BMI View: Underpinned by a strong pipeline of new projects and expansion plans, we believe Turkey has the potential to become a significant gold producer in the global mining industry. While the country is currently in the process of negotiating a disarmament agreement with Kurdistan Workers' Party, we caution that this will not be a plain sailing process and believe elevated political risks will continue to dampen investment flows and threaten project delivery.
We maintain our view that Turkey ' s gold mining sector is poised to experience rapid growth over the coming years as a string of companies continue to establish a foothold in t he country ' s nascent mining sector while the government undertakes serious efforts to attract more capital inflows. According to the Gold Miners Association, the Turkish gold industry is looking to place itself among the top 15 gold-producing countries in the world by 2016. G old pro duction in Turkey has increased at a stellar rate over the past decade, from near zero levels in 2000 to more than 803koz (thousand ounces) in 2011, marking an average growth of 47% per annum . Indeed, the country has imm ense potenti al to become a significant player in the global gold mining industry. It is estimated that Turkey , Europe ' s largest gold producer, holds more than 209moz (mill ion ounces) of recoverable gold, with known gold deposits situated in the Aegean, eastern Black Sea, Central and Eastern Anatolia regions .
|Getting Back On Track|
|Turkey - Gold Production (koz) & Growth|
Heading Towards A Brighter Future ...
While we do not expect Turkey to become a dominant gold producer by 2016, we believe this is set to change over the long term as several companies bring their plays into production. This is especially given our expectation for gold prices to stay elevated by historical standards. We forecast prices to average US$1,775/tonne and US$1,875/tonne in 2013 and 2014, respectively . We believe the current gold price environment will be a boon for miners as it allows companies to economically process a large amount of rock for the extraction of very little gold . To highlight, Centerra Gold has recently announced that it has acquired the remaining 30% interest in the Oksut gold project located in central Turkey. As part of its ongoing exploration plan, Centerra will spend US$8mn on the expansion and upgrading of the Oksut deposit in 2013, advancing with metallurgical testwork and initiating environmental and technical projects studies. Having experienced a decade of consisten t declines in mine discoveries, we are sanguine over the future prospects of gold mining and expect an increasing number of companies to venture abroad for investment opportunities.
...But Major Headwinds Blow
Despite our upbeat view on Turkey's mining industry, the existence of elevated political risks will nevertheless, dampen investment flows and threaten project delivery in the country. Among the key challenges to political stability include Turkey's long-simmering tensions with the Kurdistan Workers' Party (PKK), recognised as a terrorist organisation by a number of states including the US and EU. Although Turkey is currently in the process of negotiating a disarmament agreement with PKK, we caution that this will not be a plain sailing process and expect the risk of an escalation of violence, mainly in the south-eastern part of Turkey, to contin ue. It is estimated that 26 exploration companies are currently working on the identification of gold deposits across Turkey, including the relatively under-explored areas in the northeast and southeast .
|na = not available. Source: BMI, Company Reports|
|Eldorado Gold||Efemcukuru||Increase production capacity to 130kozpa||2012|
|Stratex International||Inlice||Reserves of 59.6koz and resources of 426koz||2013|
|Stratex International||Altintepe||Resource of 593koz||2013|
|Eldorado Gold||Kisladag||Increase production capacity from 300kozpa to 475kozpa||2014|
|Centerra Gold||Oksut||Undergoing exploration work||na|
|Chesser Resources||Kestanelik||Undergoing drilling program||na|
|Alacer Gold||Copler||Reserves of 4.4moz||na|
|Alacer Gold||Cevizlidere||Resources of 1.6moz; Undergoing preparatory drilling work||na|
|Chesser Resources||Sisorta||Resources of 303koz; Undergoing drilling program||na|
|Alamos Gold||Agi Dagi & Kirazli||Resources of 1.96moz||na|
|Mediterranean Resources||Tac||Resources of 950koz||na|
|Mediterranean Resources||Corak||Resources of 630koz||na|
|Chesser Resources||Karaayi||Undergoing US$2.5mn exploration program||na|
|Chesser Resources||Catak||Undergoing preliminary exploration program||na|
|European Goldfields||Ardala||Undergoing drilling program||na|