Turkish delays send Ariana lower

Shares in Ariana Resources (AAU) lost more than a tenth of their value after revealing delays to its Red Rabbit Gold Project in western Turkey.

"First production from the project is now projected in 2013, and we will keep investors abreast of developments in this regard over the course of 2012," commented managing director Kerim Sener, who must overcome environmental regulations to get production back on track.

On a positive note, the AIM-listed gold and silver producer announced that it had commenced the acquisition of the strategic freehold land in Arzu South pit - "a key hurdle" for the permitting of the project ahead of production.

In addition, the company has secured an agreement for a $2 million (£c1.3 million) loan with YA Global Master SPV to cover current funding requirements for the development of the Red Rabbit Project.

The loan will be made available in two tranches. The first tranche, for $750,000, is to be paid in 10 instalments with the final instalment due in January next year. The second tranche will be made available following repayment of the first tranche. The company will pay an interest of 10% per annum on the outstanding amount, together with an implementation fee of 10% on each instalment.

This loan follows Proccea Construction's $1.4 million investment in Red Rabbit joint venture and came as Ariana agreed to make available a short-term loan of $600,000 to be shared on a 50:50 basis with Proccea "to cover any shortfall in the development budget for phase one".

"The report shows good progress with feasibility close to completion with Proccea coming in with their first project financing investment," stated broker Fairfax, estimating that the mine should be profitable at below $1,058 per ounce. Fairfax had a 'buy' recommendation on the stock.

For an understanding of what to look for when considering exposure to the sector, read: Analysing... Miners.