TIDMCGH
RNS Number : 4015D
Chaarat Gold Holdings Ltd
19 February 2020
19 February 2020
Chaarat Gold Holdings Limited
("Chaarat" or "the Company")
FY 2019 Production, Operational and Financial Update
Analyst conference call at 10:00am today
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, is pleased to announce its
production, operational, and financial update for the Financial
Year (the "year", "2019" or the "Period") ending 31 December 2019 -
a year in which the company made significant strides in its
strategy to become a leading emerging markets gold company.
Kapan Mine ("Kapan")
-- Completed the acquisition of Kapan in January 2019;
-- Lost time injury frequency rate ('LTIFR') of 0.39 (per one
million hours worked). Since taking ownership in January 2019,
there has been one Lost Time Injury ('LTI'), below industry
averages;
o This compares very favourably to the 4.16 five year average
LTIFR of the 27 members of the International Council of Metals and
Mining (ICMM);
-- Continued improved recoveries, better plant utilisation and
increased mining rates under Chaarat's ownership;
-- Gold equivalent production up 7% to 60,252 gold equivalent
ounces(1) ("oz") at an all-in sustaining cost ("AISC") of USD$
1,040 / oz (2018: 56,424 oz at AISC of USD$ 1,183/oz);
o Total tonnes mined of 678,382t at a feed grade of 3.23 g/t
AuEq compared to 637,441t at a feed grade of 3.44g/t in 2018.
o Recoveries improved to 81.4% in 2019 versus 77.8% in 2018
following improvements achieved in the grinding and flotation
circuits.
o Fleet availability improved as equipment issues seen at the
beginning of the year were resolved by the end of Q3 2019 and
improved further in Q4 2019 by 5%.
o Underground development of 23,136 metres achieved in the year,
compared to 19,868 metres in 2018. Increased meterage is improving
flexibility and availability of faces underground, allowing for
consistent delivery of ore to the plant.
o Cost improvements were achieved due to retendering all
services and goods, bringing outsourced contracts in-house and
monitoring use of consumables.
-- A positive 25% increased unaudited preliminary EBITDA of USD$
c.11.5 million from Kapan in 2019 (2018: USD$ 9.2 million);
-- The unaudited preliminary EBITDA has improved from USD$ 3.7
million in H1 2019 to c. USD$ 7.7 million in H2 2019;
-- Realised gold price for the year of USD$ 1,413 /oz (2018:
USD$ 1,268/oz) which is USD$ 163 /oz higher than the 2019 internal
budget price;
Kapan 2019 2018 % Change
Production (oz) 60,252 56,424 7
-------- --------- ---------
All-in sustaining 1,040
cost (USD$) (1) / oz 1,183/oz (14)
-------- --------- ---------
Sales (oz) 55,255 50,915 9
-------- --------- ---------
Gold production (oz) 32,791 30,179 9
-------- --------- ---------
Silver production
(oz) 557,001 486,963 14
-------- --------- ---------
Copper production
(t) 1,719 1,583 9
-------- --------- ---------
Zinc production (t) 6,476 6,330 2.3
-------- --------- ---------
Realised gold price 1,413
( USD$) /oz 1,268/oz 11
-------- --------- ---------
-- Due to the higher gold price impact on gold equivalent
ounces(2) , production guidance has been revised to 55,000 oz of
gold equivalent ounces per year for 2020; and,
-- The 2020 - 2026 Life of Mine Plan has been implemented.
(1) AISC on an oz produced basis exclude smelter TC/RC charges,
others which add c. USD$ 150/oz. Sustaining capex of c. USD$ 4
million included in the AISC.
(2) Gold equivalent ounces for 2019 are based on gold ratios of
81 for silver, 6,698 for copper and 16,075 for zinc. For the LOMP
2020 to 2026 these ratios are being amended to 83 for silver, 7,778
for copper and 20,968 for zinc due to adjusted price
assumptions.
Tulkubash
Construction
Construction continues at Tulkubash and first gold production
remains on track for late 2021. Chaarat is proceeding with detailed
engineering and has finalised several project components. These
include:
-- Initial earthworks including equipment mobilization, further
de-risking the project as it heads towards first production;
-- Ore haul road and platforms construction, to allow for early stockpiling ahead of processing.
-- Access road to site has been upgraded to ensure year-round access to project site;
-- Advance construction camp was installed; 360-man camp was
fabricated, and installation started with completion scheduled for
Q3 2020, enabling sufficient accommodation capacity of various
construction and mining teams from the start;
-- Detailed design of HLF, Crushing Circuit and ADR is advancing; and,
-- Tree Cutting permit for the whole site has been secured and
work commenced to clear area ahead of mining.
Resource & Reserve Update
The Company has published a Resource & Reserve Update for
the Tulkubash Project, for full details of the update, refer to the
announcement released today, 19 February 2020.
Highlights:
-- P&P Reserves increased from 22Mt to close to 25Mt with an
increase in grade to 0.95 g/t compared to 0.92 g/t previously;
-- Gold ounces in P&P Reserves have increased 14% to 749 koz
compared to 658 koz in the published bankable feasibility study;
and,
-- The pit shell optimisation for the Reserve update was based on a USD$ 1,300/oz gold price.
Project Financing
The Company is further advancing its project financing efforts
and is pleased to announce that discussions have moved to detailed
due diligence with one project financing group who are familiar
with the sector and region and could act as a sole lender. In
addition, the Company is progressing discussions with other
potential lenders and expects to announce the proposed lending
syndicate in the coming months.
Chaarat is working with potential lenders to implement a debt
facility that will fully fund construction and bring the asset into
production. It is envisioned that the debt facility will have a
term of 5 to 6 years, comprise standard project finance clauses
regarding customary conditions precedent to closing, including the
requirement for the Company to contribute an amount of equity to
the project, which will be funded through a combination of
resources provided through the Çiftay Joint Venture Agreement,
together with other funding options the Company is exploring.
As announced in September 2019, the Company signed a Joint
Venture Agreement with Çiftay, the Turkish mining and mine
construction contractor. Under the agreement, Çiftay will
progressively invest up to USD$ 31.5 million in cash for a
corresponding 12.5% equity stake in Tulkubash and Kyzyltash
projects.
The Tulkubash construction Capex of USD$ 110 million will be
fully funded once the project finance is closed and based on
discussions with potential lenders it is expected that the
financing facilities will be concluded in Q2 2020.
Corporate Update
2019 was a transformational year for the Company, following the
acquisition of the Kapan mine. Upon the acquisition, the Company
saw potential to improve the performance of the asset through
investment and optimisation initiatives across all operational
metrics and was able to deliver on those.
In November 2019, the Company provided the latest update to the
Kapan Reserve Estimate. The resource and reserve update showed that
depletion continues to be replaced with new reserves through the
Company's developed and successful exploration program. The work
allowed Chaarat to extend its mine life. This ongoing replacement
of resource through exploration continues to give the Company the
confidence that this mine should have many years of ongoing
operation well beyond the current LOMP. Chaarat continues to target
the significant exploration potential in the broader area
surrounding the Kapan mine, including the existing flank areas to
the main workings and will provide updates to the market when
appropriate.
Construction is ongoing and progressing well at Tulkubash with
Chaarat running a fast tracked, detailed engineering study,
continuing pre-construction works at site towards first gold
production and in parallel continuing exploration for immediate
construction readiness - first gold production remains on schedule
for late 2021.
In December 2019, the Company announced the conclusion of a
stabilisation agreement with the Government of the Kyrgyz Republic
in respect of the Company's Tulkubash and Kyzyltash projects. The
agreement showed strong support for Chaarat in country and is a
strong endorsement for the Company going forward.
Funding Update
The Company is on track on its refinancing efforts for the USD$
17 million debt maturing in Q1 2020 and possible options for
increasing the quantum of debt secured against Kapan, made possible
by the improved operating performance at the mine. The Company is
in detailed due diligence stage with potential refinancers and will
announce further information in the near future.
M&A Strategy
Chaarat is continuing its efforts to actively pursue a
disciplined growth agenda through organic growth and selective
M&A, with the Company currently in active dialogue on
opportunities that if concluded would be beneficial to all
stakeholders.
Progress on those potential opportunities will be announced as
soon as a clear structure and path to closing is visible, although
there can be no certainty that agreements will be reached.
Environmental, Social and Governance ("ESG")
Chaarat is committed to meeting the expectations of good
international industry practice, including recommendations set out
by the IFC Performance Standards on Environmental and Social
Sustainability. A number of the ESG initatives were implemented by
the Company during the course of 2019 including:
Kapan
- Initiated work to improve the stability of the local tailings
facility and improve water recycling on site;
- Worked with local business to develop a water treatment
facility to effectively remove dissolved metals in historical
runoff from old soviet era mines in the area;
- Improved safety programs on site and integrated contractors in
the company's safety management program;
- Organised basketball and football competitions between the
department and the workshops to promote a healthy lifestyle and
sports;
- Supported the renovation of the female health department at the Kapan Medical Centre clinic;
- Hosted a charity event bringing attention to helping children
from socially vulnerable families and children with health issues
during the Christmas period; and,
- Capital construction of the kindergarten in Kapan for 100 kids started in 2019 and ongoing.
Kyrgyz Republic
- Co-sponsored the third Kyrgyz-British Investment Forum
together with EBRD in London promoting the benefits of doing
business in the Kyrgyz Republic. This forms part of the Company's
ongoing work with EBRD and others to promote responsible foreign
direct investment in the Kyrgyz Republic;
- Contributed over USD$ 210,000 to social causes to the Chatkal district;
- Organized the Chaarat Cup to support the sport activities in the region; and,
- Hosted Children Master Class painting events.
Chaarat 2020 ESG Plan
- Opening a music and art school in Kapan;
- Ongoing construction of new kindergarten in Kapan for 100 children;
- Ongoing renovation of polyclinic in Kapan;
- Fourth Kyrgyz-British Investment Forum; and,
- Chaatkal Cup.
Notice of audited Full Year Results
Any numbers mentioned in this press release are subject to
yearend closing process and audit. The Company will be announcing
its audited Full Year Results for the period ended 31 December 2019
in April 2020.
Artem Volynets, Chief Executive Officer, commented:
"I'm pleased to report that we continue to make impressive
progress in all the assets across the company.
Our producing mine in Kapan is demonstrating solid operational
improvements with an excellent safety record, being a top priority
for the Company.
Since we acquired the project last year, we have improved
recoveries, plant utilisation and increased mining rates. We have
now implemented the updated life of mine plan that was announced
last year and due to continuing higher gold prices the run-rate
production guidance has been revised to 55,000 of gold equivalent
oz.
Construction continues to progress well at Tulkubash with first
gold production remaining on track for late 2021. With regards to
project funding, we are delighted to confirm that discussions have
now moved to due diligence and documentation with a leading sector
project finance group in the region. This, alongside the already
announced financing agreement in the form of the JV with Ciftay,
positions us well to deliver our goal of first gold in late
2021.
Chaarat will continue putting a great importance to sustainable
development and social investment programmes in the countries 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."
Analyst conference call and presentation
Chaarat Gold will host an analyst conference call and
presentation today, at 10:00am GMT. 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: 58876769#
The presentation will be available for download from the
Company's website:
https://www.chaarat.com/report_category/presentation/ or by
clicking on the link below:
https://www.anywhereconference.com?Conference=301310944&PIN=58876769&UserAudioMode=DATA
A recording of the conference call will subsequently be
available on the Company's website.
Enquiries
Chaarat Gold Holdings Limited
Artem Volynets (CEO) +44 (0)20 7499 2612
info@chaarat.com
Numis Securities Limited
John Prior, Paul Gillam (NOMAD) +44 (0) 20 7260 1000
James Black (Corporate Broking)
SP Angel +44 (0) 20 3470 0470
Ewan Leggat (Joint Broker)
Tavistock
Charles Vivian +44 (0)20 7920 3150
Gareth Tredway chaarat@tavistock.co.uk
Barney Hayward
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/ .
2019 PRODUCTION & OPERATIONAL SUMMARY
Sales partly lower due to concentrate in transit not accounted
for in December 2019.
Production Summary
2019 2018
Tonnes ore milled 733,860 635,501
Grade (g/t) 3.14 3.55
Recovery (%) 81.4 77.8
Gold equivalent (oz)
Production 60,252 56,424
Sales 55,255 50,915
Gold production (oz) 32,791 30,179
Silver production (oz) 557,001 486,963
Copper production (t) 1,719 1,583
Zinc production (t) 6,476 6,330
Realised gold price
(USD/oz) 1,413 1,268
ENDS
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