TIDMCGH
RNS Number : 6699W
Chaarat Gold Holdings Ltd
13 February 2017
Chaarat Gold Holdings Limited
("Chaarat" or "the Company")
KYRGYZ GOVERNMENT SUPPORT FOR THE TULKUBASH PROJECT
UPDATE ON BANKABLE FEASIBILITY STUDY
APPOINTMENT OF CHIEF OPERATING OFFICER
PROGRESS ON FINANCING DISCUSSIONS AND APPOINTMENT OF A FINANCIAL
ADVISER
INTRODUCTION OF NEW SHAREHOLDER ALIGNED INCENTIVE SCHEME
Road Town, Tortola, British Virgin Islands (13th February
2017)
Chaarat (AIM - CGH), the AIM quoted exploration and development
company with assets in the Kyrgyz Republic, today provides an
update on progress on its strategy to achieve production from the
Tulkubash Heap Leach Project (the Tulkubash Project). The Tulkubash
Project is the first stage in developing Chaarat. With a deposit of
7 million ounces of a high grade gold resource, Chaarat represents
a world class resource.
Highlights:
-- The Chairman of Chaarat, Martin Andersson, receives unanimous
expressions of support for Chaarat's operations in the country and
its investment plans from senior political leaders in the Kyrgyz
Republic, including Prime Minister Jeenbekov, during a recent visit
to Bishkek
-- Bankable Feasibility Study (BFS) for the Tulkubash Heap Leach
Project on schedule for completion by the end of H1 2017
-- Robert (Bob) Benbow appointed as Chief Operating Officer. He
brings many years of operating experience to the Chaarat team and a
solid track record of successful mine development (including
Alacer's Çöpler Gold Mine)
-- The Chairman to lead the financing workstream of the
Tulkubash Project with financial advisers appointed
-- Recruitment of construction and operating team underway
-- Introduction of new share option plan for the Board and
senior management team, linked to achievement of milestones to
production
Martin Andersson, Chairman, comments: "I have just returned from
a visit to the Kyrgyz Republic during which I met the Prime
Minister, the Speaker of the Parliament and two previous Prime
Ministers. I was pleased to see the general interest in attracting
foreign direct investment into the country and the support for
developing Chaarat in particular.
Chaarat's significant investment to date as well as its socially
and environmentally responsible approach to developing the project
is recognised and widely respected. I am confident, and recognise
as a significant achievement, that the Company's founders and
long-standing management team have positioned the Company well for
the next stage of development.
With Bob, a seasoned and experienced mine builder and operator,
joining the team and the feedback we are receiving from financial
institutions and the teams preparing the BFS, the development of
the Tulkubash Project is progressing according to plan."
Bob Benbow, COO, comments: "I am excited to have this
opportunity to bring another green field mine to life. I believe
this mine has tremendous potential to benefit the local
communities, the Kyrgyz Republic and the shareholders for years to
come."
Visit to the Kyrgyz Republic
On a recent visit to the Kyrgyz Republic the Chairman met the
senior political leadership of the Republic including Mr.
Jeenbekov, the Prime Minister, Mr. Tursunbekov, the Speaker of the
Parliament, and two former Prime Ministers, Mr. Sariev and Mr.
Kulov. Unanimous expressions of support were voiced for Chaarat's
operations in the country and its investment plans. In addition,
Chaarat was asked to work with the government on a strategy to
improve the international investor perception of the country's
operating environment.
Alexander Novak, the Chaarat director based in Bishkek, was
invited by the Speaker to join the council which has recently been
set up by Parliament to promote foreign investment. As part of this
group, Chaarat will have the ability to comment on proposed changes
to legislation affecting, for example, mining regulations and the
foreign investment climate.
In the last 12 months three new mines have been brought into
production in the country and a fourth is in construction. The
government has initiated plans to construct a smelter near Chaarat.
The smelter is to be built by a recently announced JV between Eti
Bakir (www.etibakir.com.tr ) from Turkey (80%) and KyrgyzAltyn, the
Kyrgyz Republic state-owned gold company (20%). This initiative, a
priority project as emphasised by the Chairman of the State
Committee of Industry, Energy and Geology in the meeting with the
Prime Minister, will enable the processing of concentrate in the
country. This could materially benefit Chaarat by reducing its
capex requirements in the second stage processing of refractory
ore.
BFS update
The BFS is on schedule for completion by the end of H1 2017 as
previously announced. Further metallurgical work is currently
underway to establish an optimal mine plan. The work on the
Environmental and Social Impact Analysis is progressing and all
identified information gaps have been filled. This includes a
renewed comprehensive household survey of the villages in the
Chatkal valley. All geotechnical investigation works have been
completed to enable the design of the leach pad, the waste dump,
roads, plant and other elements of the Project. Fleet design
criteria have been agreed and quotes for equipment and other items
are being pursued.
The Company is investigating the impact on the Project of a
number of different processing options including increasing the
processing capacity by up to 50% to 12,000 tonnes per day, which
would increase production to approximately 100,000 ounces of gold
per year. The Board believes this option could add significant
value to shareholders and is confident the reserve base can be
increased to support a satisfactory life of mine (LOM) at this
revised rate.
In parallel with the BFS, local permitting is progressing
in-country. The permit for construction of the new access road to
site has been secured. The new route, identified by a local
designer, has fewer serpentines and points at risk from avalanches,
facilitating maintenance and ensuring its use by heavier traffic
which is expected during construction and operation.
Recruitment of Chief Operating Officer
Since September 2016 Bob Benbow has been working with the
existing Chaarat team to supervise and drive the work of GBM
Minerals Engineering Consultants Ltd (www.gbmmec.com) and Wardell
Armstrong (www.wardell-armstrong.com) on the BFS. The Board of
Chaarat is delighted to announce that he has now accepted our offer
to join the Company as Chief Operating Officer. Bob's primary
responsibility will be to develop and build the Tulkubash Project
and he will oversee mining operations once in production.
During his 30 year career Bob has worked with junior exploration
companies to bring them into production and transform them into
operating companies. He has taken three green field gold
developments into production and from 2007 he served as the Vice
President and Country Manager of Alacer Gold Corp.'s
(www.alacergold.com) Çöpler Gold Mine in Eastern Turkey which has
produced over 1 million ounces as one of the lowest cost producers
in the world.
Bob built a team of expatriates and Turkish nationals to execute
the successful start-up of Çöpler, which was initially developed as
an open pit heap leach operation. The Çöpler mine is now moving
into development of the refractory ore contained within the
deposit. The two similar stages in Chaarat's development will
benefit directly from Bob's relevant experience.
Update on financing the Tulkubash Project
The Chairman, supported by the full Board and management team,
has assumed primary responsibility for the financing workstream of
the Project, leveraging his experience of raising finance for
projects in the region and elsewhere.
Several options with potential providers are being analysed to
optimise finance for construction. The Board remains of the view
that the current share price does not reflect the underlying value
of the Chaarat deposit. Consequently, the Board's primary criteria
in evaluating financing options will be added shareholder value on
a risk adjusted basis.
Endeavour Financial Limited (Cayman) has been appointed to
assist the Board in assessing the available options and build on
the feedback received to date. The team will identify and help
implement various financing options for the Tulkubash Project,
assist in review of all project work and project contracts to
ensure bankability and work with Chaarat to meet its production
strategy.
Recruitment and new share option plan
The Board is focussed on the importance of building a team with
the right skills to bring the Tulkubash Project into production and
maintain a successful operation thereafter. At Board level this has
meant the Chairman assuming the additional role of leading the
finance effort. The search for an additional independent Board
member with significant mining experience is underway. Work
continues on building the team to execute the strategy and deliver
value to shareholders.
Given the importance of recruiting, retaining and motivating the
right team, the Board has decided that now is an appropriate time
to review the incentive scheme of the Company.
The Board is committed to an incentive scheme that is fully
aligned with the interests of shareholders. In the Company's new
share option plan part of the vesting of options has been linked to
the achievement of specific milestones on the road to production.
Furthermore, the Chairman has waived his fee and any entitlement to
options for the current year, Martin Wiwen-Nilsson has waived his
cash compensation entirely in lieu of options and Richard Rae has
also waived a portion of his fee in lieu of options.
Following Board approval, options have been granted to directors
and certain employees at an exercise price of 15p. They will be
exercisable between 1 and 8 years from the date of grant. Half of
the awarded options will vest over three years with the remainder
vesting on the achievement of milestones including the completion
of the BFS, completion of financing for the Tulkubash Project and,
most importantly, the first gold pour.
The following options have been awarded to directors:
Dekel Golan 4 million
Alexander Novak 3 million
Linda Naylor 3 million
Richard Rae 300,000
Martin Wiwen-Nilsson 200,000
Bob Benbow has been granted 3.5 million options and 4.9 million
options have been granted to certain key group employees based in
Bishkek whose knowledge, commitment and loyalty are critical to
delivering the Project.
Enquiries:
Chaarat Gold Holdings
Limited + 44 20 7499 2612
c/o Central Asia Services info@chaarat.com
Limited
Dekel Golan CEO
Linda Naylor FD
Numis Securities Limited +44 (0) 20 7260 1000
John Prior, Paul Gillam
(NOMAD)
James Black (Broker)
About Chaarat Gold
Chaarat Gold is an exploration and development company operating
in the Kyrgyz Republic with a large, high grade resource - the
Chaarat Gold Project. The Company's key objective is to become a
low cost gold producer generating significant production from the
development of the Chaarat Gold Project. Chaarat is engaged in an
active community engagement programme 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 in the
Kyrgyz Republic by building relationships based on trust and
operating to the best environmental, social and employment
standards.
Further information is available at www.chaarat.com
About Endeavour Financial
Endeavour Financial is a private independent merchant banking
company focused on providing expert and unbiased financial advisory
services to the global natural resources sector. Endeavour
Financial has a history of achieving success for clients based on
resource industry focus, innovative transaction skills and the
diverse professional backgrounds of its award-winning team.
Offering advice in project, corporate and debt capital markets;
equity-linked financings; mergers and acquisitions; and strategic
business development over more than two decades, Endeavour
Financial has established itself as a leading financial advisor in
the natural resources sector. Specific to the mining sector, in the
last ten years the firm has closed in excess of US$ 4 billion of
development financings for single-asset emerging producers.
This information is provided by RNS
The company news service from the London Stock Exchange
END
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