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LONDON (Alliance News) - Ariana Resources PLC Wednesday said it has received a set of investment incentives from the Turkish government for the Kiziltepe gold-silver mine, as part of its Red Rabbit joint venture in western Turkey with Proccea Construction Co.
The gold exploration and development company said the incentives secured include a 100% exemption from customs duty, a VAT exemption over machinery and equipment, and an 80% reduction in corporation tax up to a limit of 40% of the capital investment.
The company also said it has secured interest repayment support on any Turkish lira or foreign currency loan, along with the government agreeing to pay social insurance contributions for all mine employees for seven years.
"The measures announced today are considered the basic incentives for the site," Managing Director Kerim Sener told Alliance News in an interview. "We have applied for a range of further strategic incentives, and if we are granted these it would significantly add to what we have already achieved."
Ariana said that it has commissioned an independent analysis of the announced incentives but noted that over the life of its mine, it expects to make an estimated saving of approximately USD1.2 million in corporation tax and USD1 million in social insurance support due to the incentives.
"These are some of the most attractive investment incentives granted to a development company," Sener said. "We've not yet calculated the total savings including customs duty exemptions and there could be even further reductions."
The company added that mine financing plans for the site had been conditional on securing these incentives and that discussions with certain institutions can now be advanced.
"We are currently finalising the conditional financing arrangements with a Turkish bank and were expecting to release news on the financing process shortly," Sener said.
The Red Rabbit site is being advanced towards production, following its recent receipt of an Environmental Impact Assessment for the site, but it awaits the clearance of its Forestry Permits before it can move forward with production.
"Hopefully this summer the forestry permits will be cleared, at which point we will begin our major construction process in order to hopefully start production in the first half of 2015," Sener said.
Ariana Resources shares were down 8.6% to 0.800 pence on Wednesday.
By Tom McIvor; tommcivor@alliancenews.com; @TomMcIvor1
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