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Turkish project gives developer Aldridge the ‘natural edge’

6th February 2013

By: Henry Lazenby

Creamer Media Deputy Editor: North America

  

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TORONTO (miningweekly.com) – Turkey-focused project developer Aldridge Minerals believes its flagship Yenipazar polymetallic volcanogenic massive sulphide project would be a catalyst for significant new value creation once production, slated for early 2016, starts.

CEO Mario Caron on Tuesday told Mining Weekly Online the company was working hard to complete a definitive feasibility study (DFS) by March 31, which would earn it full ownership of the project from Alacer Gold.

Caron explained that the DFS, which is about 95% complete, would be underpinned by the latest drilling results, published at the end of November 2012. The company’s ongoing exploration work at Yenipazar had delivered results in that the project parameters had been significantly improved from the initial preliminary economic assessment (PEA) completed at the end of 2010.

The November resource update estimated the Yenipazar resource to hold 29.69-million tons grading 0.95 g/t gold, 31.3 g/t silver, 0.31% copper, 1.01% lead and 1.47% zinc in the National Instrument 43-101-compliant indicated category. At these gradings, the project is expected to hold about 900 000 oz of gold, 29.85-million ounces of silver, 204.8-million pounds of copper, 660.2-million pounds of lead and 961.2-million pounds of zinc in the indicated category.

“With the majority of the resource in the indicated category, the deposit is well understood and there is room for expansion. The company plans to undertake exploration at three new outcrops discovered near to the project, which is due to be drilled during the year,” Caron said in Toronto.

The 2010 PEA had placed a $209-million net present value on the project, which, at the time, was expected to have an internal rate of return of 23.2% over an expected mine life of 12 years.

According to the PEA, the mine would cost about $200-million to construct.

However, Caron pointed out the parameters of the project had increased as a result of ongoing work since the PEA, which could result in a higher cash flow from the project. The expected mine throughput increased by 37%, from 5 700 t/d to 7 500 t/d, while expected gold recoveries improved by 150% to 92% and the average gold price hit a new all-time high of $1 913.50/oz on August 23, 2011, a 90% difference on the $1 007/oz price used in the PEA.

Caron said Turkey is a mining-friendly jurisdiction and the country offers tax breaks and incentives for new miners. To this end the company expects to receive, among other benefits, a value-added tax exemption, customs duty exemption and an 80% tax reduction rate.

“Turkey has been good to us. All the necessary infrastructure such as roads and rail are located near to the project, and we do not foresee any environmental challenges with regard to sourcing water or any other considerations. Our project has been well received by locals,” he said.

There is also a full complement of Turkish professionals available to work on the project. Turkey, Europe’s leading gold producer, is also the world’s second-fastest growing economy and is expected to become the world’s tenth-largest economy by 2023. All this development is expected to result in a significant appetite for raw materials, something a polymetallic mine such as Yenipazar would be well suited to provide.

Caron also said the polymetallic nature of the project provides the company with a “natural edge” in the number of funding avenues it would explore during the year, after the DFS had been delivered. This might include entering into metals streaming contracts, finding offtake partners or selling equity, or a combination theroff.

The company in December announced a $10.5-million financing, in which its strategic Turkish partner ANT Holding, which owns 30% of Aldridge, also participated, to raise money for the exploration and development of the Yenipazar property and for general working capital purposes.

Following completion of the DFS, Alacer Gold would retain a 6% net proceeds interest on the project until revenue of $165-million had been accumulated, after which it would retain a 10% net proceeds interest.

The TSX-V-listed company’s shares closed at 59 Canadian cents apiece on Tuesday. The company has a market capitalisation of C$31.32-million.

Edited by Creamer Media Reporter

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