Chaarat Gold Holdings Ltd (AIM:CGH) said it exceeded its 2021 production guidance at its Kapan mine in Armenia and that it hopes to close debt financing for its Tulkubash project in the second half of this year.
The AIM-quoted company produced 63,000 gold equivalent ounces, including 14,000 ounces from third-party ore output, beating its 2021 guidance of 57,000 ounces. It produced about 59,000 ounces in 2020.
However, the all-in-sustaining cost (AISC) of production increased to US$1,205 an ounce from US$1,034 in 2020, while the price received for its gold climbed 0.6% to US$1,784.
"I am pleased to report that we exceeded our 2021 production guidance at Kapan,” said executive chairman Martin Andersson. “The difficulties of the COVID pandemic and global supply chain issues created an ongoing set of challenges for the company, but the team found ways to manage the conditions.
“The company benefitted significantly from the increased commodity prices seen in 2021. At the same time though we are seeing inflationary prices flowing through due to that same price environment."
Kapan’s contribution to EBITDA improved from US$19mln in 2020 to about US$22.7 million in 2021.
For 2022, the company expects to produce 50,000 to 53,000 ounces from its own ore and an additional 6,000 to 9,000 ounces from third-party ore.
Elsewhere, the development of the Tulkubash project was impacted by the events around Centerra Gold Inc's Kumtor mine and ongoing COVID-19 pandemic in the Kyrgyz Republic, Chaarat said.
It hopes to close debt financing for Tulkubash in the second half of this year, although it noted that this was subject to a resolution of Centerra's Kumtor situation, even though this has no direct impact on Chaarat’s operations.
A disagreement between the Kyrgyz government and Centerra has resulted in the Canadian company no longer having control of the Kumtor mine, forcing it to initiate international arbitration proceedings.
“The situation around the Kumtor mine has affected the debt financing timeline significantly pushing it into H2 2022,” Chaarat said.
“Based on recent press releases by Centerra and the Kyrgyz government, Chaarat expects a resolution of the situation shortly. This should enable the company [Chaarat] to continue discussions around a standalone financing or a comprehensive refinancing of its current debt outstanding and financing of the Tulkubash project,” it said.
Chaarat said it will continue to review its existing balance sheet structure with a view to further reducing its interest cost and improving the balance sheet structure.
“Construction progress at Tulkubash was negatively impacted by the delay in our debt financing efforts. The Kumtor/Centerra situation led to cautiousness in the market and until this issue is resolved, funding remains a challenge,” said Andersson
“The emphasis for 2022 will be to conclude the debt financing for Tulkubash to achieve our first gold pour in 2024 target but also to progress work on Kyzyltash with a processing route decision in the beginning of 2023 to create substantial long-term value for Chaarat shareholders,” he said.
Chaarat also announced that it has appointed group financial controller, David Mackenzie, as interim chief financial officer. The previous CFO stepped down last November.