Half-yearly report for six months to 30 June 2009

29 September 2009
AIM / PLUS Markets: AAU
 
HALF-YEARLY REPORT FOR SIX MONTHS TO 30 JUNE 2009
 
Ariana Resources plc ("Ariana" or "the Company"), the gold
exploration and development company focused on Turkey, announces its
unaudited half-yearly results for the six months ended 30 June 2009.
 
Highlights:
 
*          Trial mining on Kiziltepe; first gold production
 
*   Acquisition of the Muratdag Gold Project
 
*  401,000 oz Au equivalent in JORC resources
 
*  JV discovery of the Salinbas Prospect
 
Dr. Kerim Sener, Managing Director, commented:
 
"During the period the Company made important strides towards the
development of its projects in western Turkey.  The trial mining of
the Kiziltepe deposit demonstrated the Company's ability to deliver
on its operational targets, both on time and on budget.  With a
combined JORC resource of over 401,000 oz gold equivalent across the
Kiziltepe and Tavsan deposits, the Company is now well placed to
pursue development routes which capitalise on current elevated gold
prices.
 
We announced recently the combination of Kiziltepe and Tavsan into a
single conceptual entity known as the Red Rabbit Project.  The
Company is considering a joint venture (JV) on Red Rabbit with a
Turkish engineering firm.  Such a JV will encompass the necessary
feasibility work, environmental impact assessment, engineering design
and plant construction required for the advancement of Red Rabbit.
 
In north-eastern Turkey, our JV with European Goldfields has made
several significant discoveries.  The identification of additional
potential in the Ardala South area, the nearby discovery of the
high-grade Salinbas Prospect and continued increases in ground
holding in this area highlight the value of the JV.
 
At the beginning of a year of unprecedented market uncertainty, the
Company raised £500,000 with the support of its largest
shareholders.  Underpinned by improving market sentiment post-period,
the Company successfully raised a further £800,000, which will be
devoted to funding the Company through the early stages of its
development work on the Red Rabbit Project and to enable focused
exploration on Kiziltepe and Tavsan."
 
CHAIRMAN'S STATEMENT
 
Although we entered this year with markets clouded by global
macroeconomic uncertainty, the Company actively took the decision to
follow through with its immediate objectives in western Turkey.
After establishing over 401,000 oz Au in JORC resources and the
completion of necessary permitting at Kiziltepe towards the end of
last year, the Company began trial mining at this location and
produced its first gold.  The achievement of this significant
milestone resulted in a further reappraisal of our two principal
projects: Kiziltepe and Tavsan.  Both projects are now being
evaluated and advanced under the banner of the Red Rabbit Project.
Meanwhile our Joint Venture with European Goldfields Limited in the
vicinity of the Ardala copper-gold porphyry in north eastern Turkey
is providing encouraging exploration success.
 
Red Rabbit Project
 
The conceptual combination of the Kiziltepe and Tavsan projects into
a single integrated project - named 'Red Rabbit' - creates a
potentially economic 230,000 oz Measured and Indicated and 170,000 oz
Inferred JORC resource.  Excluding the existing Inferred resources,
the combined project satisfies a production rate of 30,000 oz per
annum over a period of 7 years.  Further exploration at both
Kiziltepe and Tavsan is planned with the object of increasing the
combined resource base to at least 500,000 oz.
 
Based on the conceptual project outline, the Company envisages mining
high-grade ore from Kiziltepe and trucking this material 125km by
road to Tavsan.  The Tavsan deposit would itself be mined and
processed at a heap-leach facility established on site.  Low-grade
ore from Tavsan would be blended with the high-grade ore arriving
from Kiziltepe before being placed on the heap-leach pads.  In the
same context, the Company will consider the development of the
combined project via the staged mining of Kiziltepe and Tavsan, with
mining commencing at the high-grade Kiziltepe deposit and concluding
with the mining of the low grade Tavsan deposit.
 
The Company intends to pursue components of a feasibility study for
the Red Rabbit Project during Quarter 4, 2009.  The most critical
aspect of this is the metallurgical testwork required to determine
the optimal crush size of Kiziltepe and Tavsan ore with respect to
cost and recovery.  Following this, the Company intends to progress
the project rapidly through to feasibility in 2010 by undertaking
comprehensive column leach testwork, preliminary mine design and
economic modelling.
 
In parallel with these efforts to bring the project to feasibility,
the Company is considering a joint venture with a Turkish engineering
company to fast-track the project through feasibility and ultimately
onto production.  Renewed exploration in the area between Kiziltepe
and Tavsan has also begun, with the aim of identifying further
resource potential in this highly prospective region.
 
Joint Venture
 
Our Joint Venture with European Goldfields Limited in north-eastern
Turkey is continuing to yield exploration success.  At the Ardala
Project, exploration has confirmed that porphyry Cu-Au mineralisation
continues to the south of previously mapped and drilled outcrops.
 Modelling of the newly discovered zone is now complete and
drill-testing is planned.
 
Approximately 1.5km to the southwest of the main Ardala porphyry, a
higher-grade gold zone named the Salinbas prospect has been
identified by rock-chip and soil sampling.  Detailed mapping and
lithological sampling has identified a 230 metre long zone of breccia
showing widths of 5 to 15 metres. Rock-chip samples returned grades
of between 1.42 and 20.5 g/t Au with an average of 10.8 g/t Au.
Other high-grade but more sporadic occurrences are located along
strike and parallel to this principal zone of interest.  A programme
of trenching with follow-up drilling is due to commence on this
prospect in the near future.
 
The JV is consolidating its ground holding in this part of the
Pontide metallogenic belt and in several newly defined areas, with
the aim of undertaking modern, systematic exploration for porphyry
Cu-Au and related Au mineralisation.  Ariana currently retains 49% of
the JV and European Goldfields is continuing to fund exploration and
development of the JV licences.
 
Outlook
 
As a focused gold exploration and development Company, our objectives
have not changed: we remain committed to establishing economic gold
resources in Turkey and then to develop these resources in the
shortest timeframe possible.  Over the past five years we have
established the Company as one of the leading gold explorers
operating in Turkey.  In this period, we have built up considerable
geological and operational expertise within what is currently the
most productive gold province in Europe. We are committed to
maintaining this strategic position, and are on the threshold of
important development and production decisions.
 
Michael Spriggs
Chairman
 
29 September 2009
 
Contacts:
 
Ariana Resources plc               Tel: 020 7407 3616
Michael Spriggs, Chairman
Kerim Sener, Managing Director
 
Beaumont Cornish Limited           Tel: 020 7628 3396
Roland Cornish
 
Alexander David Securities Limited Tel: 020 7448 9820
Nick Bealer / David Scott
 
Loeb Aron & Company Ltd            Tel: 020 7628 1128
Peter Freeman / Frank Lucas
 
Editors' note:
 
About Ariana Resources
 
Ariana is an exploration and development company focused on
epithermal gold-silver and porphyry copper-gold deposits in Turkey.
The Company is exploring a portfolio of prospective licences selected
on the basis of its in-house geological and remote-sensing database,
on its own in western Turkey and in Joint Venture with European
Goldfields Limited in north-eastern Turkey.
 
The Company's flagship assets are its Sindirgi and Tavsan gold
projects.  Both projects contain a series of prospects, within two
prolific mineralised districts in the Western Anatolian Volcanic and
Extensional (WAVE) Province in western Turkey.  This Province hosts
the largest operating gold mines in Turkey and remains highly
prospective for new porphyry and epithermal deposits.  These core
projects, which are separated by a distance of 75km, are presently
being assessed as to their economic merits.  The total resource
inventory of the Company stands at 401,000 ounces of gold
equivalent.
 
Loeb Aron & Company Ltd. and Alexander David Securities Limited are
joint brokers to the Company and Beaumont Cornish Limited is the
Company's Nominated Adviser.
 
For further information on Ariana you are invited to visit the
Company's website at www.arianaresources.com.
 
Ends
 
Ariana Resources Plc
 Unaudited condensed consolidated interim statement of comprehensive
                               income
                For the six months ended 30 June 2009
 
12 months to
               Note       6 months to           6 months to     31 December
                                     30 June           30 June 2008
                                        2009              2008
Continuing
Operations                             £'000             £'000        £'000
 
Administrative
costs                          (206)                     (343)        (608)
 
Other income            12                                   -            -
 
Operating Loss                         (194)             (343)        (608)
 
Share of loss                                              (2)
of associates                              -                           (25)
Investment
income                                     3                18           29
 
Loss on
ordinary                                                 (327)
activities
before tax for
the period                             (191)                          (604)
 
Tax             (3)                        -                 -            -
 
Loss for the
period                                 (191)             (327)        (604)
 
Other
comprehensive
income:
Exchange
differences on
translating                                     (23)
foreign
operations                              (40)                             25
 
Other
comprehensive
income for the                                  (23)
period, net of
tax                                     (40)                             25
 
Total
comprehensive                                            (350)
income for the
period                                 (231)                          (579)
 
Loss for the
period                                                   (327)
attributable
to
 Owners of the
parent                                 (191)                          (604)
 
Total
comprehensive
income
attributable                                             (350)
to:
 Owners of the
parent                                 (231)                          (579)
 
Loss per share (pence):
 
Basic
 
(4)                 0.14                  0.41                  0.71
 
  _____                   _____                   _____
Diluted
  0.13                  0.41                  0.71
 
  _____                   _____                   _____
 
Condensed consolidated balance sheet
 
                                     30 June 30 June 2008 31 December
                                        2009                     2008
 
£'000        £'000       £'000
ASSETS
 
Non-current assets
 
Trade and other                                       179
receivables                              126                      126
 
Land, property, plant                                 267
and equipment                            213                      230
 
Intangible assets                      3,711        3,064       3,401
 
Interest in associates                     -           24           -
 
Total non-current assets               4,050        3,534       3,757
 
Current assets
Trade and other
receivables                              174          214         302
Cash and cash
equivalents                              198          671         143
 
Total current assets                     372          885         445
 
Total assets                           4,422        4,419       4,202
 
Equity
 
Called up share capital                1,427          927         927
 
Share premium                          4,244        4,282       4,282
 
Other reserves                           720          720         720
 
Share options                            100           85         100
 
Translation reserve                       23           15          63
 
Retained earnings                    (2,237)      (1,769)     (2,046)
 
Total equity                           4,277        4,260       4,046
 
Liabilities
Current liabilities
 
Trade and other payables                 145          159         156
Total current
liabilities                              145          159         156
 
Total equity and                                    4,419
liability                              4,422                    4,202
 
Condensed consolidated interim cash flow statement
 
                                 6 months to 6 months to 12 months to
                                     30 June     30 June  31 December
                                        2009        2008         2008
 
                                       £'000       £'000        £'000
Cash flows from operating
activities
 
Cash generated from operations         (100)       (363)        (613)
Net cash outflow from
operations                             (100)       (363)        (613)
 
Cash flows from investing
activities
Purchase of land, property,
plant and equipment                        -       (231)        (231)
Purchase of an interest in                          (26)
associate                                  -                     (25)
Purchase of intangible assets          (310)       (832)      (1,125)
Interest received                          3          14           28
Net cash used in investing
activities                             (307)     (1,075)      (1,353)
 
Cash flows from financing
activities
Proceeds from issue of share
capital                                  462         927          927
Net cash proceeds from
financing activities                     462         927          927
 
Net increase/(decrease) in
cash and cash equivalents                 55       (511)      (1,039)
Cash and cash equivalents at
beginning of period                      143       1,182        1,182
 
Cash and cash equivalents at                         671
end of period                            198                      143
 
Notes
                        Ariana Resources Plc
  Notes to the unaudited consolidated interim financial statements
                For the six months ended 30 June 2009
1. General information
 
Ariana Resources Plc (the "Company") is a public limited company
incorporated and domiciled in Great Britain. The addresses of its
registered office and principal place of business are disclosed at
the end of this report. The Company's shares are listed on the
Alternative Investment Market of the London stock Exchange. The
principal activities of the Company and its subsidiaries (the
"Group") are related to the exploration for and development of gold
and other minerals in Turkey.
 
The unaudited consolidated interim financial statements are presented
in Pounds Sterling (£), which is the parent company's functional and
presentation currency, and all values are rounded to the nearest
thousand except where otherwise indicated.
 
The financial information set out in this interim report does not
constitute statutory accounts as defined in Section 435 of the
Companies Act 2006. The Group's statutory financial statements for
the year ended 31 December 2008, prepared under IFRS, have been filed
with the Registrar of Companies. The auditor's report on those
financial statements was unqualified and did not contain a statement
under Section 237(2) of the Companies Act 1985.
1(a). Basis of preparation
 
These financial statements have been prepared under the historical
cost convention, and the accounting policies have been applied
consistently throughout the Group for the purposes of preparation of
these condensed consolidated interim financial statements.
 
The financial information for the twelve months ended 31 December
2008 has been derived from the Group's audited financial statements
for the period as filed with the Registrar of Companies. It does not
constitute the financial statements for that period. The auditor's
report on the statutory financial statements for the year ended 31
December 2008 was unqualified and did not contain any statement under
Section 237(2) or (3) of the Companies Act 1985.
 
The amendment to IAS1 (Revised) Presentation of Financial Statements
released in September 2007 redefines the primary statements and
expands on certain disclosures within these. The group's primary
statements have been amended to reflect the presentation required and
the adoption of this amendment has had no impact on Group earnings or
equity in the current or prior periods
 
New IFRS accounting standards and interpretations not yet adopted
 
The directors together with their advisers are in the process of
evaluating the impact of standards and interpretations that have not
yet become effective. Listed below are those standards and
interpretations most likely to impact the Group:
 
- IAS 23 Borrowing Costs (revised 2007) (effective 1 January 2009)
 
- IAS 27 Consolidated and Separate Financial Statements (Revised
2008) (effective 1 July 2009)
- Amendment to IFRS 2 Share-based Payment - Vesting Conditions and
Cancellations (effective 1 January 2009)
- IFRS 3 Business Combinations (Revised 2008) (effective 1 July 2009)
- IFRS 8 Operating Segments (effective 1 January 2009)
- IFRIC 11 IFRS 2 - Group and Treasury Share Transactions (effective
1 March 2007)
 
IFRS 8 Operating Segments replaces the segmental reporting
requirements of IAS 14 Segment Reporting. The key change is to align
the determination of segments in the financial statements with that
used by management in their resource allocation decisions. This
standard is not expected to have significant impact on existing
disclosure
 
Based on the Group's current business model and accounting policies
it is felt that the other standards and/or interpretations are
unlikely to have a material impact on the Group's earnings or
shareholders' funds.
 
IFRS 1 First time adoption of IFRS: the Group has elected the
business combinations exemption, which allows the Company not to
restate business combinations prior to 1 January 2006.
 
The Group has elected to apply the transitional provisions under IFRS
6 which permits the existing accounting policy under UK GAAP for
accounting for and capitalisation of mineral exploration costs, to be
used for IFRS purposes.
 
The Group has chosen not to restate items of property, plant and
equipment to fair value at the transition date.
 
1(b). Significant accounting policies
 Basis of consolidation
 
The consolidated financial statements incorporate the financial
statements of the Company and entities controlled by the Company.
Control is achieved where the Company has the power to govern the
financial and operating policies of an entity so as to obtain
benefits from its activities.
 
The results of subsidiaries and associates acquired or disposed of
are included in the consolidated income statement from the effective
date of acquisition or up to the effective date of disposal, as
appropriate.
 
Where necessary, adjustments are made to the financial statements of
subsidiaries to bring their accounting policies into line with those
used by other members of the Group.  All intra-group transactions,
balances, income and expenses are eliminated in full on
consolidation.
 
Income and expense recognition
 
The Group's only income is interest receivable from bank deposits.
Interest income is accrued on a time basis, by reference to the
principal outstanding and the effective rate of interest applicable.
The effective interest rate is the rate that exactly discounts
estimated future cash receipts through the expected life of the
financial asset to the net carrying amount of the financial asset.
Operating expenses are recognised in the income statement upon
utilisation of the service or at the date of their origin and are
reported on an accruals basis.
 
Group companies
 
The results and financial position of all the Group entities (none of
which has the currency of a hyperinflationary economy) that have a
functional currency different from the presentation currency are
translated into the presentation currency as follows:
 
-           monetary assets and liabilities for each balance sheet
presented are translated at the closing rate at the date of that
balance sheet. Non-monetary items are measured at the exchange rate
in effect at the historical transaction date and are not translated
at each balance sheet date.
 
            -           income and expenses for each income statement
are translated at average exchange rates (unless this average is not
a reasonable approximation of the cumulative effect of the rates
prevailing on the transaction dates, in which case income and
expenses are translated at the dates of the transaction); and
 
-                all resulting exchange differences are recognised as
a separate component of equity.  On consolidation, exchange
differences arising from the translation of monetary items receivable
from foreign subsidiaries for which settlement is neither planned nor
likely to occur in the foreseeable future are taken to shareholders'
equity.  When a foreign operation is sold, such exchange differences
are recognised in the income statement
             as part of the gain or loss on sale.
 
Investments in associates
 
An associate is an entity over which the Group is in a position to
exercise significant influence, but not control or joint control,
through participation in the financial and operating policy decisions
of the investee. Significant influence is the power to participate in
the financial and operating policy decisions of the investee but is
not control or joint control over those policies.
 
The results and assets and liabilities of associates are incorporated
in these financial statements using the equity method of accounting
except when classified as held for sale. Investments in associates
are carried in the balance sheet at cost as adjusted by
post-acquisition changes in the Group`s share of the net assets of
the associate, less any impairment in the value of individual
investments. Losses of the associates in excess of the Group`s
interest in those associates are not recognised.
Intangible assets
 
Intangible assets represent the cost of acquisition by the Group of
rights, licences and know how. Such expenditure requires the
immediate write-off of exploration and development expenditure that
the Directors do not consider to be supported by the existence of
commercial reserves.
 
All costs associated with mineral exploration and investments are
capitalised on a project-by-project basis, pending determination of
the feasibility of the project. Costs incurred include appropriate
technical and administrative expenses but not general overheads. If
an exploration project is successful, the related expenditures will
be transferred to mining assets and amortised over the estimated life
of the commercial ore reserves on a unit of production basis. Where a
licence is relinquished or a project abandoned, the related costs are
written off. Where the Group maintains an interest in a project, but
the value of the project is considered to be impaired, a provision
against the relevant capitalised costs will be raised.
 
The recoverability of all exploration and development costs is
dependent upon the discovery of economically recoverable reserves,
the ability of the Group to obtain necessary financing to complete
the development of reserves and future profitable production or
proceeds from the disposition thereof.
Impairment of tangible and intangible assets
 
At each balance sheet date, the Group reviews the carrying amounts of
its tangible and intangible assets to determine whether there is any
indication that those assets have suffered an impairment loss. If any
such indication exists, the recoverable amount of the asset is
estimated in order to determine the extent of the impairment loss (if
any). Where it is not possible to estimate the recoverable amount of
an individual asset, the Group estimates the recoverable amount of
the cash-generating unit to which the asset belongs. Where a
reasonable and consistent basis of allocation can be identified,
corporate assets are also allocated to individual cash-generating
units, or otherwise they are allocated to the smallest group of
cash-generating units for which a reasonable and consistent
allocation basis can be identified.
 
Intangible assets with indefinite useful lives and intangible assets
not yet available for use are tested for impairment annually, and
whenever there is an indication that the asset may be impaired.
 
Recoverable amount is the higher of fair value less costs to sell and
value in use. In assessing value in use, the estimated future cash
flows are discounted to their present value using a pre-tax discount
rate that reflects current market assessments of the time value of
money and the risks specific to the asset for which the estimates of
future cash flows have not been adjusted.
 
If the recoverable amount of an asset (or cash-generating unit) is
estimated to be less than its carrying amount, the carrying amount of
the asset (cash-generating unit) is reduced to its recoverable
amount. An impairment loss is recognised immediately in the income
statement, unless the relevant asset is carried at a revalued amount,
in which case the impairment loss is treated as a revaluation
decrease.
 
Where an impairment loss subsequently reverses, the carrying amount
of the asset (cash-generating unit) is increased to the revised
estimate of its recoverable amount, but so that the increased
carrying amount does not exceed the carrying amount that would have
been determined had no impairment loss been recognised for the asset
(cash-generating unit) in prior years. A reversal of an impairment
loss is recognised immediately in the income statement, unless the
relevant asset is carried at a revalued amount, in which case the
reversal of the impairment loss is treated as a revaluation increase.
 
2. Accounting estimates and judgements
 
The Group makes estimates and assumptions regarding the future.
Estimates and judgements are continually evaluated based on
experience and other factors, including expectations of future events
that are believed to be reasonable under the circumstances. In the
future, actual experience may deviate from these estimates and
assumptions. The estimates and assumptions that have a significant
risk of causing a material adjustment to the carrying amounts of
assets and liabilities within the next financial year are discussed
below:
 
* Capitalised mining costs
 
            The recovery of the value of the Group's exploration
mining projects is reviewed in the light of future production
estimates based upon ongoing geological studies. Over the longer term
the actual mineable resources achieved may vary significantly from
the current estimates. The Group periodically updates estimates of
resources in respect of its exploration mining projects and assesses
those for indicators of impairment relating to its capitalised costs.
 
* Carrying value of property, plant and equipment
 
The Group monitors internal and external indicators of impairment
relating to its property, plant and equipment. Management has
considered whether any indicators of impairment have arisen over
certain assets. After assessing these, management has concluded that
no impairment has arisen in respect of these assets during the period
and subsequently.
 
* Useful lives of tangible assets
 
Plant and equipment are depreciated over their useful lives. Useful
lives are based on management's estimates and are periodically
reviewed for continued appropriateness.
 
* Fair value of financial instruments
 
The Group determines the fair value of financial instruments that are
not quoted, based on estimates using present values or other
valuation techniques. Those techniques are significantly affected by
the assumptions used, including discount rates and estimates of
future cash flows.
 
* Share-based payments
 
            In order to calculate the charge for share-based payments
as required by IFRS 2, the Group makes estimates principally relating
to assumptions used in its option-pricing model as set out in note11.
 
* Shareholder warrants
 
            The shareholder warrants entitle shareholders to a number
of common shares based upon the number of shares they subscribed for
at the date of issue of the warrant instrument. The warrants relate
to a transaction with the equity holders as opposed to a transaction
in exchange for any goods or service. The equity component of the
instrument is not considered material and there is no liability
component arising as a result of these warrants. Upon exercise of the
warrant the proceeds received, net of attributable transaction costs,
are credited to share capital and where appropriate share premium.
 
* Trade and other receivables
 
Trade and other receivables are recognised initially at
fair value and subsequently restated for any impairment.  A provision
for impairment of trade receivables is established when there is
objective evidence that the Group will not be able to collect all
amounts due according to the original terms of the receivables.
 
3.         Tax
 
The Group has incurred tax losses for the period and a corporation
tax charge is not anticipated.
4.         Loss per share
 
The calculation of basic loss per share is based on the loss
attributable to ordinary shareholders of £191,000 divided by the
weighted average number of shares in issue during the period, being
139,263,918 (fully diluted weighted average number of share amounts
to 145,760,462).
 
The full Half-Yearly-Report is published on the Company's website:
www.arianaresources.com.
 
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