The metal and mineral resources of Turkey have been under-exploited for decades. Afrasia Mining and Energy Consulting (AME) and Red Crescent Resources (RCR)are bringing South African and global expertise into alliance with local knowledge. Ruari McCallion found out more.
The CEO of Red Crescent Resources and Afrasia Mining and Energy Consulting, Alan Clegg, began his working life in the coalfields of north-east England; but it wasn’t long before he moved to South Africa and developed his career with Goldfields Group and Anglo-American. Now a 34-year veteran, he has been involved in private mining exploration, development and consultancy companies since 2001, when he got involved with Engineering Consulting Partnership TWP (Townshend Van Der Walt & Partners).
“We achieved some spectacular growth levels—up to 240 per cent a year,” says Clegg. “By 2004 and on track towards the planned IPO, we recognised it was time to look beyond our core market in South Africa. I identified Turkey as an excellent prospect and a potential springboard to Central Asia and the Middle East which would be foundational to future growth.” TWP set up an operation in Turkey in 2006, TWP Eurasia A.S., but post the 2007 IPO decided it wanted to remain focused on Africa. Clegg, however, remained committed to the original vision and made an MBO through which AME was born in 2008.
“AME is a full-service consulting company,” he says. “We offer exploration, feasibility, development and EPCM (engineering, procurement and construction management) expertise.” It covers everything from start to finish, including infrastructure and mine closure plans. “We now have around 35 engineers on our staff; we operate projects in Morocco and provide consultancy in Tunisia, Saudi Arabia, Turkey, Kyrgyzstan, Kazakhstan and Tajikistan.” AME is based in Ankara, Turkey and, crucially, it has strong Turkish involvement. “There are strong historical links between the Turkiç countries and we find it is easier to do business as a Turkish company.”
The ownership of both AME and RCR is mainly vested in Clegg, as executive chairman and CEO, while Dr Zafer Toper, general manager and operations director of AME, is also an owner. In RCR the core commodities focus is on base and ferrous metals project development, while solids to gas (STG) and gas to liquids (GTL) from coal is another area of focus for AME and its sister company SAT Enerji A.S. (SATE). All have important roles to play in the sustainable growth and development of the Turkish economy.
“Turkey imports 94 per cent of its liquid fuels,” says Clegg. “One of the country’s goals is to produce 30 to 40 per cent of its liquid fuel requirements from processing of its coal reserves.” Processing requires different and new techniques other than those used in South Africa by Sasol. “We are in the process of attempting to develop partnering with an International Energy Group from the UK and the Turkish state coal company in a project that is seeking to realise opportunities in this field.”
However, the immediate focus for RCR and a significant part of AME is the Hakkari Zinc Project, in the south-east of the country. RCR and the Seyitoglu family, which is well-established and with extensive commercial interests in south-east Turkey, agreed to establish a joint venture to explore, develop and exploit the family’s holdings in the Hakkari area, RCR Zinc.
“The zinc oxide deposits in the region are of very high grade,” says Dr Toper. “There are a lot of small operations in the region, which mine the ore, crush it and sell it through traders, in particular the Chinese. The run-of-mine ore sold to date is up to about 35 per cent zinc with around 4.5 per cent lead. We are looking at beneficiation—adding value to the product.”
Two projects under active consideration are investment in zinc sintering by rotary kiln precipitation, in order to raise zinc content to 55 to 60 per cent; and further refinement to LME (London Metal Exchange) grade, 99.99 per cent. RCR’s independently executed metallurgical tests indicate that Hakkari ores lend themselves to direct leaching solvent extraction. “Because of the high grade, only a low concentration of sulphuric acid has been indicated as being needed for maximisation of metal recovery. Our pre-project analysis and feasibility study will include plans for mitigation of environmental impact.”
The strategy of RCR is to build the company’s value post the imminent listing on the Toronto Stock Exchange (TSX) through to $400 million by 2012 and $1 billion by 2014, which is very ambitious, given that its expected market capitalisation value is around $80 million. It can only achieve that level of growth by selecting its sites carefully. It requires that its operations should be in the bottom 25 per cent of the cost curve—i.e., the cost of extracting the zinc should be well below the world average—and will provide an un-geared investment rate of return of at least 23 per cent, with 30 per cent margin a realistic possibility. The Hakkari project looks as if it meets both criteria.
“We have 26 licences totalling over 50,000 hectares in a 70 by 20 kilometre target area,” says mining engineer Mohammed Arar. “Our laboratory scale metallurgical tests are showing positive results, in the 90 per cent recovery range. After we had completed those tests we started to expand operations, and commenced a drilling programme in 2010; we expect to reach a total of 3,000 metres drilled by the end of December.” The drilling target for end 2011 is 7,000 to 8,000 metres, with the objective of proving resources of a minimum of five million tonnes. Three geologists and 35 assistants and operatives are currently in the field, working towards these goals.
“We want to have completed the pre-feasibility study by the end of 2011, by which time we will expect to be producing zinc calcine,” says Doug Taylor, director of Business Development and also a mining engineer with RCR. “We are looking to produce LME-grade zinc in another 12 to 18 months.”
The topography of south-east Turkey is challenging. The collision between the Anatolian and Arabian tectonic plates has caused massive folding; in some parts, the zinc mineralised seam runs vertically or is even folded over itself. The area is slashed with steep valleys, but these are mere physical challenges. Turkey’s mineral wealth in the south-east has not been effectively exploited because of a long period of political turmoil. The Kurdish population has had many of its grievances answered and the area is much more stable. This has provided the opportunity to RCR to develop the resources, in partnership with the people on the ground.
“We have faced tough times recently—the recession forced us to reconsider our investment strategy,” says Dr Toper. Yet RCR has still been successful recently raising additional capital of $6 million in Canada. RCR’s exploration and development schedule is remaining aggressively on target and the mineral resources of south-east Turkey are soon to come on-stream. www.afrasia.com.tr and www.redcrescentresources.com
