis.

Project: ErgamaCommodity: Gold/copperOwnership: Aegean Metals Group [TSX]. Teck Resources exercised a one-time back-in right on May 28, 2013, and is now required to invest US$1.275 million in exploration at Ergama within three years in order to earn-in to a 51% interest in the property.

ISTANBUL

ANKARASahinili

Agi Dagi

Halilaga

CukuralanOvacik

Efemcukuru

Kisladag

Kaymaz

Altintepe

Asikoy

Yenipazar

Derekoy

Cöpler

Cevizlidere

Ergani

Mastra

Mollahara

Tac

Cerattepe

Cayeli Hot Maden

Ergama

TETHYAN PORPHYRY BELT

Turkey

Exploration team at Pilot’s TV Tower

“Çöpler is an epithermal gold-silver-copper deposit,

centred on a composite diorite to monzonite

porphyry stock that has intruded into the

surrounding metasediments and limestone-marbles”



TURKEY

Location: Edge of the Kazdag mountain range, south of Gokceyazi village, Balikesir Province, western Turkey.

Geology: Exploration activities completed to date at Ergama indicate that the prospect has the potential to host a high-sulphidation epi-thermal gold system with similar characteris-tics to those observed elsewhere in the Biga peninsula.

Detailed rock chip and soil sampling pro-grammes completed by the company’s geol-ogists over the central portion of the Ergama property confirmed the gold anomalous areas that had been identified by previous explorers such as Eurogold and Newmont. Two geophysical surveys completed over the main target area at Ergama – a ground mag-netics survey and induced polarisation (IP) survey – allowed Aegean’s geologists to gain an improved understanding of the geo-logical/structural setting, with the IP survey identifying a number of sub-horizontal, near-surface resistivity anomalies interpreted to represent the hydrothermal silica caps that overlie the main gold mineralised zone. Chargeability anomalies outlined by the IP survey at depth were interpreted to be indic-ative of sulphide minerals commonly associ-ated with gold mineralisation.

Status: An initial 14-hole drill programme has been designed to test the highest-priority tar-gets at Ergama. An application for a drill (for-estry) permit for Ergama – a requirement for all mining companies that intend to execute drill programmes on government-owned land – was submitted to authorities (through Teck Madencilik) and is currently awaiting approval.

Latest: In August, Aegean reported that it received a report on exploration work from operator Teck. Field activities at Ergama have been restricted to: a) additional geological mapping on key outcrops; b) silt and rock chip sampling (14 samples and 47 samples, respec-tively); and c) a further 14.2 line kilometres of IP, distributed in four E-W-trending lines spaced 200m apart and designed to extend Aegean’s existing grid 800m to the south.

ISTANBUL

ANKARASahinili

Agi Dagi

Halilaga

CukuralanOvacik

Efemcukuru

Kisladag

Kaymaz

Altintepe

Asikoy

Yenipazar

Derekoy

Cöpler

Cevizlidere

Ergani

Mastra

Mollahara

Tac

Cerattepe

Cayeli Hot Maden

Ergama

TETHYAN PORPHYRY BELT

Turkey

“An initial 14-hole drill programme has been designed to test the highest-priority targets at Ergama. An application for a drill permit for Ergama was submitted to authorities (through Teck Madencilik) and is awaiting approval”

Graphic: Aegean Metals Group

Making big discoveries in a promising region is a matter of science, and the prudent investment of time and capital.

We have been making big discoveries in Turkey since 2004, and our successes continue at Halilağa and TV Tower.

www.pilotgold.com

Project: Hot MadenCommodity: Gold/copperOwnership: Aegean Metals Group (TSX). Lidya Madencilik has the option to earn-in to a 70% interest in return for a US$3 million expenditure commitment over a 48-month period. Location: Eastern Pontides, 130km north-east of regional centre Erzurum in Artvin province in north-eastern Turkey.

Geology: An initial surface rock-chip sam-pling programme returned long intervals of significant gold and copper mineralisation from road cuts that cross-cut the central por-tion of the Hot property. Since that date, exploration activities at Hot have focused on:



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8

a) detailed geological mapping of the central portion of the Hot property, with a clear emphasis on defining the styles of minerali-sation present; and b) follow-up rock chip sampling within the central portion of the property, together with additional rock chip and soil sampling along both the northern and southern extensions to the known mineralisation. Historical data for the Hot property were retrieved from the Turkish MTA and have been incorporated into the database.

Status: Drill target definition work is ongoing at Hot, and includes additional geological mapping, rock chip sampling, and ground geophysics.

Latest: In August, Aegean reported that Lidya had initiated field activities at Hot Maden, with field crews having already been mobilised to undertake additional geo-logical mapping and rock-chip (channel) sampling.

Project: Kirazlı and Ağı DağıCommodity: GoldOwnership: Alamos Gold (TSX/NYSE)Location: Ağı Dağı is 50km southeast of the city of Çanakkale and Kirazlı is 25km north-west of Ağı Dağı in the Biga Peninsula, Çanakkale province, northwestern Turkey.

Geology: Both deposits are epithermal, high-sulphidation, disseminated gold systems, hosted within Miocene undifferentiated heterogeneous volcanic assemblage of dacitic to andesitic composition.

They are associated with a large hydro-thermal alteration zone that covers more than 10sq km.

Gold mineralisation is closely associated with silicic and advanced argillic alteration occurring near the upper contact of the vol-canic sequence.

Status: A positive pre-feasibility study (PFS) was completed on Ağı Dağı and Kirazlı in 2012 with both projects contemplated as stand-alone open-pit, heap-leach operations. Under the PFS, Kirazlı is expected to produce an average of 99,000oz of gold at total cash costs of $515/oz (inclusive of royalty) over a five-year mine-life. Ağı Dağı is expected to produce an average of 143,000oz/y of gold at total cash costs of $611/oz (inclusive of roy-alty) over a seven-year mine-life. The nearby Çamyurt deposit was not incorporated into the PFS though significant capital spending on infrastructure that is expected to benefit the economics of the Çamyurt project was included.

Latest: In August, Alamos Gold reported that it has received the final signatures approving the Environmental Impact Assessment (EIA) for its Ağı Dağı gold project. The company continues work on amending the EIA for the Kirazli project to include an assessment of the potential cumulative impacts of proposed projects in the region while awaiting a posi-tive resolution of the legal process.

A ruling on the interim relief remedy requested by the company from the High Court is expected before the end of 2014. Gold production from Kirazli, the first of the company’s Turkish projects, is expected within 18 months of receipt of the outstand-ing forestry and operating permits. With about US$390 million in cash, no debt and strong ongoing cash flow generation, the company expects to fund development of these projects internally.

Project: KişladağCommodity: GoldOwnership: Eldorado Gold (TSX/NYSE)Location: Uşak province, western Turkey

Drilling at the Deli zone of Agi Dagi

Alacer’s Çöpler gold mine, one of two economic porphyry gold deposits in Turkey

“In August, Aegean reported that Lidya had

initiated field activities at Hot Maden, with field crews having already

been mobilised to undertake additional

geological mapping and rock-chip (channel)

sampling”


Eldorado is a leading low cost gold producer with mining, development and exploration operations in Turkey, China, Greece, Romania and Brazil.

TSX: ELD | NYSE: EGOeldoradogold.com

Eldorado’s success to date is based on a low cost strategy, a highly skilled and dedicated workforce, safe and responsible operations, and long-term partnerships with communities where it operates.

Through its Turkish subsidiary Tüprag, Eldorado operates two gold mines in western Turkey: Kişladağ and Efemçukuru. Together these produce just shy of 400,000 ounces of gold per year.

Kişladağ is the largest gold mine in Turkey and is Eldorado’s flagship operation.

Kişladağ MineKişladağ is a low-grade, open-pit, heap-leach operation.

> 2014 Poured 2 millionth ounce of gold

> 2014 Expansion from 12.5 Mtpa to 20 Mtpa underway; completion targeted mid 2016

> 2006 Commercial production

> 2003 Completed feasibility study

> 1997 First drill test of deposit

Efemçukuru MineEfemçukuru is a high-grade, underground operation.

> 2014 Cost benefit analysis underway for possible expansion from current 400 Ktpa to 500 Ktpa

> 2011 Commercial production

> 2007 Completed feasibility study

> 1992 Deposit discovered while carrying out reconnaissance work

Eldoradoindd.indd 1 18/11/2014 14:44


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Geology: Porphyry gold deposit that formed beneath a coeval Miocene volcanic complex in Western Anatolia. At least four latite intru-sive phases are recognised in the deposit. Alteration consists of a potassic core with K-feldspar, biotite, quartz and locally magne-tite, outwardly overprinted by illite, kaolinite, quartz, and tourmaline.

Remnants of a quartz-alunite lithocap are found near surface. Gold mineralisation occurs within zones of quartz-pyrite stock-work and disseminations. Oxidation extends to a depth of 20 to 80 metres but there is no supergene enrichment.

The mineralised intrusions at Kişladağ are enclosed within volcanic and volcaniclastic strata that overlie basement schist and gneiss of the Menderes Massif Core Complex. These strata dip outward from the deposit core, and display rapid facies changes from massive lavas and coarse poorly stratified units proxi-mal to the porphyry centre, to finer well-stratified volcaniclastic strata that interfinger with lacustrine sedimentary rocks in sur-rounding sedimentary basins.

Status: Largest gold mine in Turkey. Low-grade, bulk-tonnage, open-pit operation that uses heap leaching for gold recovery. Pro-duced 306,182oz gold in 2013 at operating cash cost of US$338/oz. 2014 forecast: 300,000-335,000oz at US$470-485.

Latest: Received approval of supplementary EIA for the expansion to 35Mt/y. Announced plans to proceed with an updated Phase IV expansion from 12.5Mt/y to 20Mt/y crushed ore; completion forecast for mid-2016.

Project: Red RabbitCommodity: Gold, silverOwnership: Ariana Resources (AIM) owns 73.5%, Turkish partner Proccea Construction owns remainder and must contribute US$8 million to receive 50% equity.Location: Red Rabbit comprises the Kiziltepe

and Tavsan Sectors, located approximately 75km apart and northeast of the city of Izmir in western Turkey.

Geology: In October 2014, Ariana began a ground magnetic survey over the Kiziltepe Sector JV licences (totalling 50km2). The geo-physical survey was undertaken by the Ari-ana field team utilising two backpack magnetometers with continuous readings undertaken along N-S-orientated lines spaced 200m apart. Data collection is largely complete and initial data processing is now under way. The company aims to provide a further update on the detailed results of the geophysical programme in due course.

Status: The financial model for mine devel-opment is based on the Kiziltepe Sector alone.

There is significant potential for Ariana to substantially increase the global resource, both enhancing the economic fundamentals and extending mine life, across both Kiziltepe and Tavsan. The target is to keep the Kiziltepe

plant running in excess of 10 years through further discoveries. As such, the Tailings Stor-age Facility (TSF) has been designed with a capacity of 15 years. Ariana can sell resources into the JV at 3X exploration cost within the Red Rabbit AOI (excluding JV licences). Ari-ana holds under licence all major prospective areas within the Sindirgi gold corridor, the mineralised trend running from Kiziltepe through to Tavsan.

Latest: Ariana’s drilling has confirmed the presence of a mineralised sub-volcanic por-phyry at the Kepez prospect in the Kiziltepe Sector of the Red Rabbit project.

Porphyry identified from geophysics to extend over 2km by 1.8km as part of a 5km-diameter volcanic caldera at Kepez. Minerali-sation occurs in intensely altered zones and epithermal veins in periphery of the por-phyry: rock-chip grades of up to 383g/t Ag and 41.8g/t Au. 1.1km by 0.2km zone of quartz-sulphide mineralisation cuts across the porphyry and carries grades of up to 0.1 to 0.5 g/t Au.

Aldridge’s Yenipazar Property

Eldorado Gold’s Efemcukuru vineyard project



TURKEY

Project: TV TowerCommodity: GoldOwnership: Pilot Gold (TSX)Location: Adjacent to Alamos Gold’s Kirazlı project and 20km to the northwest of Pilot Gold and Teck Resources Halilağa project in the Biga Peninsula, northwest Turkey.

Geology: The property contains multiple zones of gold mineralisation interpreted to be nested within a large, highly-altered volcanic centre or centres.

Many of these target areas have wide-spread epithermal alteration with supporting geophysical and geochemical signatures typical of those seen at other high- and low-sulphidation gold (Kirazlı, Ağı Dağı) and porphyry copper-gold deposits (Halilağa) within the Biga Peninsula.

The targets defined to date are primarily classified as either low-sulphidation epither-mal gold-silver, high-sulphidation epither-mal gold-silver +/- copper or copper-gold porphyry mineralisation.

An intermediate sulphidation deposit (Kartaldağ) exists in an inlier to the property and occurrences of this type of mineralisa-tion may be also present at TV Tower.

Latest: Pilot Gold recently announced a third gold-rich porphyry discovery at TV Tower, located 3km south of the KCD gold-silver deposit. The new Columbaz discovery com-prises high grade gold-bearing epithermal veins overprinting a gold-copper porphyry system.

Project: YenipazarCommodity: Gold, silver, copper, lead, zinc (polymetallic VMS)Ownership: Aldridge Minerals (TSX Venture)Location: North of Kayseri and 200km east-southeast of Ankara in Yozgat province, cen-tral Turkey.

Geology: Polymetallic volcanogenic massive sulphide body with a currently determined strike length of at least 1,700m averaging 200m in width and about 20m in thickness at depths between 30 and 190m.

Mineralisation at Yenipazar rarely attains true massive sulphide levels; however, hori-zons containing 15-20% sulphides most com-monly define areas of significant base- and precious-metal mineralisation. The main body of the deposit appears to be stratiform in nature. The highest-grade zones are

formed by breccias cross-cutting mineralisa-tion hosted in schist. These breccias can be interpreted as related to feeder zones devel-oped after the currently visible VMS orebody was deposited.

Status: Aldridge has received several key permits and licences in Turkey, including the local permit that will allow it to conduct com-mercial activities in the region surrounding the Yenipazar Property and an extension to the Yenipazar operating licence to May 21, 2019. The company also holds an Environ-mental Impact Assessment Positive Decision Certificate.

Latest: Aldridge recently awarded contracts to Tenova Mining & Minerals (TMM) and GAP İnşaat (GAP) for value engineering and early-construction planning at its Yenipazar proj-ect in central Turkey.

It has agreed to US$45 million in financing with Orion Fund JV, consisting of a US$10 million equity private placement which includes participation by the company’s two largest shareholders, and a US$35 million bridge loan facility. It has also entered into lead concentrate and gold offtake agree-ments with an Orion affiliate.

Büyükesat Mahallesi, Çayhane Sokak No:47/9, 06700 Gaziosmanpasa, Çankaya, Ankara, TURKEY

Tel: +90 312 446 4842 Fax: +90 312 446 4843

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TURKEY

Follow the contours of geologist Matt Lennox-King’s career since the turn of the millennium and you will under-

stand how he stumbled into the mining ex-ploration business in Turkey.

It was 2001 when the CEO of Fronteer Gold, Mark O’Dea, asked him whether he fancied helping out at the firm’s early-stage Red Lake project in Ontario.

Fronteer was the predecessor company of Toronto-listed Pilot Gold, where Lennox-King is today CEO and O’Dea is chairman. The key thing to remember is that Pilot Gold inher-ited from Fronteer two prospects near Galli-poli in Turkey’s northwest. To summarise, a job at Red Lake led to the trail to Turkey, said Lennox-King.

“To say I was headhunted would be gener-ous. He [O’Dea] needed a warm body to help out with some samplings. I had been on the circuit, working for five or six juniors along the way, so I guess it was about being at the right place at the right time,” he said.

“In 2004, we went across to Turkey because Fronteer had struck a deal with Teck, which had a couple of promising projects broadly in the area where Pilot now operates.”

Those operations were sold to Alamos in 2010 after Teck began to sell off its gold port-folio, and both are now in feasibility stage, “so they have taken things on from where we began,” he explained.

Fast forward to April 2011. Fronteer was acquired by Newmont and Pilot was spun out as an independent company with two remaining Turkish exploration assets, Halil-aga and TV Tower. Pilot Gold was also

endowed with nearly a dozen properties in North America, the most advanced being Kinsley in Nevada.

Halilaga and TV Tower are joint ventures with Teck. In total, more than 20 former team members of Fronteer are contributing to Pilot Gold’s operations, and the line-up includes 18 geoscientists and three PhDs.

What’s it like doing business in Turkey these days?

Lennox-King said: “Well, we were the second wave in that part of the world, El Dorado and Teck (in an earlier incarnation) had been to the area, but there had been no systematic year-over-year exploration in the area until we arrived.

“If I think of Turkey 10 years ago and compare it to now, it’s a completely different place. The mining and exploration industry was fairly immature in Turkey in 2004.

“If you look at something as simple as metres drilled per day, a good performance metric for us, the rates were fairly abysmal. We would perhaps get five to 10m of drill core per drill, per 24 hour period, which isn’t great. So, poor production.

“Today on our TV Tower project we get about 45m per 24-hour period. The technol-ogy, quality and experience of people doing the drilling has improved quite significantly. “

How could things get better?“Essentially it would come down to cer-

tainty and transparency in permitting; that’s the biggest thing. There are bumps along the

road, but a matter of time rather than any fundamental flaw.”

The basics look good, he said. Both TV Tower and Halilaga are a few minutes from the highway. There are deep-water ports between 50km and 100km away.

Lennox-King described TV Tower as an evolving gold-silver-copper district featuring the recently discovered Columbaz Gold Zone (October 2014), and two additional porphyry

systems: Hilltop and the Valley Porphyry (June 2014). Hilltop is centred along a 4 km-long oxide-gold trend. Results from the Valley Porphyry include long runs of gold and copper mineralisation starting at surface, with grades superior to those typical of many copper-gold porphyry deposits.

Halilaga was said to be the first significant cop-

per-gold porphyry found in western Turkey, and was estimated to be the third-largest gold deposit in the country. A 2012 prelimi-nary economic assessment (PEA) identified a project with a 26% IRR and a number of oper-ational advantages, including: location in an industrial region with excellent infrastruc-ture, favourable terrain, low elevation, and high grades at surface.

The initial resource estimate shows an indi-cated resource of 1.665Moz of gold at 0.31g/t Au, 1,112Mlb of copper at 0.30% Cu (168Mt) and inferred resource of 1.661Moz of gold at 0.26g/t Au, and 1,007Mlb of copper at 0.23% Cu (199 Mt).

Now the company is about to embark on another PEA for Halilaga. Lennox-King said the original PEA estimated capital expendi-ture of US$968 million. “We anticipate the updated study will come up at 50% or less than that. We have had to downscale to take account of the changing market place. And we believe we will come up with superior economics.”

Was Lennox-King worried about the falling gold price?

“Not really. What we see at Halilaga and TV Tower are projects that work down to very low levels. In the case of Halilaga, you end up with a robust project even with gold prices significantly lower than today’s,” he said.

Pilot Gold is valued on the Toronto exchange at US$81 million.

According to its third-quarter results state-ment, its budget for the remainder of 2014 is fully funded and it expects to be similarly positioned in 2015.

“If I think of Turkey 10 years ago and compare it to now, it’s a completely different place. The mining and exploration industry was fairly immature in Turkey in 2004”

Pilot Gold drilling project in Turkey. The company is valued on the Toronto exchange at US$81 million

Pilot likes view in TurkeyLow-flying gold price won’t trouble robust projects, says junior company chief

Richard Wachman



TURKEY

14

Red rabbit out of a hatAriana maintains the steady pace of its exploration in Turkey

Ariana Resources drilling has con-firmed the presence of a mineral-ised sub-volcanic porphyry at the

Kepez prospect in the Kiziltepe sector of the Red Rabbit project in western Turkey, which it owns in a joint venture with local firm Proc-cea Construction.

The AIM-listed gold explorer said geo-physics identified the porphyry as extending over 2km by 1.8km as part of a 5km-diameter volcanic caldera at Kepez. Mineralisation occurs in intensely altered zones and epither-mal veins in periphery of the porphyry, with rock-chip grades of up to 383g/t Ag and 41.8g/t Au.

Managing director Kerim Sener said this latest news proved Ariana was maintaining its pace of exploration, while making “great strides in terms of understanding why we’ve got all the mineralisation we see across us in the district.”

The Kepez porphyry, located 6km from the planned Kiziltepe mine, will become a focus of future drilling programmes on the project as Ariana looks to expand its resource base across the region, Sener said.

He said the company’s progress on Red Rabbit was aided by its strong relationship with the Turkish authorities. The state has approved a mining licence along with vari-ous other incentives including support for social insurance contributions and exemp-

tions from value added tax and customs duties.

The final item needing approval before Ari-ana can start the construction phase is a for-estry permit, which is the responsibility of the prime minister’s office.

Earlier this year Ariana announced a US$33 million credit agreement with Turkiye Finans Katilim Bankasi that would enable it to bring its Kiziltepe mine into production. Proccea has another US$4 million to spend in order to complete its earn-in to a 50% share of the project.

Sener called Turkey “a relatively easy place to operate in”, and acknowledged some nat-ural advantages, namely that he is half-Turk-ish and speaks the language and that local operations are managed by a home-grown Turkish team.

“We’ve got a couple of foreign geologists involved on the exploration side of things, but otherwise we run ourselves as a Turkish company. So we’re not perceived as being that different to other operators in Turkey.”

There is an advantage to being perceived as a Turkish company, he said, although he credited Newmont at its old Ovacik gold mine in the late 1990s and early 2000s with leading the way in showing that mining com-panies could win local support through com-munity engagement and education.

“There was at that time a sort of perspec-tive that foreign companies might come in, chop off the top of a few hills, leave a few holes in the ground and that’s it ... but Tur-key’s broken the back of that misconception in its own way,” he said.

“With each new mine that’s opened, it’s got progressively easier in Turkey and there’s now a much broader understanding of the contribution of foreign companies.”

Ariana will stay focused on Red Rabbit until it brings the Kiziltepe sector into production, and then it will shift its attention to the Tavsan sector of the project 75km away, where it holds an estimated 215,000oz of gold resources.

From there, Sener said Ariana would look at developing more projects in Turkey, where it already holds a number of other properties, and could also use the country as a base from which to spread out to eastern Europe, the Balkans or the Caucuses.

Nadav Shemer

“With each new mine that’s opened, it’s got

progressively easier in Turkey and there’s now a

much broader understanding of the

contribution of foreign companies”

Zack van Coller, Ariana Resources’ exploration team leader, using a field portable XRF unit on mineralised outcrop of the Kepez prospect within the Red Rabbit


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MINERAL EXPLORATION SERVICES AND CONSULTANCY

To find out more about our technical services or discuss your project specific needs, please contact us:

SRK Exploration Services

12 St Andrews Crescent, Cardiff, CF10 3DD, United Kingdom

UK: +44 (0) 2920 233 233Turkey: +90 (0) 545 964 7378

Email: [email protected]: www.srkexploration.com

SRK Exploration prides itself on the ability todeliver high quality field services and explorationexpertise in remote locations. We aim to be the partner of choice by adding valueto your project and maintaining aleading position in the industry.

MINERAL EXPLORATION SERVICES AND CONSULTANCY

To find out more about our technical services or discuss your project specific needs, please contact us:

SRK Exploration Services

12 St Andrews Crescent, Cardiff, CF10 3DD, United Kingdom

UK: +44 (0) 2920 233 233Turkey: +90 (0) 545 964 7378

Email: [email protected]: www.srkexploration.com

SRK Exploration prides itself on the ability todeliver high quality field services and explorationexpertise in remote locations. We aim to be the partner of choice by adding valueto your project and maintaining aleading position in the industry.

1p_SRK.indd 1 21/11/2014 12:38

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