Turkey Mining Report 2009

There were a number of developments in the expansion of gold exploration and excavation in 2008 .

Canadian-listed Anatolia Minerals Development said in April of 2008 that it had received an environmental permit for its Copler gold project from the Turkish Ministry of the Environment. The permit would allow it to receive forest land leases and proceed with the securing of other associated permissions. Anatolia Minerals also outlined a strategy for phasing the stages of development on the project. Over eight years the mine is expected to produce 175,000oz of gold per year. Favourable conditions led the company to revise their expected capital expenditure for the initial phase of the project to US$169.5mn, down from US$190mn, with an average operating cost over the life of the mine of US$260 per ounce – reduced from an earlier estimate of US$290 per ounce. Proven and probable reserves were estimated at 40.8mn tonnes, with a grading for gold and silver of 1.65 grams per tonne (g/t) and 3.75g/t, respectively .

In June 2008, Eldorado Gold announced that they had obtained all necessary permits enabling them to construct their Efemcukuru mine. They were then able to proceed with preparation of the site and initiate exploration of the surface and soil samples and prepare for a detailed magnetic survey of the area. In August the estimates for capital investment and operation costs were updated to reflect a higher capital cost of US$142 – up from a previous estimate of 104mn. Operating costs were up to US$285 per ounce, which was an increase on the initial estimation of US$227 per ounce. In September 2008, it was announced that a proven and probable reserves of 3,785,000 tonnes of gold at 10.04g/t for 1,221,000 ounces had been identified. Expected output for the mine in 2009 was estimated to be 325,000-340,000 ounces, and to exceed 400,000 by 2010 .

Inmet Mining struggled in 2008 with advancing plans for their Certtepe copper project. In March 2008, a court granted an injunction for a case launched by two non-governmental organisations who claimed that Inmet’s operating licence should not have been granted. Regarding the case of Inmet Mining, the project was found to be falsely exempt from environmental regulations. After an appeal failed in April 2008, the company decided to wind down its operations. The project, which was expected to produce 290,000 tonnes of high grade copper per year, was suspended. Despite a US$34mn impairment charge, Inmet Mining decided not to pursue the project regardless of whether the issues over environmental regulations could have eventually been overcome .

Exploration in Turkey enhanced the amount of probable reserves within the mining sector and a significant discovery was made in 2008 by the Turkish Mining Exploration Institute (MTA) which discovered new reserves of coal in Eskisehir and Ayan, thought to be approximately 1bn tonnes of lignite .

It was the latest in a series of discoveries since exploration was accelerated by the government as part of an ambitious coal research campaign begun in 2004. If these latest reserves are proven, it could increase the total reserves in Turkey by 10% .

The government introduced new tax measures in 2009 to make Turkey attractive to foreign investment. – these measures included VAT and customs duty exemption, land concessions, interest subsidies on loans used for investment purposes, state payment of social security premiums and payroll taxes. Gryphon Resources, which focuses on the mining and exploration of copper and manganese, saw the new tax incentive as an opportunity for their operations .

The increase of exports is a clear indication of the industry’s recent growth. According to the Istanbul Mineral and Metal Exporters’ Association (IMMIB), 2007 exports amounted to a value of US$2.72bn which accounted for 2.55% of the country’s total exports. Exports increased massively by more than 30% between 2006 and 2007. Turkey is likely to attract more foreign investors as current investors accelerate the industry’s growth. Currently there are 20-25 mining companies from Canada, US, UK and Australia .

The experience that they bring and the relationships formed with local companies is in turn enhancing the mining industry and transforming Turkey into a notable mining nation .

Industry Forecast According to BMI forecasts, the mining industry in Turkey is expected to grow by 71.3% between 2009 and 2013. The industry is expected to reach a value of US$12.76bn by 2013.