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Mariana Resources Ltd.: THE INVESTMENT CASE

Mariana Resources' gold joint-venture in Turkey shaping up to be a world-class deposit

There is no doubt we will have a resource upgrade, probably later in the year - chief executive Glen Parsons
Mariana Resources' gold joint-venture in Turkey shaping up to be a world-class deposit
The partners have embarked on an ambitious 20,000-metre drilling programme

The latest results from Mariana Resources PLC’s (LON:MARL, CVE:MARL) Hot Maden gold-copper joint venture in Turkey were, once again, eye-catching.

More importantly, they will help confirm the continuity of the mineralisation and should contribute a resource upgrade.

For this portion of what will be a 20,000-metre drill programme has expanded the area of known gold and copper in an area called the Main Zone.

And it has also helped define additional mineralisation in the Ridge Zone that lies between the Main Zone and the Southern Zone. 

Speaking to Proactive Investors chief executive Glen Parsons said: “The thing you can see is the resource has grown and is growing.

Resource upgrade expected

“The good holes keep on coming. There is an expansion [of the resource size]….to what extent we don’t know. The nice thing is it continues to grow.

“There is no doubt we will have a resource upgrade, probably later in the year, probably anywhere up to September.” 

There were two stand-out holes that returned respectively 116.5 metres at 6.7 grams per tonne of gold and 79 metres at 8.1 grams.

Copper concentrations were respectively 1.7% and 1.9% and each hole had thick sections of high-grade mineralisation.

For example, the drill team found 16 metres at almost 36 grams per tonne of gold.

While the results cited above were at the very high end of what was found they were not were not isolated occurrences.

Greater confidence

The latest exploration round was a mix of infill drilling and step-out drilling around Hot Maden’s Main Zone resource.

Infill drilling helps generate more confidence that what was uncovered in the first-pass exploration exists and is continuous over the area.

Step-out drilling is designed to expand the strike length of the resource.

Both are important in compiling the planned preliminary feasibility study, which will provide a fuller assessment of just what the joint venture (JV) partners have uncovered and how economic the deposit might be, while providing a rough guide to the investment required.

CEO Parsons said the results “continue to impress and increase our confidence in the high grade mineralisation and continuity thereof”. 

Drilling for extensions towards the new Southern Discovery zone has yielded “particularly encouraging results”, he added.

'Nice intercepts'

The team found “nice intercepts” of high grade copper and gold complementing the existing mineral resource. 

Parsons added: “If one compares the mineralisation footprint on the drill plan to that of late last year we can see the growth and continuity that has been achieved in drill holes HTD 63 to 106, with a mineralised strike length of now 700m, and which we are confident will translate into an increased mineral resource for this developing new zone."

One of the highest grade copper-gold deposits in the world today, Hot Maden is host to 3.45mln gold equivalent ounces.

Mariana has 30%, while Turkish partner Lidya holds the rest.

The shares, up almost 190% in the past year on the back of some stellar results from Hot Maden, succumbed to a bout of mild profit-taking to trade at 55p each.

Undemanding share price

“With the price 30% off its January high the valuation looks very undemanding at this level,” said City broker Northland Capital.

It pointed out that Mariana, with US$4.75mln in the bank, has a “significant cash balance” that is expected to be bolstered by continuing funds from the exercise of warrants.

In January the company revealed the findings of a preliminary economic assessment of Hot Maden, which estimated its net present value to be US$1.37bn.

The projected cash flows from a mine are so strong the payback on the investment would be just over two years.

Upfront costs were estimated at US$169mln, which rises to US$261mln over the mine’s life.

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