Anatolia’s capital costs at Copler down 10%

Vancouver – Lower commodity prices are driving down phase I costs of Anatolia Minerals’ (ANO-T) Copler gold project 110 km north of Malatya, Turkey.

This spring Anatolia expected capital costs for the 1.3-million-oz. gold project, now under construction, to ring in at US$190 million. The company estimated cash costs at US$290-per-oz. gold.

But as part of requirements to secure a US$70 million debt facility with UniCredit announced late this summer, Anatolia has produced a revised NI-43-101 technical report on the first phase of the project and realized 10% to 11% savings on both capital and cash costs.

Now Anatolia forecasts capital costs at US$169.6 million and cash costs of US$260-per-oz. gold.

“What that really is – driving the reversal – is oil and lower commodity prices,” Anatolia president and CEO Edward Dowling says.

For example, he says, previous permutations of the plan at Copler included diesel fuel assumptions that were based on oil prices when they were US$140 to US$150 a barrel. Now it’s below US$60.

Likewise he says that material prices have fallen considerably. He notes that since this summer the cost of rebar is down around 70%.

Dowling says lower commodity prices combined with a construction slowdown connected to the current economic downturn is also allowing Anatolia to be “hard-nosed” with contractors.

“It used to be that there was more work than contractors,” he says. “But now there’s more contractors than work.” As a result he says Anatolia is renegotiating terms of its contracts.

“We’re expecting costs to come down even further,” he says.

On news of the updated plan Anatolia’s share price slid 13¢ to close at 98¢ at presstime. Anatolia has about 83 million shares issued.

Currently Anatolia is in the throes of finalizing its US$70 million debt facility with UniCredit. Despite the ongoing credit crunch Dowling does not foresee any obstacles to closing the deal.

“At this point I’d say there aren’t any.”

But he admits, “I was nervous two months ago.”

His optimism about Anatolia’s pending debt facility stems from the improving London interbank offered rate and news that UniCredit, despite economic turmoil, exceeded profit expectations in the third quarter.

As for construction at Copler Dowling says Anatolia is still on track to finish building the 16,000-tonnes-per-day mine by the end of 2009. In addition to the pending US$70 million from UniCredit, as of June 30, 2008 Anatolia reported US$105 million in cash and cash equivalents.

Construction at Copler began in September. So far a temporary powerline is in place and 10 km of a 40-km-long permanent line have been completed. Key equipment has been manufactured and Dowling says earthworks are underway.

Phase I is planned as an eight-year, open-pit, mine with proven and probable reserves of 40.8 million tonnes grading 1.65 grams gold per tonne and 3.65 grams silver per tonne.

Based on US$700 gold and US$12 silver the after-tax internal rate of return is 28.1%.

As for the timing of full production at Copler, Dowling is conservative. “It’s gonna take the whole of 2010 to get there,” he says.