Red Crescent Resources

Turkey is something of an unknown and misunderstood place; but as Alan Swaby learns, there is at least one mining entrepreneur who has complete faith in its future.

Considering the amount of exploration that’s taken place in some of the most obscure corners of the world, it’s something of a surprise that Turkey’s mineral resources are so underdeveloped. At least it is to Alan Clegg, founder and CEO of Red Crescent Resources (RCR)—although he’s not complaining too much, as it leaves the field wide open for RCR at the moment.

“There’s iron ore,” he explains, “that feeds a domestic iron and steel industry, coal and several other base metals that are mined—but often in something of an amateurish way in a fragmented industry. Very little has been done in recent times and with modern technology to survey the country’s resources since the Russians had a look around half a century ago, pre-second world war. The traditional process among the informal sector in Turkey has been to dig a hole until it falls in and then start again elsewhere, with little or no applied engineering or even primitive technology being evident.”

Clegg and RCR are on a mission to amend all that—or at least get the Turkish State thinking about a more professional and internationally attractive way of structuring the mining business for the overall benefit of the country and its inhabitants. His connection with Turkey goes back to 2004 when he began investigating mineral deposit development potential there for the business development for consulting engineering appointments on behalf of the South African engineering consulting group TWP (Townshend Van Der Walt & Partners). 

“Our plan was to go public,” says Clegg, “and considered that looking beyond the core market in South Africa would be beneficial to sustain post listing growth in new markets. I identified Turkey as an excellent prospect and TWP set up an operation there in 2006. In the end, TWP decided to remain focused on the domestic market but I remained committed to the original vision and made an MBO through which Afrasia Mining and Energy Consulting [AME] was born in 2008.”

Historically, Clegg’s background had been in mining operations management, mining technology and equipment development and executive mining business management, consulting and engineering—in other words, helping dozens of other mining companies develop and exploit the minerals they had rights for on a global basis. But it didn’t take long for the realisation that here was the ideal opportunity to become mine owner as well as engineer. In the same year, Clegg formed a Turkish business, Red Crescent Resources (RCR), with the initial aim of developing high-grade zinc oxide deposits at Hakkari, in south-east Turkey, close to the borders of Iran and Iraq. 

“On the basis of the joint venture agreement we have with the landowners at Hakkari, RCR was floated on the Toronto stock exchange less than a year ago. We raised CAD$5.9 million to supplement the cash and sweat equity I and my fellow directors had invested. This gave us much of the working capital needed until the first cash flow begins, which will be towards the end of this year.”

Not bad going for the first venture and in less than 300 days since the business was floated. But rather than just selling run of mine ore at around +25 per cent zinc, RCR has plans to add value—first by pre-concentrating an ore blend feed of around 13 to 15 per cent zinc, using gravity methods, to a 30 to 38 per cent concentrate and then potentially through further refinement using methods to be defined within a pre-feasibility to be started later in the year, ultimately taking the ore to LME (London Metal Exchange) grade: 99.99 per cent within a planned central refinery hub facility in southern Turkey.

But Clegg and his managers quickly agreed that having all their eggs in one basket—particularly so close to potential neighbouring hotspots—was probably not the most prudent of strategies. So, to go with Hakkari, RCR now has two additional mining sites: yet more zinc and lead at Tufanbeyli in Adana the southern province of central Turkey and copper at Sivas, 400 kilometres to the north-east of Tufanbeyli.

The NI43-101 technical report and initial mineral resource statement has just been lodged for Tufanbeyli which Clegg describes as “offering a good code-compliant basis for the project to continue as planned.” Sivas is still in the logging stage, with 5,000 metres of core samples still to be taken this year and another 25,000 metres planned for next year; but Clegg considers it could potentially be a world class operation.

In the meantime, Clegg is working hard to put something back into the Turkish nation. He’s now married to a local medical professor and specialist doctor who has given up her career in anaesthetics to contribute a major role as executive assistant, stakeholder manager and cultural interpreter for the business. There’s an odd mix of attitudes prevalent in Turkey which have to be addressed if serious outside investors are to be attracted. Clegg is advising the government informally on a range of mining matters and was part of the consultation process leading to a recent set of modernised mining regulations.

Although the population is literate, enthusiastic and hardworking, as a Muslim nation there is still the underlying notion at the unskilled level, particularly in the east of Turkey, that whatever happens is in the hands of God—not an idea that sits comfortably with a Western insistence of working safety and health standards and norms and protocols such as the Equator Principles (www.equatorprinciples.com). 

“When we issued workers with their protective clothing,” Clegg recalls, “we were staggered to find them arrive at work the next day in their ordinary clothes. The yellow reflective vests, hard hats and reinforced boots had gone into the display cabinet at home and had to be replaced with a second, ‘functional’ set. Nevertheless, the message is getting through and many thousands of man days have now been worked without serious accidents or incidents.”

And while there is tremendous support for the mining projects, the locals don’t fully appreciate the procedures and protocols that have to be followed before investors can be persuaded to put money into a venture. As such, the Cleggs spend almost as much of their time educating stakeholders at every level on how it has to be as they do on developing the business.

Ironically, there is just as much education needed at the investor end of the spectrum with the far-away US and Canada having some very odd and outdated views on what constitutes a modern Turkey. It comes as something as a surprise, for example, to learn that Turkey has the sixteenth largest economy in the world and the sixth in Europe. It is a very important geopolitically stable country that has managed to maintain a secular democratic republic for 100 years, and create the fastest growing economy in the OECD in the process. But it’s an economy that is over-reliant on imported energy and materials—something that Clegg is determined to help re-address. www.rcrholding.com.tr