Letter to Shareholders

22 January 2015
AIM: AAU

LETTER TO SHAREHOLDERS

Ariana Resources plc ("Ariana" or "the Company"), the gold exploration and development company focused on Turkey, is pleased to announce an open letter to shareholders, which will be posted today on the Company's website at www.arianaresources.com.

Dear Shareholder,

As we progress into 2015, I would like to take this opportunity to discuss the advances made by the Company towards production in Turkey and also to reflect on 2014, which, despite the challenging conditions prevailing in the market, was a year of significant development for Ariana. 

Amongst the significant milestones achieved during the year were the following:

• EIA approval: By the end of 2013 we had successfully completed the permitting required by the Turkish Ministry of Environment and Urban Planning as part of the Environmental Impact Assessment ("EIA") reporting process.
• 20-year licence extension:  Successful completion of the EIA enabled us to apply for a 20-year extension to our primary operating licence, which we were granted in April.
• Tax incentives:  An application to the Ministry of Economy for a series of tax incentives and other government support mechanisms was also approved in June.  These incentives amount to an immediate US$2.2 million saving over the eight-year life of the mine.
• Bank loan for mine construction:  On obtaining these incentives from the Turkish Government, we successfully finalised arrangements with a Turkish bank, Turkiye Finans Katilim Bankasi A.S., to provide a US$33 million debt facility to fund the development of the Kiziltepe mine. 
• Surface rights obtained: 100% of the land rights were also purchased over our primary Reserve at Kiziltepe

We are now on the cusp of moving into mine construction at Kiziltepe as we await the delivery of the final permit for access to government-owned land, which in our case relates to an area of forest.  We are also mindful of the frustration our shareholders may have felt concerning the time taken for this final component to be signed off and for construction to commence.  Whilst it has not been easy to estimate timescales in this regard, it is important to appreciate that with our mine finance facility now in place, such permitting is very much viewed as a procedural process, rather than an area of undue uncertainty for the Company or its stakeholders.

In a recent development, we are now most encouraged to begin 2015 in the knowledge that several revisions to the Turkish Mining Law have been submitted to the Turkish parliament and are currently with the Parliamentary Commission.  We expect that these revisions, once accepted, will help to catalyse the permitting process for the mining sector in the near term.

Enhancing our Resource Base
As we move nearer to mine construction and production, we are also mindful of the fact that going forward, a key area of value enhancement for the Company will be our ability to build on and expand the size and scale of the mineable resource at Kiziltepe through our on-going exploration in and around the Red Rabbit Project.  The results of these efforts to date have been announced during the course of the past year and point to considerable additional resource potential.  In particular, we see immediate along-strike and down-plunge resource potential at Kiziltepe, in addition to resource growth opportunities at several prospects such as Kizilcukur and Kepez.  Once the Kiziltepe mine becomes operational, we expect to convert this potential into further mineable reserves, enhancing mine life as well as the long-term economics of the mine.  We have now advanced certain exploration targets in the vicinity of Kiziltepe to the point of drill-testing and will be looking to progress to the drilling stage. 

Ardala-Salinbas Project Developments
Outside of our operations in western Turkey we continue to advance our exciting Ardala-Salinbas JV project with Eldorado Gold Corp.  Shareholders will be aware that this joint venture is fully funded by Eldorado and whilst Ariana continues to retain a 49% stake in the project under the terms of the original JV, we also maintain a free-carry to the feasibility study stage.  Over the life of the JV, Eldorado has spent approximately $7M for almost 19,000 metres drilled, and we have identified a gross Indicated and Inferred JORC resource of over 1.1 million oz gold equivalent, with approximately 569,000 of this net attributable to Ariana.

We indicated in November last year that it was our intention to explicitly demonstrate the value of this project to the market and we have since been working with Eldorado to define several parameters required for a scoping level assessment of the project.  Independent reviews of geological, metallurgical and mining data were completed and the JV is now in the process of compiling this data as part of an internal scoping study which will be used to gauge the potential value of the project.

Tigris Resources IPO
We are also very pleased to see that Tigris Resources Ltd is continuing to progress towards an IPO on the TSX-V following a capital pool transaction with Kirkcaldy Capital Corp. and an associated fundraising of C$1.3 million.  Significantly, this transaction was supported by Sprott Global Resource Investments Ltd.  Ariana currently holds 1.75 million shares in Tigris, which will be rebranded as Royal Road Minerals Ltd.

Special Thanks
On a more personal note, I would like to express my greatest appreciation to my father and our founding General Manager in Turkey, Erhan Sener, who as of year-end 2014 has retired from a full-time role within the Company.  In late 2003, Erhan was instrumental in the establishment of Ariana's operations in Turkey; as General Manager he brought to bear his considerable experience and expertise of the Turkish business sector on the way we managed our operations.  Erhan will now be replaced by Fatma Yildiz, who was our licence manager and has a strong background in mining engineering.  We welcome Fatma to her new role and wish her much success.  Meanwhile, Erhan will continue with the Company in a part-time consulting capacity.

Moving in to 2015
We are encouraged to note the resilience and renewed strength in the gold price of late.  Whilst the gold market and demand for physical gold in Turkey has continued to remain robust throughout the down-cycle of the last three years, a more positive global gold price environment can only enhance overall sector sentiment.  Importantly, production costs in Turkey have remained amongst the lowest in the world and the recent reduction in energy costs will further reduce operational costs in the country.  Considering our Kiziltepe feasibility study was completed at a time when a barrel of oil was approximately $100, the current price environment, if sustained, will make a considerable positive impact on the economics of our operation, which has a current forecast operating cost of $600/oz. 

Whilst considerable advances have been made during the course of 2014, we are acutely aware that the Company remains valued by the Market at approximately £5.5 million at the current share price.  In contrast, internal estimates of the value of our assets and the resource ounces currently attributable to the Company (based on the comparable transaction methodology), provides hope that the Market value will eventually begin to converge with the combined valuation of our assets, as sentiment towards the sector improves once more.

2015 is set to be a transformational year for Ariana Resources, as we move towards mine development, leading to maiden production and revenues at Kiziltepe, in addition to the numerous positive developments and expected news flow as outlined above.  We believe it would be hard for the market to overlook these positive developments and we will ensure that the Market is aware of the significance of our news in this regard.  We look forward to updating shareholders on our developments at this exciting time for Ariana.

Yours faithfully,

Dr. Kerim Sener
Managing Director

Contacts:

Editors' note:

Dr Kerim Sener, BSc (Hons), MSc, PhD, is the Managing Director of Ariana Resources plc.  A graduate of the University of Southampton in Geology, he also holds a Master's degree from the Royal School of Mines (Imperial College, London) in Mineral Exploration and a doctorate from the University of Western Australia.  He is a Fellow of The Geological Society of London and has worked in geological research and mineral consultancy in Southern Africa and Australia.  He has read and approved the technical disclosure in this regulatory announcement.

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 developing 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 Eldorado Gold Corporation in north-eastern Turkey.  Eldorado owns 51% of this joint venture and are fully funding all exploration work on the JV properties, while Ariana owns 49%.  The total resource inventory within this JV is 1.09 million ounces of gold.

The Company's flagship assets are its Kiziltepe and Tavsan gold projects which form the Red Rabbit Gold Project.  Both 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 and now form part of a Joint Venture with Proccea Construction Co.  The total resource inventory at the Red Rabbit Project stands at 475,000 ounces of gold equivalent. 

Beaufort Securities Limited and Loeb Aron & Company Ltd. 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