Chaarat Gold Holdings Ltd (LON:CGH) said it has exceeded production guidance for the full year at its Kapan Mine in Armenia as well as making “good progress” in business development despite the impact of the coronavirus (COVID-19) pandemic, cross-border hostilities in Armenia and protests in the Kyrgyz Republic.
Reporting its production and operation results for the year to December 31, the AIM-listed miner said it had produced 58.2 kilo ounces (koz) of gold equivalent from Kapan, exceeding guidance of 55 koz, while also surpassing its third party ore target of 50 kilo tonnes (kt) with 67.8 kt processed.
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Chaarat also reported a 50% increase in the standalone earnings (EBITDA) contribution from Kapan to US$19mln in 2020, adding that a peace deal between Armenia and Azerbaijan signed in November had “led to stabilisation in country resuming sooner than expected” and the COVID-19 pandemic had had a “limited impact” on operations.
Meanwhile, the company said it has advanced construction preparation work at its Tulkubash project in the Kyrgyz Republic despite COVID-19 and political unrest in the fourth quarter of the year, with a 2,000-metre confirmatory drilling programme completed and a bankable feasibility study expected in the first quarter of 2021.
Chaarat also said finance discussions for the project have been advanced with several banks and that the feasibility study and an environmental and social impact assessment are awaited before proceeding.
The firm noted that it has completed an internal review of its Kyzyltash project, also in the Kyrgyz Republic, while external expert opinion received in June last year had confirmed the current preliminary timeline to 2026.
Looking ahead to 2021, Chaarat said it is targeting production of 57 koz from Kapan over the year, while project financing for Tulkubash is expected to close in the first half of the year.
Meanwhile, the company said a drilling programme and metallurgical test work planned for Kyzyltash will allow it to make a decision on the “optimal processing route” by the end of the year, adding that it will also “continue to appraise [merger & acquisition] opportunities”.
"I am pleased to report that we exceeded our 2020 production guidance at Kapan despite the challenges presented during the year. The ongoing COVID-19 pandemic and events in our countries of operation have presented unprecedented challenges for Chaarat in the period under review. In addition, a low commodity price environment in H1 2020 had its impact on our first-half performance but the strong rebound in prices in H2 2020 supported the strong performance overall despite the unrest in Armenia”, Chaarat chief executive Artem Volynets said in a statement.
“Construction progress at Tulkubash was heavily impacted by the COVID-19 movement restrictions leading to a shift in first gold pour date as previously reported. The hiatus did provide time to carefully and conservatively assess the project to ensure its robustness. The emphasis of 2021 will be to ramp up construction on Tulkubash but also be to progress work on Kyzyltash to create substantial long-term value for Chaarat shareholders. Chaarat will continue placing great importance on sustainable development and social investment programmes in the countries in which we operate. We truly believe that respectful and open dialogue and partnership with local communities is essential for the long terms success of our operations", he added.