Ariana Resources plc (AAU) Earnings Call Transcript & Summary

Good morning, and welcome to the Ariana Resources plc Corporate Presentation. [Operator Instructions] The company may not be in a position to answer every question received during the meeting itself. However, the company can review questions submitted today and will publish responses where it's appropriate to do so. Before we begin, I would like to submit the following poll. And I would now like to hand you over to the management team of Ariana Resources plc. Michael, good morning to you.

Good morning, and good morning to you all, and thank you for joining us this morning. I'm Michael de Villiers, the Chairman; and on my right is Kerim Sener, who will be presenting with us today; and Andrew du Toit, our Operations Director based in Harare. We've outlined our proceedings today, which covers an update on our various projects, corporate business, ongoing developments, our financial review and our forthcoming AGM. And I'd like to hand over to Kerim now to start with the presentation and the update on projects. Over to you, Kerim.

Thank you, Michael. And again, good morning to you all for those joining from Europe and good afternoon to those joining from Australia. As investors may be aware, we're making substantial inroads towards our ASX dual listing, which we're planning to execute during the course of the next quarter. And I'll touch on aspects of that as we go through the presentation. I believe we've also got a few questions with respect to that. I'll now take you through the corporate presentation, just explore some of the key developments that have been underway for the company over the last few years that have led us to this point. And I'll draw your attention to this introduction slide, particularly a bit of a recap on part of our history. We entered into production through a partnership in Turkey with Proccea Construction initially in 2017, developing the Kiziltepe gold and silver mine. That mine has now been producing very successfully in all years since, recording around 22,000 ounces of gold production per annum, but up to about 28,000 ounces per annum. And that has really provided the company with the wherewithal through the partnership to now develop our second mine in Turkey, Tavsan, and I'll give that some further detail later on in the presentation. Then during the course of last year, we completed a merger acquisition of the Dokwe gold asset in Zimbabwe. And that has become the flagship of the company moving forward, and it's essentially that project that will take much of our focus in the years ahead and essentially becomes the sort of platform for further growth for the company and its shareholders. I'll skim through much of the detail on this slide, it's quite a wordy slide, and I know that this presentation will be made available after the video presentation. So people can take the time to sort of read through. The main point is just to recap some of the points of history that I've gone through and also to sort of stress the point that the company has a very experienced and broad management team, encompassing a wide variety of expertise from corporate finance all the way through to geology, that's myself and Andrew, and also mining engineering. And that broad expertise has been very successfully applied in the jurisdictions that we've worked in. And that has been largely Turkey in prior years and through the development of our partnership there, but also in more recent years as we've sort of diversified outside of Turkey somewhat, elsewhere in Southeast Europe. And I'll talk about Kosovo in particular later on in the presentation. But then we've got the team in Zimbabwe now through the process of the merger with Rockover. And as Michael mentioned, Andrew joins us from Harare today. So a huge amount of expertise locally within Zimbabwe as well. So where are we geographically, split between Turkey and operations largely in Western Turkey, that's the Kiziltepe and Tavsan mines, and then the Salinbas, copper-gold, molybdenum porphyry and associated gold silver zone that we're continuing to explore within the context of our Zenit partnership in Turkey. So all three projects that I mentioned, Kiziltepe, Tavsan and Salinba, are part and parcel of Zenit mining operations. And with Kiziltepe being the active mine Tavsan providing ore to the Kiziltepe plant, but about to go on stream through its own heap leach processing. In Zimbabwe, here in Southern Zimbabwe, not too far from Bulawayo, we have the Dokwe project. And of course, given the scale of that deposit and the exploration upside that we're fully cognizant of and want to continue exploring. This is obviously the flagship of the company going forward, and we obviously hold 100% of that. Quick corporate overview. I won't dwell on that slide. Suffice to say that directors and management comprise a large part of the shareholder base, and Newmont Mining Corporation is a strategic investor, and that investment is primarily to fund some of the exploration and development work that we're undertaking in Kosovo. And again, I'll touch on that later on into the presentation. This is the Board. You've met myself, Michael and Andrew on this call. I understand that there may be a couple of the other directors that are listening in as well. So hello to them. Again, I won't dwell on this slide too much. I know we've got some questions regarding the appointment of our Deputy Chairman recently, Michael Atkins. So I'll cut on to address that later on in the Q&A. Moving on to the Dokwe project. So firstly, just to set the scene. The Zimbabwe Craton is an extremely prospective zone within the earth's crust of gold mineralization. And the geology is akin to that, that we see in Western Australia. And in fact, there is a geological theory that's based on some very recent evidence that suggests that in the distant past, going back 2.7 billion years, the Zimbabwe Craton, shown here, if you can see my pointer, actually, I can draw, I think, the Zimbabwe Craton shown here, and the Yilgarn Craton shown here. Together, these formed part and parcel, the same piece of ancient earth crust at about 2.7 billion years ago. And subject to the same influences into their geology, including the introduction of gold mineralization that occurred at around that time at about 2.7 billion years ago. Based on the dating evidence of the gold mineralization across both cratons. So this certainly beefs up our understanding that the Zimbabwe Craton is essentially on an area basis of the same level of prospectivity as the Yilgarn Craton. But the difference has been that in the last quarter of century, the Zimbabwe Craton has received very little exploration attention, whereas the Yilgarn has seen a huge amount and up to $1 billion per annum is spent on gold exploration alone in Western Australia. And a large part of that being into the Yilgarn Craton. So this is the set of the exploration opportunity on a fundamental basis. It's highly prospective, yet deeply under-explored. And again, just to emphasize that two of our directors, Nick Graham and Andrew du Toit have spent their careers operating very successfully in Zimbabwe, and they have been involved in the development of a number of very significant operations, gold and otherwise. So moving on to provide a little bit detail around the Dokwe project. This is the claims area, shown in red outline on the graph -- on the map on the right-hand side. And Dokwe North shown here in the northern part of the claims area, and Dokwe Central down here. What we're seeing in this map is the gold anomaly in soil. And these deposits were discovered on a very low level, 1.2 parts per billion gold anomaly contour. And also draw your attention to Siduli Pan and the anomalies of Dokwe South, which are to this day largely unexplored and untested. There's very little drilling through any of this area. So it's something that we certainly want to work up to in the future. But right now, our main focus is on Dokwe North and Dokwe Central. And the resource split between measured and indicated and inferred [indiscernible] categories across both of those areas, as shown there in the table on the left. And we also show the reserve position, that reserve was derived from the pre-feasibility study reserve that was originally put together in 2022 and then more recently updated. And today, this morning, we provided an update to market with another iteration of that adjusting for a higher gold price scenario. At USD 2,750 per ounce gold. So focusing in now on Dokwe North. Dokwe North, we can see the ore body here in outline. This is the block model as based on the original pre-feasibility study sitting within the pre-feasibility designed pit shown in pink. And we can also see the drill pattern. Dokwe North is, as you can see, a very well-drilled deposit already. There's certain infill drilling that we will want to do as part of our ongoing feasibility study. But to a large degree, the ore body is actually quite well characterized now, and a huge amount of work has been undertaken over the last year or more indeed on really pulling together a very robust geological model that has now informed a revised mineral resource estimate. So the numbers quoted here at the top of the slide, almost 22 million tonnes at about 1.5 grams per tonne to just over 1 million ounces of gold within Dokwe North alone, that comes out of that latest MRE, and that was undertaken at the higher gold cutoff of 0.6 grams per tonne of gold. Now one of the really interesting features of the Dokwe North deposits and perhaps this speaks to the potential long-term future upside of the deposit. These zones are very fine-grade gold mineralization that run over potentially tens of meters, as you can see, so these are just a couple of examples that we've pulled out, 14 at 55 grams and 8 meters at almost 200 grams per tonne of gold. But these zones are actually very continuous within the deposit, and they trend in the sort of northeast orientation. There appears to be a plunge component to those. And the deposit is certainly not closed off at depth. And this is the point really that I wanted to drive home that these high-grade shares are certainly worth drill testing to greater depth and indeed a long strike. And we've got some opportunity there for further upside. I won't go through too much more on this slide. I'll leave people to take away further once they review the presentation once it's uploaded. I'll move on now to Dokwe Central, which is located 2 kilometers to the south of Dokwe North. Now this didn't feature within the original pre-feasibility study to this day. So the update that we provided this morning to market still does not include Dokwe Central. Dokwe Central is being included within the feasibility study, however, and the work that we're underway with Whittle Consulting and Auralia Mining Consulting in Perth, that work is looking at both of the deposits operating together, and we're looking at new mining scheduling, processing opportunities for the development of both deposits simultaneously. Now Dokwe Central is smaller, but you'll note that the drilling is very much limited to a very particular area. And so our feeling is that part of the reason it's smaller is simply because it has been less well drilled. As it stands, the deposit is somewhat higher grade than Dokwe North. It appears to be pipe-like, sort of vertically dipping shoot of gold mineralization that's developed between a sedimentary package and a volcanic package to the south shown in gray. And that sort of constrains the deposits certainly in a north direction. However, east and west, these areas that are outlined with the red dashed lines show where we believe there's potential to broaden out our understanding of the resource in those directions. And in particular, I'll draw your attention to this drill hole out here, DPD4, where 7.3 meters at 6.6 grams per tonne was intercepted from a relatively shallow debt, 32 meters below surface. Another hole in that general area, but at much greater depth, we had an intercept of 1 meter of 2.4 grams per tonne of gold. So it certainly suggests that there is an opportunity out here in this panel of potential that we've defined. Now, the resources at Dokwe Central sit within an optimized pit at USD 2,750 per ounce gold and that part of the resource, which is indicated and also inferred, 91,000 ounces of gold in total. But as I said, at higher grade than Dokwe North. Now moving on to the pre-feasibility study and what came out of that originally, the annual gold production profile graph shown there on the top right-hand side and the annual and cumulative free cash flow graph shown on the bottom. These graphs are derived from the original pre-feasibility study undertaken in 2022 and that reflects a production profile of around 60,000 ounces of gold per annum. But really approaching up to almost 80,000 ounces of gold per annum from any individual year over a 13-year mine life. Now, this was obviously based on a proven and probable reserves, as previously stated, of about 800,000 ounces of gold. And that's what features in the pre-feasibility update that we provided to market today. Run at the $2,750 per ounce gold, yielding an NPV 10 post tax of USD 354 million and an IRR of 75%. However, the really important point to take away from this slide is that this is based on the prior reserve figures, and it's based entirely on Dokwe North, did not include Dokwe Central. If we start looking at the -- just the measured and indicated resource, which is that part of the resource that could be converted on application of the modifying factors to proven and probable, we get to an improved resource. We get to over 1 million ounces in pit. Now if that all converts to proven and probable, we're not dealing with an 800,000-ounce input. We're dealing with 1 million-ounce of input, and that would change these numbers yet again to the positive. The other thing that we're working on with our consultants, Whittle and Auralia, is to look at the options to compress the mine schedule. So rather than look at the 13-year mine life, what can we do to up the mining and processing rate. Obviously, that involved potentially a larger mill and processing plant. But that would potentially get us to a mine output of approaching 100,000 ounces per annum over perhaps a 10-year mine life. So that's what we set as our target for the feasibility. So what would the site looking? Now this is a very provisional and early site plan, but it is an improvement on the site plan that featured as part of the original pre-feasibility study. Here, you can see the Dokwe North pit and the ore body shown in red -- sorry, this picture is not ideal because you can't really properly visualize the thing in 3D. But the idea is that you can see part of the ore body, it's partly sort of translucent topography here. So you can see the ore body at depth beneath the Dokwe North pit. So if you can just imagine that, that's the pit. That's the ore body that sits within it, and that's the ore body that continues at depth. Likewise, with the Dokwe Central pit to the south, a more simple pit, a more conical pit. And here, you can see the very steeply plunging, almost vertical ore body at Dokwe Central. This area in between, I alluded earlier to the fact that north of Dokwe Central is a sedimentary unit, based on the exploration data that we have at this point in time, and our understanding of the geology and the distribution of mineralization, we understand that this area that we've designated for the infrastructure of the mine to be much less prospective at least near surface. So it's an ideal location to position the waste rock dumps. Obviously, both of those very close to the pit rims, so you're minimizing haulage distance. The stockpiles, likewise, the ROM pad, the run-of-mine ore and the low-grade stockpile shown here in yellow, and the tailings storage facility shown in blue over there. So hopefully, that gives people a better sense of how the Dokwe site may be developed. So quickly speaking to the future in terms of broader exploration upside, I previously covered the geochemistry, the gold geochemistry of the Dokwe project area and the distribution of the various prospects, but there is actually a broader story here, and that relates to the prospectivity that continues under cover. So this green line here shows the limits of the cover that sits above a buried part of the Bulawayo- Bubi Greenstone Belt that trends from over here and then under cover over here. All the way out almost to Botswana border and beyond. So we see Greenstone Belt on the other side of the border, in fact. So this is a hugely prospective area that is incredibly under-explored. Dokwe was an early discovery under cover. And it speaks to the potential to identify further areas through this region to continue exploration. And the company has a whole series of EPO applications that cover part of this area. So in the longer term, we want to undertake further greenfields exploration to ultimately grow the long-term pipeline here in Zimbabwe. The Bulawayo-Bubi Greenstone Belt balance importantly has a number of very significant deposits. Now what we're showing here are not necessarily the current -- sorry, they're not the historical resources. These are what are considered more current resources. So How mine, which is an operating mine that's run by Namib Minerals, the Nasdaq-listed company. Turk, privately operated and Bilboes is the project that Caledonia are looking to develop. And of course, Dokwe here, about 1.4 million ounces. So very important region. Now, just in the interest of time, I'll skip through a number of the other slides in the presentation. But just as a quick recap on our Turkish operations through the partnership we have in Turkey. This is 23.5% owned by Ariana at the present time, both Kiziltepe and Tavsan were historically 100% owned by us, but we partnered those up. We developed them very successfully, Kiziltepe as I said, has been operating for the last 8 years and at a very low operating cost. Tavsan, we're moving to the stage now that it will be processing on site. So through its heap leach, and this is a very recent photograph showing the crush and -- crushing -- screening buildings, crush and screen and then onto the agglomerator, which is just off screen. And then from here, convey, you can see the conveyor that's been installed off screen to the heap-leach pads, which are just here and actually, you can see the edge of the heap-leach pad there, the pregnant pond and the barren pond. And then you can see the very top of this CIP building out here related to the back end of the plant, and that's where the gold room would be. So this is due to come on stream very soon, and we'll be providing further updates to market shortly on that. This slide speaks to some of that history of gold -- successful gold production in Turkey from 2017 through to last year and the split between gold and silver revenue. Profit after tax and the Turkish operations shown down here and the resource growth in Turkey from the lowly start of 100,000 ounces in 2007, all the way through to 2 million ounces currently. These are all quoted obviously on a 100% basis. Just reminding investors that we hold 23.5% of that. And there's the split in further detail there. In addition to that, I mentioned we've got a third project, and this is Salinbas, up in Northeastern Turkey, a very high prospective project, part of the Hot Gold Corridor. The Hot Maden discovery was made about 16 kilometers of the south of Salinbas. But at Salinbas, we've got the gold silver zone out here, so I outlined that there, which we've been extensively drill testing in recent years. But we've also been trying to understand the porphyry copper-gold and molybdenum system out here, and we've been doing some drilling there as well. But there's a huge amount of further upside potential, we haven't even got around to drill testing out here and elsewhere, some targets that we've got to the north. So this is an active exploration project. At the moment, drilling is paused, but we've got an ongoing drilling program that we're planning to conclude later this year. And then from there, we'll be updating with a further mineral resource estimate. In Kosovo, this is our partnership with Newmont Mining Corporation. Newmont as injected USD 3.3 million into Ariana in recent years. and we've utilized those funds to support the activities of Western Tethyan Resources, which is 76% held by Ariana, and Western Tethyan has obtained number of important licenses in Kosovo, Hertica Project was one of the first that we drilled under the partnership with Newmont, identified a new copper-gold porphyry system there. And we've also got a number of new license applications in place, and we've put out an announcement relatively recently with a further update on that. Slivova is owned outside of the Newmont arrangement. So we hold, as I said, 76% of Western Tethyan and then Western Tethyan owns 51% of Slivova, and we've just put a new license application in over the Slivova project in May of this year. And once that's granted through the -- the Ministry of Mines, we'll then be able to commence the further work on that project, which will involve further drilling and then moving into feasibility. This is a relatively small, so Kiziltepe-sized project, but high grade, and there's a real opportunity to develop this as the first gold mine in Kosovo moving forward. We've completed a preliminary economic assessment on that and had announced that to the market some time back. So quickly summarizing before we move on to question time. What is Ariana currently? Well, it's primarily focused on the Dokwe project in Zimbabwe, we've demonstrated over 1 million ounces as an in-pit resource, which is capable of being developed in -- towards a production profile of about 100,000 ounces per annum. We're underway with our strategic option study and the definitive feasibility study, that work is being undertaken through our work with Whittle Consulting and Auralia and indeed with other consultants as well. And we're obviously backstopped by the successful gold production partnership in Turkey that has seen 1 line work successfully and gold produced and silver, and the second one due to the stream imminently. There's a huge amount of exploration upside across all our projects that I've run through, but notably in the case of Dokwe, we believe there's a genuine opportunity to continue to grow the resource base of Dokwe and to ultimately build into further revisions to our economic model through the feasibility as we continue to drill the deposit. And lastly, just to end on that point about the management team, this is a management team that's got a track record in successfully delivering gold and indeed, other operations in Turkey and in Zimbabwe. And through our partnerships, we leverage further skill sets that have reinforced that, and we've been able to demonstrate that ability to execute and sustain multiple exploration development programs across a wide variety of assets. Now we do have a variety of appendices here that support some of the things that I've been talking about, and I'll leave that for people to review in their own time. Thank you very much.

[Operator Instructions] While the company takes a few moments to view those questions submitted today, I would like to remind you that a recording of this presentation, along with a copy of the slides and the published Q&A can be accessed via investor dashboard. Michael, Kerim, Andrew, as you can see, we have received a number of questions throughout today's presentation. And Michael, if I may now hand back to you to chair the Q&A and give responses where appropriate to do so. I'll pick up from you at the end.

Thank you, Kerim, please explain what is behind me.

Gold. So it's a streak of gold contained within one of the high-grade shears that we see within the Dokwe North deposit. So I gave example of an 8-meter intercepted almost 200 grams per tonne of gold. It's like -- so where we see extremely high grades, that's the sort of feature that you can see within the deposit, very coarse [indiscernible] gold. And in that case, I mean that's a highly unusual example where it's -- there's probably enough gold there to make up a few gold wedding rings, to be honest.

It's about the dimensions of this pencil, and I took that picture in February when I was up on site. Unfortunately, I had to give the bit of rock back. I think it's safely in a locked-up place now, but that's a good example. I've never seen that much visible gold in my life, ever. And I challenge anyone who is in this industry to say they've seen more. I think we need to make special mention of the fact that we've got a new board member, and that's Michael Atkins, who's joined us from the Perth business community, and we'd like to welcome him on the team. He comes with a tremendous CV of both Australian business and African business and particularly in the area that we're working in. And his role is going to be around supporting Kerim, particularly in Perth and the rest of Australia in ASX IPO and then going on to help us with ongoing corporate development. I think we should also just point out that our annual report is now on the website. And I'd like to quote from the financial review. The directors are pleased to report profit before tax of GBP 2.7 million, driven primarily by significant improvement in our share of profits from Zenit this year, GBP 5.7 million, that is. This is partly due to the general increase in gold price throughout the year, which has improved gross margins and also the processing of high-grade Tavsan ore through the Kiziltepe mine. I won't read the rest of it, but it's a little on Page 18 of the annual report, which is available. But I think it shows that you get a mine into production that is well controlled and well managed. You do make a very good margin, which is currently about $1,500 an ounce from the operations in Turkey, and we seek to do the same and better in Zimbabwe. We've got our forthcoming Annual General Meeting on the 9th of July at the East India Club. Attendance is very much welcomed, but not mandatory for voting, which can be done via a form of proxy online or by post or by your custodian shareholders. We ask our shareholders to support these resolutions as they will give us the ongoing authority to continue the company's development.

I think we should now turn to the Q&As that have been submitted online and quite previously. Kerim, do you want to take the first one?

Yes. So I'd be happy to. Hold on, one moment.

First one...

Unless Michael, do you want to pick out any of the questions?

It's when do you consider that production will commence in Zimbabwe and has Ariana got sufficient funds to get both production -- to production without borrowing more.

Yes. So I mean, the key point here is that, we're in the middle of a feasibility program for Dokwe. So we've got to continue to work through that study program. Once we've completed the work required, particularly when it comes to drilling, the associated metallurgical test work that follows on from the drilling, some additional geotechnical drilling. I mean there's a large amount of work that needs to occur in Zimbabwe. So we're looking to fund the development of that and complete that program over about 12 months. And once we've got to the -- we've successfully concluded the feasibility study, we've got a positive result. Then the plan would be to move the project into the project financing stage. After that, there will be a construction program and the construction program on a mine of this sort of scale could be about 18 months. So if we're looking at total time frame from today to first gold in Zimbabwe, assuming that we can hit all of deadlines along the way and we don't have any hurdles that are more problematic to cross, it could be about a 3-year time line to go to production.

Okay. So that's not that far away.

No. Could be develop very quickly in the scheme of things.

Now another point around that is probably worth discussing is the legislation surrounding projects in Zimbabwe, the question around 26%. And Andrew, you've recently just had the chance to review the latest particular legislation that has been published, not yet passed through Parliament. Could you comment on that?

Yes, correct. We have the latest bill was published yesterday, 358-page documents that's been awaited for some time. And there have been various iterations over the years, this is the latest one. It doesn't say anything about the -- it's -- notably [ signs ] about state participation in all mining projects, which was alluded to by that permanent secretary in December, and that's been -- the Zimbabwean press has been quite on that front since then. So basically, what it does say is it just restricts foreign ownership to larger mining projects, which is -- doesn't affect us. There's still the requirement for certain strategic minerals to have local state participation, but that also doesn't include gold. And it's a positive development with the issue of state participation is cleared up. And Zimbabwe is a very mining-focused country. It's business as usual, very keen to get things moving forward, and this new Act really lays the ground for getting the computerized cadastral system up and running.

Now I think one of the observations we made in our several visits to Zimbabwe and the applications that have been made is that the process of getting permitting, and getting a response from government is significantly better than some of the other jurisdictions we worked in. And Kerim, I think that's something you've reflected on.

Yes. No, very much so. And just to speak to the point that Andrew has just made about Zimbabwe as a mining jurisdiction. It's been a mining jurisdiction for a very, very long time across a whole range of commodities, but gold is obviously an important part of that. And in our presentation at the back in the appendices, we've actually got a table that shows some of our peer group operating in Zimbabwe. So mining companies operating successfully across a whole range of commodities. And these are...

Because I think it answers quite a few questions that are coming up.

Yes. Hold on.

Thank you.

So this is the slide, if people can see that. So I've highlighted in bold, a couple of the foreign companies such as Namib Minerals, Caledonia Mining, which I mentioned during the presentation and Kavango Resources as companies that are all focused on gold. The others in that list are not focused on gold. And two things come out of this. One is that there are major operators in Zimbabwe, it's a mature mining jurisdiction, a very successful one. Companies have been operating there very successfully for very many years. Despite the rap that Zimbabwe might have as a jurisdiction, that just doesn't relate to what's going on in the mining space. And then the other point to take away is the market cap of some of the comparable companies. So Namib Minerals and Caledonia Mining in particular. Given -- I come back to that slide that I showed a little earlier because I think it's quite interesting. Both of those examples happen to be in the same operating region as us. So here is Dokwe. Caledonia Mining are operating their Blanket mine further to the south, but this is their Bilboes asset in the north. And How mine, which is being run by Namib Minerals, a Nasdaq-listed company. So it just speaks volumes that within a single greenstone belt in Zimbabwe, you've got three international operators. And the other point being that you look at the market cap of Namib Minerals or Caledonia Mining -- admittedly Caledonia is in production, and the Namib Minerals is in production at How mine. But if you look at the scale of the operations compared to the scale of Dokwe [ envisaged, ] there's a massive disconnect in valuation. So in time, obviously, we're going to be fixing that as we continue to develop the Dokwe asset.

Okay. Let's turn back to some questions. One that came in says, can you provide assurances that there won't be another Dokwe, i.e. another new project to chase at the expense of developing, completing other assets and impacting shareholder value. That I think actually points to the fact that we've probably got to take a view on where we allocate time and resources and bandwidth meaning that some things will not get attention. But most certainly, Dokwe is our primary focus now. I also think that we would probably be quite reluctant to take on new projects until we see Dokwe in production. I'll -- over to you, Kerim and Andrew, to comment.

Yes, very much so. The key thing about Dokwe is that it's a 1-million-ounce asset with scope to continue to grow. So with -- it's a bit like a kid in a candy shop really. There's so much for us to do. And we see the opportunity. We recognize a pathway to develop Dokwe sensibly. That is certainly supported by the fact that the new bill associated with the mining -- the mining act in Zimbabwe has just been published, that sets up the foundation for the work that we're going to be undertaking in Zimbabwe. And actually, wind the clock back and I have said this before, but in our early days when we were originally looking at Turkey as a jurisdiction, there were virtually no -- well there was one gold mine operating in Turkey at the time. That was considered a highly risky jurisdiction as a result of that. And Newmont was the operator of that one gold mine, and they've taken a lot of time to get that into operation. And we thought, no, there's an opportunity. The geology is prospective, there's a way to get hold of ground, let's get into Turkey. And we were able to pick up some good quality ground very quickly. That set up the company for its future success. And one of the key components of that future success was, we knew that there was a new mining law that was due to come on stream in Turkey. There was the 1985 law and then we knew that new one was going to come out. And as it happened, it came out in 2004, just as we were getting started. So I really feel that we're in the same position now in Zimbabwe, but with a much, much bigger asset, remembering that when we started as a company, we didn't have any resources in the ground. We only had mineral exploration licenses in Turkey.

I remember that.

And it was greenfields exploration. Now we're in the highly advantageous position that we've got 1 million ounces in pit resources with proven and probable reserves. We've got a pre-feasibility study done, moving into feasibility. And we've got a new mines act out or the new bill to amend the act. And it's just like a repeat, but on a much, much stronger foundation.

Let's trip through the questions. Today's update mentions targeting up to 100,000 ounces. Would this require additional infrastructure or materially change the current $82 million CapEx assumption?

Yes. Well, the CapEx assumption is based on the original pre-feasibility study, and that's the peak funding requirement. The total capital expenditure would be somewhat more than that. The main point is that, that PFS was based on Dokwe North only. So when we start to integrate Dokwe Central into the picture, and we look at how we might be approaching the mining and processing of both of those locations near simultaneously, it establishes a somewhat different operation. So our feasibility study is not going to look quite like the pre-feasibility study, and there will almost certainly be a scale-up of the capital expenditure. The reason being is that if we want to get to 100,000 ounces per annum, which is the target. We need to be upping the mining rate and upping the processing rate, which means bigger mills for starters, bigger processing plant. That means more money. So that's all going to be built into the feasibility study.

Okay. I think it's also worth mentioning that proximity to Johannesburg, which has got a tremendous supply chain for all of the components that go into a plant is a day's drive away by truck. The logistics of getting plant built and supported out of that area is particularly good.

Yes.

As are the mining finance banks who are located in Johannesburg, very doable.

Yes, and the other thing is that it's not just suppliers per se, in South Africa. It's the local expertise within Zimbabwe. And we've got a slide in the appendix that outlines this. And here, we show Bilboes, we show Eureka. Eureka is up in the north of the country. Now this was completely revamped site that was originally developed by an Australian company, Delta Gold in the 1990s. And with new kit that was large -- was engineered in Zimbabwe and partly built using Zimbabwean contractors with mills admittedly sourced from South Africa, all of that infrastructure was put in place for perhaps $50 million. And it was done locally. So this is the opportunity that the skills are there, the availability of equipment and people there, it's an ideal mining jurisdiction in many regards.

Okay. Changing subjects. When will there be a resource update regarding Salinbas after so much drilling?

Yes. So Salinbas, as indicated, we are still in the drilling phase. So we want to complete the drilling program, which has gone on pause -- we went on pause through the winter period, but we're expecting to start up again through the summer. Once we've completed that drilling program, then we'll be revising the mineral resource estimate.

Okay. Whilst we appreciate the Dokwe will be the main focus for the foreseeable future, can you confirm that Asgard will still be looking for future potential like Pallas and [indiscernible] you might want to update us on what they have been up to very briefly.

Yes. So we utilize -- it is correct. We utilized Asgard as a sort of scouting platform in a sense to identify opportunities globally. I mean we were admittedly not fully global. We weren't looking at the Americas, but we were certainly looking in Africa and Asia. And the Pallas, the one that Michael has just mentioned, is in Asia, in Kazakhstan specifically, and they've partnered up with Ivanhoe Mines. And Ivanhoe is funding a major drilling program, putting over $18 million into their drilling programs. So we are a sort of fairly foundational level shareholder within Pallas as a result of that. So we're very much looking forward to seeing the results of the work that Pallas complete. But one of the other things that came out of Asgard was the initial work that we did in Zimbabwe. When we were originally scouting that project, we were undertaking due diligence on that project over the course of 2023, into 2024, which involve drilling as well. So we are very serious about the approach that we took with Dokwe even from a very early stage. So that's -- we're not going to be doing anything more with Asgard at this point in time. It's done its job, but it does retain the investments such as Pallas and others.

Okay, now Pallas did a recent fundraising. Remind me of the price?

It was GBP 1.

What does that create in terms of theoretical or balance sheet value for us if you value the whole operation at GBP 1 in our books?

Well, it probably be a couple of million pounds.

Well, okay. That's a good sign.

Yes.

There's a question, nugget effect, is it evident in, I assume, the person is asking about Dokwe.

Yes. So that's a good question. Perhaps it has come from a geologist. So let me just come onto this slide here. Yes, there is a nuggety component of gold within Dokwe, and it's right to point that out. And it's obvious in the case of the chunk of gold sitting behind Michael. However, typically within the deposit, the gold is free and fine. And it's actually quite -- you normally only see it through thin sections, so looking down a microscope. In some of those high-grade shear zones that we see running through the deposit. We do see coarser gold, visible gold in drill core and it's sort of [indiscernible] usually a couple of millimeters at most. And the example, as I said, that's sitting by Michael is a very atypical example of coarse gold. It's the only one that we've seen in the deposit quite like it. But you do see little streaks of gold, sometimes -- narrow streaks that run over perhaps a couple of centimeters. But yes, there's a nuggety component and that's sort of been well understood through the work that we've done on the semivariogram. So again, I'm speaking a bit more sort of geologically assuming that the questions come from a geologist. So we've done variography on the ore body. And we've understood that relationship. In the plan that you see here, now admittedly, this is the block model based on the pre-feasibility study. We've improved on this. So these high-grade zones that we see in red here, reds and oranges, they're actually -- you can join those together much more coherently now. But it gives a sense of the sort of somewhat spotty high-grade patches within the deposit, where you are encountering the potential for coarse [indiscernible] gold. Now that gold is obviously easy to extract. So 26% or possibly even more of that gold would be extractable through a gravity circuit. So we -- from a processing perspective, we're envisaging gravity upfront, take out 25% to 30% of the gold through the gravity method. And then what comes out of that, we're leaching through CIL. So that's the current sort of thinking for the processing of the deposit.

Okay. So question around finance, have the members of the company -- a strategy for managing FX risk in Zimbabwe perhaps similar to Zimplats' structure. Well, the background, I think, to first mention is that Rockover, the discoverer of Dokwe has been in operations in Zimbabwe for 20 years. So there is a tremendous amount of corporate experience there to start with. And maybe, Andrew, you could comment on some of the strategies that you have observed by other mining companies operating there and Kerim, your experiences.

Yes. Okay. Obviously, Zimbabwe largely dollarized at this stage. And...

U.S. dollar.

U.S. dollar. Yes. Currently, the default number is -- the default payments of 70% in U.S. dollars and 30% in local currency. And that local currency has a fairly stable rate. It's been -- since they introduced the ZiG last year, there was a devaluation in September, but then since it has been pretty stable. And so it's not -- the value is not too distorted at the moment so you get a reasonable value for your ZiG component. And at this time, that's how most of the mining companies are operating. There are some offers through -- what we talked about in the past through Vic Falls stock exchange listing and various sort of ways of improving that U.S. dollar payment rate. And it's an ongoing discussion across all exporting sectors in the country.

The other point to just to emphasize is that the Zimbabwean economy is dollarized, so from a day-to-day transaction point of view, everyone is dealing in U.S. dollars. Now there is the ZiG that Andrew has mentioned, the new local currency. But all contracts are still priced in U.S. dollars, unless there's a government association. If there's an arrangement within any government institution, then anything would be paid through ZiG.

Well, that makes pricing very predictable, which is exactly what you want. And there's a question around the potential to go underground at Dokwe North.

Yes. Yes. And unfortunately, this presentation does not show the down plunge continuity, those high-grade zones that I was talking about. So I'll just have to describe it. You can see these high-grade blocks within the deposit in reds and oranges. Now if you can imagine, these as shoots of gold mineralization that are sort of plunging at a moderate angle. And yes, it's difficult to describe in 2D, but they're basically plunging into the page at a moderate angle. And like all of these shear zone-hosted gold systems that are what we call orogenic gold systems developed in ancient Archean crust and in granite-greenstone terrains. Quite often the shear zones, they're not really limited to a couple of hundred meters. These shear zones are transcrustal shear zones, and they can potentially go kilometers. And there are examples of that in Canada, in South Africa, in Zimbabwe even and Western Australia. So once you're on to one of these well-developed transcrustal shear zones or any splays that are coming off those, there's an opportunity to continue to chase those to substantial depths through ultimately underground mining. So yes, longer term, there's a big opportunity.

Okay. Turning back to Turkey. Is the company receiving a dividend from the JV, given the increased production and near record gold price. How does Ariana influence policy within the JV?

Yes. So like our partners, Proccea and Ozaltin, we've chosen to defer dividends over the last 3.5 years or so because we wanted collectively to fund the development of our second mine, Tavsan. And also to support further exploration work around the Tavsan site in particular. So in terms of potential dividend flow. So had we not chosen to develop Tavsan, and how can I say? Cut off our nose to spite our face and just limit ourselves entirely to production to -- from Kiziltepe, which is obviously coming to an end, it's a depleting asset, we would have taken perhaps $10 million off the table in dividends. That would have been our share. Likewise, Proccea, they've taken about $10 million off. And Ozaltin, for their share, it would have been about $20 million. But instead, the partners collectively took the decision that we wanted to develop a sustainable business in Turkey, develop the second mine and fund that through the profits that were retained within Zenit. So that's the approach we took. I think it's the right approach because now we can enjoy another 8 years potentially of mine life from the Tavsan deposit -- would otherwise had not been realized.

What is worth also mentioning in the context of Zenit and Kiziltepe is Kiziltepe has run for significantly longer than initially planned.

Yes.

So our contribution, in the question around JV policies, our contribution is pointing to where additional exploration can be done to extend life of mine.

That's exactly right. So we're in year 9 now of Kiziltepe's production. And the feasibility study envisaged only an 8-year mine life producing -- it was about just -- it was over 110,000 ounces of gold in total. But by the time Kiziltepe finishes and assuming that we brought in all the satellite sources of ore as well from places like Kepez and Kizilcukur, we'll be approaching perhaps 200,000 ounces of total production. So the total time for Kiziltepe is extended. But most importantly, we've upped the production of gold. The gold output has been a lot higher than envisaged in the feasibility study.

Okay. We're coming up for time. Is there anything you'd like to make as a closing remark? Andrew, Kerim?

Yes, very -- I'm happy to be able to take the time to run through the presentation and answer hopefully, some of the questions that have come up in people's minds.

Yes. Thanks -- this is the start of a good forward-moving period.

I'm going to make another closing remark as well, speaking not only as the director, but also as a significant shareholder. The Board is acutely aware of Ariana share price today. We unequivocally reaffirm our total commitment to Ariana's strategy and direction. While the market fluctuations are beyond our direct control, we look forward to future unwavering confidence and determination in delivering the company's goals. I think I should emphasize that this price that we've experienced has been very painful for all of us, particularly because we put a lot of own money into this company. But I think we're on the right track going forward. One of the last questions I saw just now was somebody commenting this has been very useful and why don't we do this quarterly. Well, I can tell you, I'm very much looking forward to doing this at least quarterly in the future. Thank you all. That was a good update. And thank you for all your questions, shareholders and attendees.

Thank you.

Thank you.

That's great. Michael, Kerim, Andrew. Thank you very much indeed for updating investors today. Can I please ask investors not to close this session as you will now be automatically redirected to provide your feedback in order that the Board can better understand your views and expectations. This will only take a few moments to complete and I'm sure will be greatly valued by the company. On behalf of the management team of Ariana Resources plc, I'd like to thank you for attending today presentation, and good morning to you all.

Thank you.