|Title:||Turkey gold production in tons for 2000 to 2011|
|Source:||E-MJ - Engineering & Mining Journal|
Start of full article - but without data
Turkish Gold Production (mt)
2000 X 2001 X.X 2002 X.X 2003 X.X 2004 X.X 2005 X.X 2006 X.X 2007 XX.X 2008 XX.X 2009 XX.X 2010 XX.X 2011 XX.X
Note: Table made from bar graph.
According to the Turkish Gold Miners Association, overall 2011 gold production is expected to reach XX mt/y, compared to XX mt/y in 2010. In the long-term, analysts expect it to stabilize around XX mt/y. This is a remarkable achievement for a country that, in its recent history, had not produced a single ounce until 2001, when the first gold mine, Ovacik, entered production stage. In XX years, Turkey has established itself as the largest European gold producer by a wide margin--Sweden follows with X.X mt/y.
The country is now posed to further strengthen its leading position. With gold setting new records in the financial market, fueled by growing concerns over European and U.S. sovereign debt risk--spot contracts averaged more than $X,XXX/oz in 2001--development projects are already piling up. In the coming months, a number of plays are due to reach production stage, while the processing capacity at some active mines will be further enhanced. In the words of a gold miner: "If you have something underground you have to develop it. And if you have already developed it, you have to double the processing capacity."
Besides, more discoveries are yet to come. Junior and mid-tier mining companies are scattered over the country looking for the next Turkish world-class deposit. The resuming of the license auctioning process will further intensify exploration activities. As long as explorers are able to access the capital markets to fund their exploration activities, rigs will be busy.
Growing processing capacity
All of the largest gold producers in the country are drafting plans to expand their productions. Eldorado is planning to invest $XXX million to double the processing capacity at its Kisladag property. The open-pit gold mine, boasts combined proven and probable reserves of XX.X million oz. Yearly production for 2011 is expected to swing between XXX,XXX oz and XXX,XXX oz. Despite a low gold grade (X.XX g/t) the company enjoys extremely low production costs, around $XXX/ oz in 2011, thanks to a heap leach circuit able to process XX.X million mt/y and due to be raised to XX million mt/y by 2014. Since last June, part of Kisladag's leach pad capacity has been absorbed by the ore coming from Efemcukuru. This smaller underground mine has reserves of more than X.X million oz of high-grade gold (X.XX g/t). Mehmet Yilmaz, director of Tuprag, the XXX%-owned local subsidiary of Eldorado Gold, estimates that total production will have reached XX,XXX oz in the first six months through the end of 2011.
Denver-based Alacer Gold also has plans to update production at its Copler mine. Copier has reserves of X.X million oz at X.X g/t and Calvin McKee, Alacer Gold's country manager for Turkey, is confident he will soon be able to revise this figure upwards. Brought into production stage in December 2010, the mine's leach pad has delivered almost XX,XXX oz per quarter and will end its first year at around XXX,XXX oz. McKee is committed to pushing the production even further. "We are pursuing a production of XXX,XXX oz/y," he said.
The company has mined only the oxides, but it also completed a pre-feasibility study for a sulphide processing plant and has initiated a complete feasibility study. "It should be completed by the end of 2012 and the plant should be in place by the end of 2014," said McKee. Overall investment will amount to $XXX million.
Turkey's Koza Gold is focusing on expanding mine-life at Ovacik. As the first Turkish gold mine to enter the production stage back in 2001, Ovacik has produced a total of XX.XX mt of gold. The mine's development was initially very controversial due to then-owner Newmont's attempt to introduce the first cyanide leaching in Turkey. As a consequence of environmental protests and legal challenges, the mine has operated only sporadically for years. Koza took over Ovacik in 2005 and soon afterwards a court overturned a previous decision to suspend production at the mine. As soon as production resumed, the company looked for satellite deposits that could feed the processing plant and expand the mine-life beyond initial projections. Today, the plant still has an output of XXX,XXX oz/y, and XX% of the ore it processes comes from Koza's nearby Cukuralan mine. Mine-life has been expanded beyond 2020. Meanwhile, Koza also brought to production the Kaymaz play last September--production there is expected to stabilize between XX,XXX oz/y and XXX,XXX oz/y.
The cyanide debate
Despite the resuming of operations at Ovacik, the Turkish public is still very sensitive to cyanide usage in mining operations. Bora Arpacioglu, managing director for Turkey of SRK Consulting said "Cyanide has not been well understood by the Turkish public. It has become a myth. But cyanide is used frequently in other industries here in Turkey and is not as well managed as it is in the mining sector. In the past there were no legal rules that could handle the use of cyanide. Now, a lot of environmental transposition from EU regulations has happened. Air quality and water quality regulations are in place, and there is a draft in parliament regarding the regulation of mining waste. With better regulations, things became clearer, especially in the legal arena. In the past people could bring companies to court very easily, now it has become more difficult. All in all, the general environmental regulations have improved, but still there is a stigma attached to the use of cyanide."
This stigma is one that mining companies have to address very thoroughly. "Gold mining is certainly a different type of mining: particularly due to cyanide, gold mining projects will get country-wide reactions and ministerial expectations are much higher--they will ask for specific studies, seepage models, transport models and so forth. There are two issues here. The first is to ensure that your EIA covers all of the necessary technical details; the other aspect is public relations. It should be the mining company that communicates in a meaningful manner to the affected public that they are doing all that they should," said Meryem Tekol, managing director of Golder Associates, a Canada-based company that specializes in providing environmental consultancy services. It launched its Turkish operations in 2006.
The production stage
While gold producers are gearing up to enhance their production facilities, a number of exploration companies are set to bring their plays into production.
Canadian Aldridge Minerals is developing a XX million mt polymetallic ore field (copper, gold, silver, lead and zinc) in Yenipazar, in the western part of Anatolia. Gold equivalent mineral reserves are currently just above X million oz, which could potentially makes it the third largest mine in the country after Kisladag and Copler. The ongoing exploration may uncover even bigger potential. "In a recent comparison of six diamond Reverse Circulaton (RC) duplicate drill hole pairs, we found that the diamond holes reported on average XX% more gold, XX% more silver, and about XX% more base metal (copper, lead and zinc). We knew that RC-drilling loses metal and tends to understate the grades, but this discrepancy came as a surprise. The resources reported so far are almost entirely based on RC drill holes, and we are now considering additional duplicate diamond holes. The so duplicated RC-holes represent XX% to XX% of the current resource, which may well be upgraded similar to the increased metal recoveries found in the six diamond/RC duplicate pairs," said Serdar Akca, Aldridge's country manager for Turkey.
Aldridge Minerals is carrying out the definitive feasibility study (DFS) at Yenipazar and plans to complete it by late November 2012. The company is also obtaining good results on the metallurgical side. "We have made progress especially on gravitationally recoverable gold, which would improve the overall gold recovery significantly when compared to the recoveries used in the still current preliminary economic assessment," said Akca. Aldridge, which has a market capitalization of $XX million, will have to invest around $XXX million to fully develop the site.
As another consequence of such high gold prices, smaller-scale projects have also become economically viable. AIM-listed Ariana Resources plans to bring its Red Rabbit project into production by the end of 2012. "Our current JORC compliant resource report at the Red Rabbit project stands at approximately XXX,XXX oz of gold equivalent, with two key sectors under development: the high-grade Kiziltepe Sector and the heap-leachable Tavsan Sector. We are still exploring the Red Rabbit project area, and there is still potential to increase the resource base to more than XXX,XXX oz," said Erhan Sener, general manager of Galata Madencilik, the Turkish subsidiary of Ariana Resources.
The company will need $XX million to process XXX,XXX mt/y ore and reach a target yearly production of XX,XXX oz over a mine life of eight years. Ariana Resources joined efforts with Turkish construction company Proccea to set up Zenit Madencilik, the joint venture that will be in charge of Red Rabbit's production. Zenit is committed to funding XX% of the $XX million investment and is already talking to financial institutions to access credit lines for the remainder. "As long as gold prices remain at their currently high levels, we do not foresee that financing the project will pose a problem at all," Sener said.
Another AIM-listed company, Stratex International, is expected to bring its Inlice and Altintepe developments into production by 2012 and 2013, respectively. The projects have a total of XXX,XXX oz of JORC-compliant resources.
Beyond these developments, the room for further expansion is still substantial. Turkey sits in the middle of the Tethyan Metallogenic Belt, a geological feature rich in gold and other base metals that runs from Eastern Europe to Afghanistan. "Turkey has mines and prospects in a number of geological segments; there are gold deposits from East to West. For us, Turkey is attractive because it has potential for large copper/gold deposits. At Copler we have reserves of X million oz and this will increase substantially with our next resource update. That is a world-class deposit. And it is not the only one. There are already six mines producing more than XXX,XXX oz/y, a couple of them are in the range of XXX,XXX oz/y. Right now, China is the world's largest gold producer, but big companies shun China because there are not world-class deposits there, but thousands of small mines. That is not the case for Turkey," said McKee.
According to a study published in 1977 by a well-known Turkish geologist, Ayhan Erler, Turkey has ready-to-use gold reserves of XXX mt, while exploration activities could bring to surface a further X,XXX mt. These figures are still regarded as the point of reference throughout the industry.
The number of mining companies actively exploring for gold has risen sharply, from nine to XX within a year. Nonetheless, operators still point to the lack of an adequate investment flow.
The resumption of the license auctioning, which will initially focus on Group IV licenses (mainly concerning gold and base metals), will certainly attract more investments. Mining companies interested in Turkey's gold are following the process closely. "This marks a key opportunity to substantially increase the company's mineral exploration footprint in Western Turkey, an area which we believe holds significant exploration upside and potential for multi-million ounce discoveries," said Sorter Koldas, director of Galata Madencilik, Ariana Resources' fully owned subsidiary.
"Exploration companies should not be stopping now. They should keep going and generate new ideas and projects. We ourselves are planning to expand our presence in Turkey, including by taking part in the license auctions," said Cem Yuceer, exploration manager for Chesser Resources.
Local Turkish exploration companies can leverage their knowledge both of Turkey's geological setting and of MTA past exploration results. "I worked in the MTA for XX years. According to my previous experience, PreGold is focusing on some properties sitting mostly on mesothermal and epithermal systems," said Mehmet KiIic, exploration and research director at PreGold.
Since exploration campaigns are costly, those who can rely on steady cash flows can make the most out of the upcoming auctions. "While Eldorado wants to develop the existing opportunities as much as possible, our exploration teams are constantly working to find new deposits. We have some good-looking prospects and we believe our growth will come through exploration," said Tuprag's Yilmaz.
Alacer Gold is drilling at Karakartal and Cevizlidere. "We are very committed to growing the Turkish business. Now that we have a production and a cash flow coming from (Copler, we can invest more in exploration activities," said McKee.
Koza's geologists are working on the forthcoming auctions too. It is no secret that this heightened level of interest by different mining companies in the first auctioning process for many years will inflate prices and companies are already expecting to pay much higher prices than those typical some years ago.
Despite its recent achievements, Turkish gold mining has not been able to keep the pace of the booming internal demand for gold. According to the recent figures by the World Gold Council, the Turks' 2011 annual demand for gold has topped XXX mt, posting a XX% growth compared to 2010 figures inspired almost entirely by a doubling of the demand for gold for investment purposes (coins and bullions). Turkey is now the world's fourth gold market after India, China and the U.S.
The growing appetite for refined gold is reflected by the increasing activity of Turkish gold refineries. Just recently, two of them--Atasay and the Istanbul Gold Refinery (IGR)--have gained accreditation on the London Bullion Market Association, the most respected standard setter in the global gold market. IGR recently launched new products to encourage people to trade their gold holdings.
"Turkish consumers have historically used gold as an investment, and tend to buy gold in large quantities. Formerly, there were no products which allowed customers/private gold investors to purchase gold directly from banks. We have introduced Gold-Gram [TM] in weights ranging from X g to XXX g, which makes it easy for our customers to invest. The packaging on our products includes security hallmarks that allow the bank to identify the karat and to identify the gold as a deposit. People have been buying gold and saving it until the gold price increased. Istanbul Gold Refinery's gold is standard XX karat and our customers can exchange their old jewelry for our GoldGram [TM]," said Ozcan Halac, chairman of IGR, whose processing capacity is X.X mt per day of gold and X mt per week of silver.
Turkish Gold Production (mt)
2000 X 2001 X.X 2002 X.X 2003 X.X 2004 X.X 2005 X.X 2006 X.X 2007 XX.X 2008 XX.X 2009 XX.X 2010 XX.X 2011 XX.X ...