Delta Group acquired Alser in 2013, which owns a high-grade chrome deposit license in Burdur province. Could you provide some background to the acquisition and the main achievements since 2013?

Delta is new to the mining world and entered the industry in 2013. Delta’s principal activities are in oil trading and infrastructure; we built the largest oil storage terminal in the Mediterranean. Chrome is our first area of focus in mining but we have also started to look at lead, zinc, gold and copper.

Regarding our chrome deposit, we spent our initial capital on exploration drilling. So far, we have done about 25,000m of drilling, which is substantial in an area of 890 ha. We have discovered the largest lumpy chrome ore deposit in Turkey for the last 20 years. This is particularly significant because this part of Turkey was regarded to have lower grade chrome but because of the varied formations and fault lines in the deposit, the quality of our deposit is much higher. We have only drilled 20% of the prospection area so there is huge potential. The deposit can become a replica of the Elazig area in eastern Turkey. We have a couple of galleries where we immediately started production and have generated cash flow.

Where does Alser’s chrome production fit into the chrome value chain?

We are an independent producer that produces for trading purposes. Alser has a diversified base of clients in locations like China, the Middle East, the UK, Germany and Sweden. Our products are of premium quality. However, chrome prices are volatile so we also acquire lower grade material from other mines in the region and have a blending operation to achieve a better volume/price equilibrium. We are now the largest trading company in western Turkey. Currently, we produce about 6,000 mt/y to 8,000 mt/y of lumpy chrome ore ranging from 42% to 50% grade from our own mine, and 15,000 mt/y of trade material from third party providers.

Turkey has higher grade chrome compared to other major produces like South Africa. What makes the geology in Turkey special?

The geology in Turkey is very young and it is still evolving, as such it has a fragmented geology. In South Africa, Australia or Canada there are large basins of deposits for different types of metallic ores and once you have done the drilling and defined reserves with 3D measurements, it becomes only a matter of excavation. I often make the analogy of a rich minestrone soup (being Turkey) vs. a boring porridge when comparing Turkey’s underground geology with some other mining nations. In Turkey, exploration and excavation go hand in hand as the chrome sits on fault lines, which means there are continued interruptions underground. If you go 100m deep you may get a fault line which has pushed the ore in another direction which means you must keep drilling to find the continuation of the deposit.

As a result, drilling requirements are on-going throughout the project life while the ore deposits are close to the surface and the grades are higher due to it being a volcanic zone making the concentration and grades of ores much greater than other geographies.

What is Alser’s timeline for investments to increase production and reserves?

When we started we had the goal of 100,000 mt of chrome sales within three years and we have achieved that. Now we plan 150,000 mt of production from our own mine next year. We will spend most capex in exploration and acquiring new licenses. Alser is pursuing a ‘hub mining’ strategy where we leverage our existing people and equipment and acquire licenses which have synergies to reduce our cost of production. We will probably invest US$50 million to US$100 million in new licenses over the next three years and our capex spending for infrastructure and equipment will be US$15 million to US$20 million. Additionally, we need to do 100,000m of drilling over the next four years, costing about US$10 million.