TIDMCGH
RNS Number : 4150E
Chaarat Gold Holdings Ltd
28 October 2022
28 October 2022
Chaarat Gold Holdings Limited
("Chaarat" or "the Company")
Q3 2022 Operational Update
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, announces its production and
operational results for the quarter ended 30 September 2022 (the
"Quarter", "Q3" or the "Period") for its Kapan Mine ("Kapan") in
Armenia and a general corporate update.
Kapan
-- As previously disclosed, tragically there was a fatal
workplace injury on 3rd September. Recordable injury frequency rate
("RIFR") (per one million hours worked) was 0.7.
-- Chaarat remains on track to meet full year production
guidance of 56-62koz for 2022 (50-53koz own ore and 6-9koz
third-party ore(1) ).
-- Q3 2022 production of 15,638 gold equivalent ounces(2) ("oz")
vs 13,224 oz in Q3 2021 (+16.5%) because of higher mine rates and
higher grades. 12,691 oz from own ore vs 10,120 oz in Q3 2021
(+25.4%) and 2,947 oz from third-party ore vs 3,303 oz in Q3 2021
(-10.8%) were produced.
-- Third party ore treated was 29.9kt vs 27.9kt in Q3 2021 (+7.3%).
-- All-in-sustaining cost ("AISC"(3) ) was largely unchanged
year on year at USD1,362 /oz vs USD1,366 /oz in Q3 2021.
-- Preliminary unaudited standalone EBITDA contribution of
USD1.0 million vs USD2.6 million in Q3 2021 (-54%). EBITDA was
significantly affected by the adverse AMD/USD exchange rate and
lower commodity prices. Q3 2022 saw an average exchange rate of 409
Dram to the dollar compared to 490 in Q3 2021 (-18%). Commodity
prices also softened in the quarter with the realized gold price
falling 12% from Q2 2022 and 4% from Q3 2021.
-- Work commenced on the annual update on the resources,
reserves and depletion for the mine. An updated Mineral Resource
Estimate and Ore Reserves Estimate are planned for release mid and
late Q4 2022 respectively.
Outlook for Kapan
-- Chaarat remains on track to deliver on its 56-62koz guidance
for the year, comprising of 50-53koz from own ore and 6-9koz from
third-party ore.
-- Third-party ore supply is expected to remain stable for the remainder of 2022.
-- East Flank drilling has been optimised to offset the adverse
effects of the strengthened exchange rate and weaking metal
prices.
-- The Company is continuing to take steps to mitigate the
adverse exchange rate impact and increases in energy prices and
cost of other raw materials.
Tulkubash & Kyzyltash
-- The Tulkubash project remains ready for final investment
decision ("FID") once project financing is finalised. Financing
discussions continue with various parties. Despite the robust
project economics and the added mine life earlier this year, the
current macro-economic environment and volatility in financial
markets has cautioned potential financiers and is likely to
postpone decisions further. An update will be provided on the
revised project schedule once the FID is made.
-- The SGS metallurgical test work programme on the Kyzyltash
core drilled in 2021 has been completed. Results showed good
recoveries for all three of the technologies tested. The programme
included testing milling indices, flotation, oxidation and then
leaching using carbon in leach ("CIL"). Pressure Oxidation ("POX")
and Albion(TM) had comparable results, with bio-oxidation ("BIOX")
returning the best overall recoveries. Chaarat has released
separate press releases on the results and will post the full
mineralogical and metallurgical test results on its website in due
course.
Corporate Finance
-- Chaarat successfully extended the maturity of its secured
convertible loan notes 2022 (the "Loan Notes") from 31 October 2022
to 31 July 2023 with strong noteholder support.
-- Chaarat reduced the principal outstanding for the Kapan
acquisition loan by a further USD2.2 million to USD12.1 million
outstanding and drew down USD3.0 million from a new working capital
facility resulting in unaudited Net Debt at group level of USD48.1
million(4) . A further USD2.4 million of the Kapan acquisition loan
(including interest) is scheduled to be paid at the end of October
2022, which will reduce Net Debt to USD45.7 million.
-- The Company continues discussions with various parties on
project financing for the Tulkubash project as well as corporate
financing options and will provide an update on the status of these
discussions as appropriate.
(1) Gold equivalent ounces for 2021 recalculated on 2022 budget
prices with Au at $1,775/oz and gold ratios of 75 for silver, 6,597
for copper and 20,381 for zinc. In last years' Q1 2021 operations
update, 2021 oz were based on gold ratios of 68 for silver, 7,287
for copper and 21,862 for zinc leading to a lower AuEq number
reported in that previous year.
(2) AISC are calculated on own ore production only and on a gold
oz produced basis. These exclude smelter TC/RC charges, which in Q3
2022 add c. USD$ 248/oz of cost. The Q3 2022 AISC includes
sustaining capex of c. USD1.7 million incurred during the period
(which excludes non-sustaining capex i.e., development capex).
(3) In reporting financial information, the Group presents
EBITDA as an alternative performance measure, "APM", which is not
defined or specified under the requirements of IFRS. The Group
believes that this measure provides stakeholders with additional
useful information on the performance of the business and, within
that, Kapan. EBITDA is calculated by adjusting profit/(loss) for
depreciation and amortisation, net finance costs, unrealised
foreign exchange gain/(loss), fair value gain on warrant and change
in provisions.
(4) In reporting financial information, the Group presents Net
debt as an alternative performance measure, "APM", which is not
defined or specified under the requirements of IFRS. The Group Net
debt comprises convertible loan notes, other loans, contract
liabilities, lease liabilities and warrant financial liabilities,
net of cash and cash equivalents.
Mike Fraser, Chief Executive Officer, commented:
"Tragically we had a further fatal injury at Kapan mine and have
increased our efforts to ensure we continue to improve the design
of safe work.
Production for the quarter exceeded our targets. EBITDA for the
quarter was impacted by the significant strengthening of the
Armenian Dram versus the US Dollar. Steps have been taken to help
mitigate this impact by reducing costs, renegotiating long term
contracts, and securing alternative supply sources.
During the fourth quarter we will provide an updated JORC
compliant Mineral Resource Estimate and Ore Reserves Estimate on
our Kapan mine which is expected to meaningfully increase our
Estimates and extend the mine life.
We are appreciative of the continuing support of our noteholders
and the beneficial solution that was announced earlier in the
quarter.
Recent media reports have commented on the corporate development
efforts underway to add to the portfolio. Further updates will be
provided as appropriate in due course. "
Enquiries
+44 (0)20 7499
Chaarat Gold Holdings Limited 2612
Mike Fraser, Chief Executive Officer ir@chaarat.com
Canaccord Genuity Limited (NOMAD and + 44 (0)20 7523
Joint Broker) 8000
Henry Fitzgerald-O'Connor
James Asensio
Gordon Hamilton
+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 Tulkubash and Kyzyltash Gold Projects in
the Kyrgyz Republic. The Company has a clear strategy to build a
leading emerging markets gold company through organic growth and
selective M&A.
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/ .
Q3 2022 OPERATIONAL SUMMARY
Q3 2022 Q3 2021
============================== ======== ========
Ore mined (t) 160,080 143,258
AuEq Grade (g/t) 3.14 2.95
Total milled (t) 197,713 167,088
Own Ore milled (t) 167,766 139,188
Third-Party Ore milled
(t) 29,947 27,900
AuEq Recovery Kapan (%) 77.6 77.2
Gold equivalent production
(oz) 15,638 13,224
Incl. from Third-Party
Ore 2,947 3,289
Gold production (oz) 8,967 7,322
Silver production (oz) 153,642 125,787
Copper production (t) 545 509
Zinc production (t) 1,241 1,230
AuEq Sales 13,689 8,534*
Realised gold price (USD/oz) 1,720 1,788
*Q3 2021 AuEq sales were impacted by discussions on export of
cooper concentrate
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