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RNS Number : 4660C
Chaarat Gold Holdings Ltd
21 June 2021
21 June 2021
Chaarat Gold Holdings Limited
("Chaarat" or "the Company")
Investment Agreement with Çiftay
Chaarat (AIM:CGH), the AIM-quoted gold mining Company with an
operating mine in Armenia and the Tulkubash construction and
Kyzyltash development assets in the Kyrgyz Republic, is pleased to
announce it has entered into a new investment agreement with Çiftay
İn aat Taahhüt ve Ticaret A. ("Çiftay"), the Turkish mining
construction and mining contractor for the Tulkubash project (the
"Investment Agreement"). The Investment Agreement supersedes the
joint venture agreement executed with Çiftay announced on 13th of
September 2019 (the "JVA").
Çiftay and the Company have decided to replace the JVA with the
Investment Agreement, in order to simplify the structure of the
partnership and further align the interests of both parties. Under
the Investment Agreement, Chaarat will retain 100% ownership of the
Tulkubash and Kyzyltash projects with Çiftay becoming a strategic
investor at the Company level, through the issuance of new ordinary
shares.
Highlights of the Investment Agreement
- As per the recently published 2021 bankable feasibility study,
the construction contract works attributable to Çiftay have been
reduced compared to the 2019 bankable feasibility study.
- The consideration for these construction contract works has
been agreed as follows under the Investment Agreement:
o A maximum cash consideration of USD 25 million.
o In addition, Chaarat has agreed to issue up to USD 17.3
million in ordinary shares in the Company ("Equity Consideration")
to Çiftay. The Company believes this will strengthen the long-term
partnership between both parties and is subject to conditions.
- The Equity Consideration will be issued in three conditional tranches.
o Tranche 1 - USD 5 million to be issued upon closing of the
Investment Agreement which is subject to the below conditions
precedent and includes a lockup period to 1(st) January 2022.
o Tranche 2 - USD 10.3 million will be issued in 2023 after USD
20 million worth of construction capital expenditure (Capex)
attributable to Çiftay has been paid in cash. Tranche 2 shares will
be subject to a lockup between issue and first gold pour.
o Tranche 3 - USD 2 million to be issued based on schedule and
budget performance criteria.
- In addition, as part of the Investment Agreement, Çiftay and
Chaarat have agreed to settle some of the accrued expenses incurred
during the construction activities to date by issuing a total of
2,800,000 ordinary shares at the same time as Tranche 1 or latest
on 30(th) July 2021. These shares will not be subject to any
lock-up period.
- Conditions for closing of the Investment Agreement
o Signing of the debt financing to fully fund the Tulkubash
project
o Signing of an amendment to the existing construction contract
based on the updated bankable feasibility study and the Investment
Agreement
- Pricing mechanism for the Equity Consideration is as follows:
o Number of shares to be issued under Tranche 1 will be
calculated based on the 20-day volume weighted average price
("VWAP") prior to an announcement by Chaarat on the successful
completion of the Tulkubash debt financing.
o Number of shares to be issued under Tranche 2 will be
calculated based on the 20-day VWAP prior to the completion of the
condition for USD 20 million worth of construction works being
completed by Çiftay.
o Number of shares to be issued under Tranche 3 will be based on
a 20-day VWAP prior to achieving first gold pour. Shares will be
issued with no lock-up period.
Tulkubash Debt Financing Update
The updated bankable feasibility study and the conclusion of the
Investment Agreement with Çiftay were two key milestones to secure
the Tulkubash debt financing. All workstreams on the debt financing
continue to progress towards signing in mid-2021.
Chaarat is in advanced discussions with potential financing
counterparties who have completed their due diligence requirements
and are finalising the financing documentation. The Company is
favouring a comprehensive refinancing through a fixed income debt
instrument to simplify the balance sheet. The proceeds from this
potential financing would be used to fully fund the construction
costs related to the Tulkubash project, refinance all of the
existing Kapan debt and to partially repay the outstanding
convertible bond maturing in October 2021.
Whilst workstreams are advancing, the debt financing is subject
to market conditions and the current situation with regards to the
Kumtor mine in the Kyrgyz Republic may defer the financing
process.
The Company continues to receive ongoing support from the
Government of the Kyrgyz Republic including being asked to attend
the recent Kyrgyz - Turkish forum along with Çiftay.
Martin Andersson, Executive Chairman of the Board,
commented:
"I am very pleased with the outcome of the positive dialogue and
the resulting strengthened cooperation with our partner Çiftay. The
simplified agreement confirms the confidence in the Chaarat
management team and the Tulkubash project. The team at Çiftay
worked with Chaarat representatives in the past and has worked on
our Tulkubash site for some time now and mutual trust has been
established. With their experience as a construction and mining
contractor, Çiftay is well placed to perform the agreed
construction and mining services.
Tulkubash is a high-quality asset with robust economics and
further potential with our second development project Kyzyltash
sitting just beneath. We fully expect Tulkubash to become a
long-term cash generator capable of sustaining organic growth at
Chaarat, and in due course facilitating the development of
Kyzyltash."
Enquiries
+44 (0)20 7499
Chaarat Gold Holdings Limited 2612
Patrick Henze info@chaarat.com
Canaccord Genuity Limited (NOMAD and + 44 (0)20 7523
Joint Broker) 8000
Henry Fitzgerald-O'Connor
James Asensio
+44 (0)20 7220
finnCap Limited (Joint Broker) 0500
Christopher Raggett
Panmure Gordon (UK) Limited (Joint +44 (0)20 7886
Broker) 2500
John Prior
Hugh Rich
About Chaarat
Chaarat is a gold mining company which owns the Kapan operating
mine in Armenia as well as the 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 the former Soviet Union 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/ .
About Çiftay
Çiftay has extensive experience as a mining and civil
engineering contractor at multiple mine sites in Turkey including
two major gold mines. Additional information about Çiftay can be
found at http://www.Çiftay.com.tr/en/about.html .
ENDS
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