Alacer focuses on upside in Turkish portfolio

VANCOUVER — Following a strategic decision to sell-off its Australian portfolio for roughly US$36 million in late October, U.S.-based producer Alacer Gold (TSX: ASR; US-OTC: ALIAF) is all about Turkey. The company delivered a record-setting performance at its Copler gold operation last year — which lies 120 km due southwest of the city of Erzincan — and continues to uncover exploration potential across a district-scale land package surrounding the mine.

During 2013 Alacer saw its production at Copler jump roughly 44% year-on-year to 216,850 oz. of gold, with all-in cash costs of US$864 per oz. The operation generated net profit of US$112 million, or 39¢ per share, with the company’s board declaring a maiden annual dividend of 2¢ per share in 2014.

The company reported that improvements to its crushing-and-stacking circuits during the year fueled increased ore throughput and recovery rates. Notably, the ratio between gold produced and contained gold in ore stacked jumped by 66% in 2013.

“Following [the divestment process] we set out to reset the business with four key objectives, which were to continue and optimize and imbed the improved operating performance at Copler with a focus on high-margin ounces,” noted CEO Rod Antal during a conference call. “Looking forward to this year we expect to be one of the lowest cost producers in the gold sector. We also have a great deal of organic growth potential building to our portfolio which is being prioritized based on geological information obtained over the past few years.”

Since Copler is an open-pit, heap-leach operation the company is currently stockpiling sulfide ore pending an expansion. Around 6.7 million tonnes of oxides were mined in 2013 at an average grade of 1.9 grams gold per tonne, while sulfides accounted for 1.5 million tonnes at an average grade of 4.9 grams gold.

In order to boost Copler’s mine life, Alacer is engaging in district-wide exploration for additional oxide resources, as well as completing a feasibility study on a potential mill upgrade to take advantage of existing stockpiles and sizeable in-situ sulfide ounces.

Oxide resources at Copler total 53 million measured and indicated tonnes grading 1.1 grams gold for 1.8 million contained oz., while sulfide resources tack on 121 million measured and indicated tonnes grading 1.5 grams gold for 6 million contained oz.

“To provide clarity on the Copler oxide profile for the next four years, we determined the best processing method for the sulfides and we’re moving forward on that basis,” Antal continued. “A staged approach for development provides several benefits: a smaller whole-ore pressure oxidation (POX) plant lowers capital intensity and de-risks the project as a whole, while retaining an option to scale up and potentially increase throughput in the future.”

The company also noted the significant positive grade reconciliation it has encountered during sulfide stockpiling. The current average grade of 4.84 grams represents roughly a 39% boost on stated resource grades. Antal said the company is undertaking an “extensive work program” in an attempt to understand the higher grades, including a review of drilling databases and resource estimates.

At the time of writing Alacer reported it was “too early to conclusively determine what exact factors are linked to the positive bias,” and could not commit to incorporating the rising grades into its upcoming sulfide feasibility study.

On the exploration front Alacer boosted its target generation activities across the Copler district in 2013, with 161 line km of induced polarization (IP) surveying and roughly 5,000 soil samples completed during the year. The company also completed a 21,000-metre scout drill program that tested several coincident geochemical anomalies and geophysical targets along the Karakartal-Findiklidere-Bayramdere-Yakuplu trend.

In mid-February Alacer released results from the program, with its Bayramdere and Yakuplu projects emerging as stand outs.

Bayramdere lies roughly 6 km southeast of Copler along a northwest mineralized trend, and returned drill highlights of: 13 metres grading 3.7 grams gold from 33 metres depth in hole BDRD-001; 8 metres of 4.5 grams from 29 metres depth in hole BDRC-006; and 5 metres averaging 4.6 grams gold from 27 metres depth in hole BDRC-015.

Meanwhile, Yakuplu lies around 6 km northeast of Copler, where 2013 drill highlights include: 20 metres of 1.3 grams gold and 0.22% copper from surface in hole YRC-025; 36 metres of 1.3 grams gold and 0.47% copper from 5 metres depth in hole YRC-026; and 35 metres of 0.9 gram gold and 0.63% copper from surface in hole YRC-028.

“We’ve demonstrated the key strength of this company is the delivery of greenfield exploration into production in Turkey,” Antal continued. “In [the district] our first priority is the discovery of additional oxide ore that can benefit our existing infrastructure. A second priority for us is the potential for standalone deposits amongst various types of mineralization, mainly epithermal skarn and porphyry-style gold and gold copper.”

Alacer has traded within a 52-week window of $1.95 and $4.21, and jumped around 13% following its 2013 results en route to a $3.48 close at the time of writing. The company reported a cash position of US$290 million to end the year, and maintains 290 million shares outstanding for a $1 billion press-time market capitalization.