TIDMCGH
RNS Number : 3753P
Chaarat Gold Holdings Ltd
09 February 2023
9 February 2023
Chaarat Gold Holdings Limited
("Chaarat" or "the Company")
FY 2022 Production, Operational and Financial 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, is pleased to announce its
production and operational results for the full year ended 31
December 2022 (the "Year", "2022" or the "Period").
Kapan Mine
-- The Company finished the year 2022 exceeding its production
guidance at its Kapan Mine ("Kapan") in Armenia.
-- Kapan produced 63 thousand gold equivalent ounces ("koz"(1) )
vs its 2022 production guidance of 56-62 koz.
-- Production consists of 50 koz from own ore and 13 koz from
third-party ore production vs 2022 guidance of 50-53 koz from own
ore and 6-9 koz from third-party ore.
-- All-in-sustaining cash cost for own ore production ("AISC"(2)
) of USD 1,376/oz was higher than the USD 1,205/oz for 2021 (+14%).
This increase is mainly due to the adverse impacts from the United
States Dollar and Armenian Dram foreign exchange rate ("USD/AMD FX
rate"). Cost reduction initiatives, implemented during 2022, have
decreased AISC in H2 2022 (USD 1,334/oz) compared to H1 2022 (USD
1,420/oz, -6%).
-- A decrease in unaudited preliminary standalone EBITDA(4)
contribution of 41% to USD 13.3 million from Kapan in 2022, before
group accounting adjustments and non-cash items (2021: USD 22.7
million). The USD 9.4 million decrease in EBITDA was mainly due to
the above-mentioned adverse impact of USD/AMD FX rate. Q4 2022
EBITDA from Kapan was USD 4.2 million, above Q2 and Q3 2022, driven
by improved commodity prices and cost savings.
-- The updated ore reserve statement for Kapan based on the
previously announced 25% increase in measured and indicated
resources is currently being finalised and will be released later
this quarter.
Tulkubash & Kyzyltash Projects
-- The Tulkubash project remains ready for final investment
decision ("FID") once project financing is finalised. Financing
discussions continue with various financial and strategic
parties.
-- The SGS metallurgical test work programme on the Kyzyltash
project was completed. Results showed strong 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. Further details can be obtained from the
19 October Announcement and the full mineralogical and
metallurgical report on the Company's website.
Outlook 2023
* Kapan Production - Mine production guidance of
50-55(3) koz of own-ore production and additional
5-10 koz of third-party ore production.
* Kapan East Flank - resource definition drilling is
continuing, and results will be published during 2023
with updates on the East Flank development.
* Kapan Costs - the Company is continuing to take steps
to mitigate the adverse foreign exchange rate impact
and is expecting a stabilisation of costs in 2023.
* Tulkubash & Kyzyltash - the Company will continue to
work on all financing options and will update the
market as and when appropriate.
* Corporate - Chaarat will continue to review its
existing balance sheet structure with a view to
further reducing its interest cost and improving the
structure of the balance sheet.
Corporate Finance Update
-- During 2022 Chaarat focused on carefully managing its liquidity position and balance sheet.
-- Chaarat successfully extended the maturity of its USD 19.7
million plus accrued interest of USD 9.0 million secured
convertible loan notes from 31 October 2022 to 31 July 2023 with
strong noteholder support.
-- In 2022, Chaarat reduced the principal outstanding for the
Kapan acquisition loan by a further USD 9.5 million to USD 9.5
million principal outstanding. Chaarat also drew down USD6.0
million from a new working capital facility supplied by
Ameriabank.
-- As at 31 December 2022 unaudited Net Debt(5) at Group level
was USD 51.9 million (USD 48.1 million as at 30 September
2022).
(1 Gold equivalent ounces for 2021 recalculated on 2022 budget
prices with Au at USD1,775/oz and gold ratios of 75 for
silver,6,9597 for copper and 20,381 for zinc. Includes third-party
ore production.)
(2 AISC on a gold oz produced basis exclude smelter TC/RC
charges, others which add c. USD140/oz. Sustaining capex of c.
USD6.5 million p.a. is included in the AISC.)
(3 Gold equivalent ounces for 2023 guidance calculated on 2023
budget prices with Au at USD1,850/oz and gold ratios of 84 for
silver, 6,998 for copper and 19,826 for zinc. Includes third-party
ore production.)
(4) 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, income tax charges and any finance
related transactions. The amount reported is unaudited and
preliminary in nature given it may be subject to adjustments in the
audit process.
(5) (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 .)
Update on the Amulsar Transaction
-- On 24 October Chaarat confirmed it was in discussions
regarding the potential acquisition of Lydian Armenia CJSJ (the
"Acquisition"). The proposed Acquisition would constitute a Reverse
Takeover as defined under the AIM rules, due to the size of the
Acquisition, and therefore the shares were suspended from trading
on AIM pending the publication of the required AIM Admission
Document or an announcement that the potential Acquisition is not
proceeding.
-- Discussions on the proposed Acquisition are ongoing and the
Company will provide an update when appropriate. There is no
certainty at this stage that the proposed Acquisition will be
completed.
Notice of audited Full Year Results
Any numbers mentioned in this press release are subject to
year-end closing process and audit. The Company plans to announce
its audited full-year results for the period ended 31 December 2022
on 15 June 2023.
Mike Fraser, Chief Executive Officer, commented:
"I am pleased to report that we exceeded our 2022 production
guidance at Kapan. We are confident of achieving a similar
production level in 2023 and continue to demonstrate reliable
operating performance at Kapan.
Whilst Kapan benefited from improvement in the commodity basket
in 2022, EBITDA was impacted by the 20% strengthening of the
Armenian Dram compared to the US Dollar during the year and higher
commodity and energy costs due to the war in Europe. This had a
consequential impact on AISC in US Dollar terms. The increase was
partially offset by real local currency efficiency and productivity
improvements.
Chaarat continues to focus on its internal development options
in the Kyrgyz republic as well as non-organic growth options, which
include the Amulsar target. Further updates will be provided on the
growth opportunities as these options progress. "
Enquiries
Chaarat Gold Holdings Limited +44 (0)20 7499 2612
Mike Fraser, Chief Executive Officer IR@chaarat.com
Canaccord Genuity Limited (NOMAD
and Joint Broker) + 44 (0)20 7523 8000
Henry Fitzgerald-O'Connor
James Asensio
finnCap Limited (Joint Broker) +44 (0)20 7220 0500
Christopher Raggett
Panmure Gordon (UK) Limited (Joint
Broker) +44 (0)20 7886 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/ .
2022 PRODUCTION & OPERATIONAL SUMMARY
2022 2021
-------------------------------- ------- --------
Tonnes ore mined (Kapan) 649,311 600,246
AuEq Grade (g/t) (Kapan) 3.1 3.3
Tonnes ore milled (Total) 764,995 729,473
Tonnes ore milled (Kapan) 634,883 584,841
Tonnes ore milled (Third-Party
Ore) 130,111 144,632
AuEq Recovery (%) - Kapan 79.1 79.1
Gold equivalent (oz)
Production 62,834 63,724
Incl. from Third-Party
Ore 12,811 14,500
Sales 56,978 57,212
Incl. from Third-Party
Ore 9,337 12,645
Gold production (oz) 35,999 35,405
Silver production (oz) 592,121 610,322
Copper production (t) 2,115 2,284
Zinc production (t) 5,454 5,836
Realised gold price (USD/oz) 1,794 1,784
AISC (USD/oz) 1,376 1,205
END
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