18th Feb 2015 11:06
LONDON (Alliance News) - Ariana Resources PLC Wednesday said the Turkish parliament has approved several modifications to the country's mining law, which the company believes will "hasten the mining permitting process".
"These and other modifications to the mining law have occurred following extensive industry consultation. The urgency with which these and related issues were debated, demonstrates how seriously the Turkish government views the mining sector," said Managing Director Kerim Sener.
The modifications, which have been implemented with immediate effect, include further encouragement of ground turnover to reduce the number of areas restricted to exploration due to under-utilisation and a new royalty framework which scales according to commodity prices, said the company.
The encouragement of ground turnover will allow more license areas to become available, because under the previous mining law, license holders could retain exploration licenses for minimal costs and by carrying out minimal work.
"Increased requirements associated with holding exploration licences and their expenditure commitments will also ensure better and more serious exploration in the long run," said Sener.
The new mining law, which was passed "almost unanimously" by the Turkish parliament, will see companies charged between TRY1,000 to TRY5,000 per year for exploration licenses and an area dependent fee of between TRY20,000 to TRY70,000 per year for operating licenses.
The royalty will also vary between 2% to 16% of the pit head sale price, and Ariana said at the current gold price, the royalty paid would be around 4%. The royalty will be reduced by 50% if production is occurring in an owner-operated process plant, said Ariana.
In the event no production occurs on an operating license for longer than a year, the Turkish authorities will charge TRY10,000.
License areas also will be auctioned off under the new modifications, and the license area boundaries will be based on the continuity of mineralised areas. Ariana said larger license areas may be available in the future as well.
Relinquished or abandoned licenses will be auctioned off and the minimum auction price to acquire a license will be no less than the annual fee charged for an operating license. Certain licenses will also be consolidated prior to auctions, meaning larger licenses could become available.
"We are now confident that these changes will also catalyse the permitting process for the mining sector in general," said Sener.
The company is currently waiting to be awarded a permit for its Red Rabbit gold project in Turkey, and Ariana said it is looking forward to "hearing positive news on our application in due course".
Ariana said the modifications made to the mining law are "generally positive" for the mining industry in Turkey, but admitted it will be more costly to acquire licenses in the country in the future and that the cost structure to maintain licenses will increase.
Ariana shares were down 2.7% to 0.890 pence per share on Wednesday morning.
By Joshua Warner; [email protected]; @JoshAlliance
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