REG - Chaarat Gold Hlgs Ld - FY 2022 Production, Operational & Financial Update

Chaarat Gold HoldingsAnnouncement

09/02/2023 07:00

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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™ 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 (mailto: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/
(http://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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