viewChaarat Gold Holdings Ltd

Chaarat Gold Hlgs Ld - Q3 2019 Production and Operational Update

RNS Number : 4620Q
Chaarat Gold Holdings Ltd
21 October 2019

Chaarat Gold Holdings Limited

("Chaarat" or "the Company")

Q3 2019 Production and Operational Update

Chaarat (AIM:CGH), the AIM-quoted gold mining Company with an operating mine in Armenia and assets at various stages of development in the Kyrgyz Republic, announces its production and operational results for the quarter ended 30 September 2019 (the "Quarter", "Q3" or the "Period") for its Kapan Gold Mine ("Kapan"), in Armenia, progress at the Tulkubash Project and a general corporate update.


Q3 Kapan Highlights


·    Q3 had a total recordable injury case rate (per one million hours worked) of zero, significantly below industry average and since taking ownership in January the Company has had one Lost Time Injury ('LTI').


·    A positive EBITDA contribution from Kapan of USD3.6 million in Q3 2019 versus USD3.2 million for the initial five-month period of control (February to June 2019) with improved recoveries, better plant utilisation and increased mining rates under Chaarat's ownership.


·    Gold equivalent production of 16,377 gold equivalent ounces1 ("oz") at a cash cost of USD1,092 / oz - compared to 16,996 oz at a cash cost of USD1,223/oz in Q2 2019 - consisting of:

8,849 ounces of gold;

163,174 ounces of silver;

468 tonnes of copper; and

1,629 tonnes of zinc;

·    Realised gold price for the quarter of USD1,474 /oz versus USD1,306/oz in Q2 2019 in line with the average gold price for the three months to end-September.

·    On track to achieve run-rate of 65 Koz of gold equivalent ounces per year and annualised EBITDA run-rate of USD20 million by year end, as improvements continue on all workstreams, including:

Total tonnes mined of 175,182t at a feed grade of 3.31g/t AuEq compared to 165,757t at a feed grade of 3.24g/t in Q2 2019.

Recoveries improved to 83.9% in Q3 2019 versus 81.6% in Q2 2019 following improvements achieved in the grinding and flotation circuits.

§ A fourth stage of crushing has been added to the existing crusher setup to grind the mill feed finer from 20mm down to 12mm and this is expected to increase recoveries in subsequent quarters. 

§ New reagents applied in the mill also showed positive effects.

§ Work is continuing to improve recoveries further.

Fleet availability improved as equipment issues seen in Q2 were fully resolved at the  end of Q3.

Underground development of 5,883 metres achieved in the quarter, compared to 5,664 metres in Q2 2019. Increased meterage is improving flexibility and availability of faces underground, allowing for consistent delivery of ore to the plant.

Cost improvements were achieved due to tendering all services and goods again, bringing outsourced contracts in-house and monitoring use of consumables.

·    Kapan Mine plan update under way and will be released in November.


Gold equivalent ounces based on gold ratios of 81 for silver, 0.48 for copper and 0.87 for zinc.


Tulkubash Construction Update

Construction continues at Tulkubash and the first gold production is on track for late 2021. Chaarat is proceeding with detailed engineering and has finalized several project components for immediate construction readiness. This comprises:

·    Initial earthworks equipment mobilized; second phase of equipment mobilization started;

·    Ore haul road and platforms construction started;

·    Access road to site has been upgraded to improve year-round access to site;

·    Advance construction camp was installed; 360-man camp was ordered, and installation will commence before year end 2019 with completion scheduled for Q3 2020;

·    Detailed design of HLF, Crushing Circuit and ADR is advancing; and

·    Tree Cutting permit for the whole site has been secured.


Tulkubash Project Financing

The Company is advancing project financing discussions with several international groups. As announced on 13 September 2019, Chaarat completed the Joint Venture with Çiftay under which Çiftay will invest USD31.5 million with Chaarat seeking the balance of the USD110m capex requirement for Tulkubash from project finance providers.

The Company is continuing discussions with several parties and is working to finalise the project financing by the end of 2019 or early 2020. A term sheet received indicates sufficient funds to finance, alongside the Ciftay investment, the USD110 million capital requirement to construct the Tulkubash project.


Corporate Financing

The Company secured USD7 million of additional working capital funds via a USD7 million upsizing of the existing USD10 million loan and extension of the maturity date to March 2020.

The Company also closed the previously announced 2021 Convertible Bond raise to new subscriptions.  Following the most recent subscription of USD0.5 million in July 2019, and the agreement with Polymetal to exchange USD10 million of notes for equity, the total value of the 2021 notes in issue is USD19.7 million;


Artem Volynets, Chief Executive Officer, commented:

"We are pleased to report further improvements across a number of operational points at the Kapan mine. From improved development and more tonnes from underground, to increased recoveries at the plant, we are getting this operation to run near its full potential, in time to benefit from the higher gold price.

"This is best reflected at the EBITDA level where we reported earnings of USD3.6 million in the period compared to USD3.2 for the first five months of ownership.

"We will not stop here and intend to continue to instil further operational improvements that are sustainable for the long term."

"At Tulkubash and Kyzyltash we were pleased to complete the Ciftay JV during the period, having first announced this exciting transaction earlier in the year. The debt package discussions for the remaining finance for Tulkubash are progressing on schedule.

"We are excited by the exploration work on our broader 24Km Tulkubash lease area, having completed the 20,000m drill programme recently with encouraging results."




Analyst conference call and presentation


Chaarat Gold will host an analyst conference call and presentation Tuesday, 22 October 2019, at 9:30 BST. Participants can access the call by dialling one of the following numbers below approximately 10 minutes prior to the start of the call.

UK Toll-Free Number: 08003589473
UK Toll Number: +44 3333000804
PIN: 35415978#

The presentation will be available for download from the Company's website: https://www.chaarat.com/ by clicking on the link below:


A recording of the conference call will subsequently be available on the Company's website.


Chaarat Gold Holdings Limited

Artem Volynets (CEO)


+44 (0)20 7499 2612

[email protected]

Numis Securities Limited

John Prior, Paul Gillam (NOMAD)

+44 (0) 20 7260 1000

James Black (Corporate Broking)


Charles Vivian

+44 (0)20 7920 3150

Gareth Tredway
Barnaby Hayward

[email protected]



About Chaarat

Chaarat is a gold mining company which owns the Kapan operating mine in Armenia as well as Tulkubash and Kyzyltash Gold Projects in the Kyrgyz Republic. The Company has a clear strategy to build a leading emerging markets gold company with an initial focus on Central Asia and the FSU through organic growth and selective M&A.

Chaarat is engaged in active community engagement programmes to optimise the value of the Chaarat investment proposition.

Chaarat aims to create value for its shareholders, employees and communities from its high-quality gold and mineral deposits by building relationships based on trust and operating to the best environmental, social and employment standards. Further information is available at www.chaarat.com.



Sales in Q3 were below Q2 partly due to concentrate in transit not accounted for in September.

Production Summary

Q3 2019

Q2 2019

Q1 2019

Tonnes ore milled




Grade (g/t)




Recovery (%)




Gold equivalent (oz)









Gold production (oz)




Silver production (oz)




Copper production (t)




Zinc production (t)




Realised gold price







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Quick facts: Chaarat Gold Holdings Ltd

Price: 38.3

Market: AIM
Market Cap: £200.91 m

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