www.chaarat.com
Chaarat Gold is an exploration and development company operating in the Kyrgyz Republic. The Company’s main activity is the development of the Kiziltash and Tulkubash projects situated within the Middle Tien Shan Mountains of Kyrgyzstan, which form part of the Tien Shan gold belt. The Company has delineated a JORC compliant mineral resource of 4.406Moz at a grade of 4.20g/t gold across both projects. Chaarat's key objective is to become a low cost gold producer; with initial production from the Tulkubash project, targeting annual production of over 200,000 ounces per annum as the Kiziltash project comes on stream.
Chaarat Gold: Frontier gold explorer on track to produce 200,000 ounces per annum by 2015
London’s Alternative Investment Market hosts plenty of companies focused on gold exploration in what are known as “frontier” regions and this list of frontier explorers has grown in recent years as the price of gold rising to new heights has made exploring and developing mines in remote locations more economical.
One frontier country is Kyrgyzstan, where the economy now depends heavily on gold exports. Most of these gold exports have come from the open-pit Kumtor Gold Mine, owned by Centerra Gold (TSX:CG.), which is located in the Tien Shan mountains in the east of the country. The Tien Shan Gold Belt is one of the most prolific gold-producing regions in the world. There are other western companies in the country looking to find and exploit the multi-million ounce deposits that are a feature of the Tien Shan, most prominently Chaarat Gold (LON:CGH).
Chaarat’s principal focus is on the eponymous Chaarat Gold project area on the western border of Kyrgyzstan. This is located at the centre of the Sandalash Licence Area – a zone occupying 604 square kilometres. The gold mineralisation of the Chaarat deposit is mostly typical of the Tien Shan belt and occurs in three mineralised zones: the Main Zone; the Contact Zone and the Tulkubash Zone.
In the Main and Contact Zones, the gold is associated with arseno-pyrite. The Tulkubash Zone however is characterised by almost pure quartzite with some pyrite. The gold is free milling which makes the Tulkubash Zone a “very lucrative” project, according to Chaarat. Across these projects, Chaarat has defined a JORC-compliant mineral resource of more than 4.7 million ounces at a grade of 4.28 grams per tonne of gold.
In November, Chaarat reported positive results from its ongoing drilling programme at Tulkubash. Mineralisation here, said the company, now extends beyond the previous strike of 360 metres to 920 metres and is still open towards the north east. Chaarat said that 19 out of 20 holes drilled in the north-west extension and nine holes in the south-eastern extension intersected mineralisation at the predicted depth. The results from this drilling included 6.25 metres at 8.58 grams per tonne of gold and 11.25 metres at 8.21 grams per tonne at the top end to 11.25 metres at 2.19 grams per tonne.
These results were described as encouraging by the company as they demonstrated a significant extension of the Tulkubash zone. Chaarat’s chief executive Dekel Golan said that the prospect of extended strike, as well as improved predictability and continuity, will also potentially enable the firm to “increase production from this low cost ore body and further improve its profit potential for the early years of operation”.
An updated resource and reserve estimate based on the 2011 drilling is set to be released early in 2012. Chaarat also reported in the summer that the Contact Zone “is proving to be a significant mineralised body, which could itself support a major mining operation”. The resource within the Contact project increased from around two million ounces to 2.33 million ounces.
In addition to its work on the Contact and Tulkubash, Chaarat has progressed its work on The Main Zone. In all, the Main Zone has indicated resources 14.4 million tonnes at an average grade of 4.30 grams per tonne for 1.99 million ounces of contained gold.
In February this year, Chaarat raised £51.6 million. The funds are to be used to help the firm develop an expandable production unit on the Chaarat deposit, with first gold pouring scheduled early 2013. Production capacity is planned to reach 200,000 ounces per annum by the end of 2014.
Back in January the shares were trading at more than 70 pence each, but since then they have hit a low of 20.18 pence before recovering to today’s price of 26.8 pence.
Major shareholders in the £65 million-market cap firm include China Nonferrous International Mining Company (nine per cent), First State Investments International (7.5 per cent), Cazenove Capital Management (7.4 per cent), TT International Investment Management (4.9 per cent), Richmond Capital (4.6 per cent), Black Rock Investment Management (3.6 per cent) and GIC Asset Management (3.3 per cent). CEO Golan also holds just over 5.8 per cent of the business.
Kumtor – after 16 years in operation - has produced several million ounces of gold and last year its gold production was 567,802 ounces. Chaarat’s management believes the firm has an opportunity to duplicate that success.
