viewChaarat Gold Holdings Ltd

Chaarat Gold continues to build scale in Central Asia


  • Plans to act as consolidator of Central Asian gold projects
  • Pushing Tulkubash towards two million ounces
  • New Kapan gold mine should deliver 65,000 ounces of production
gold and dollars

Quick facts: Chaarat Gold Holdings Ltd

Price: 25.6 GBX

Market: AIM
Market Cap: £120.36 m


What Chaarat Gold Holdings does:

Chaarat Gold Holdings Ltd (LON:CGH) is rapidly emerging as a key mid-tier player in Central Asia’s gold space.

The company is actively seeking to consolidate the disparate Central Asian gold market through judicious acquisitions of projects.

It raised US$5.8mln of new cash in November to support various growth initiatives and strengthen the balance sheet.



What Chaarat Gold Holdings owns:

Chaarat Gold was built around the Tulkubash project in Kyrgyzstan. The company is currently drilling Tulkubash with a view to pushing the resource up towards the two million ounce mark.

A recent feasibility study envisioned mining an average of 94,000 ounces per year at Tulkubash, at all-in sustain costs of US$819 per ounce.

The project is estimated to require US$110mln to get it up and running, and has an internal rate of return of 20%. Total undiscounted cash flow is likely to be US$114mln.

Chaarat said in December that construction continues to progress well, with the first gold production on track for late 2021.

The company also owns significant exploration acreage around Tulkubash, and recent drilling has demonstrated the likelihood of adding to the resource soon.

It also acquired the Kapan mine in Armenia. This mine boasts a measured and indicated resource of 1.6mln gold equivalent ounces, with a mine life of seven years, with gold equivalent production averaging 60,000 per year.


What the boss says: Dusty Nicol, Senior Vice President, Exploration

"We are getting now something that could be very exciting, could be the beginning of an entirely new target concept in this deposit [Tulkubash project]."

"It could become not only a significant short term addition to the project in terms of tonnage and grade, it could open up a real corridor for discovery."


Watch the interview

Broker view

“Chaarat’s strategy builds on both organic as well as acquisitive growth to deliver value from ‘Five Steps’, including disciplined M&A, exploration upside, operational efficiencies, geographical/operational synergies and a reduction in cost of capital,” says broker SP Angel.

“The US$55mln acquisition of the polymetallic Kapan underground operation closed in Jan 2019 and is an example of the management team’s ability to source and execute on a successful M&A transaction. The acquisition was completed at an attractive price (0.5x P/NPV on c.$110m NPV8% estimate using spot commodity prices) and included minimum dilution (US$5mln cash, US$10mln convertibles, US$40mln bank loan).

The broker has also run the rule on Chaarat’s valuation: “We initiate coverage on Chaarat Gold with a 'buy' recommendation supported by our sum-of-the-parts valuation of US$266mln or 42p per share, comprised of US$91mln in net assets, or 14p per share for Kapan and $221mln or 35p for assets in Kyrgyzstan.”

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Chaarat Gold's Artem Volynets discusses 'impressive progress' across its key...

Chaarat Gold Holdings Ltd's (LON:CGH) CEO Artem Volynets recaps on a year of solid progress across the miner's three projects - the producing Kapan mine, Tulkubash which is currently under construction and the earlier stage Kyzyltash project. He says since they acquired Kapan, management has...

on 25/2/20

3 min read