REG - Chaarat Gold Hlgs Ld - Interim results for six months ended 30 June 2022
08/09/2022 07:00
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RNS Number : 6865Y Chaarat Gold Holdings Ltd 08 September 2022
8 September 2022
Chaarat Gold Holdings Limited
("Chaarat" or "the Company")
Interim results for the six months ended 30 June 2022
Chaarat Gold Holdings Limited (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, today publishes its unaudited results for the
six-month period ended 30 June 2022 ("H1 2022").
Highlights for interim period ended 30 June 2022
Group Financial Results
Revenue up 5% in H1 2022 (US$50.4 million) compared to H1 2021 (US$48.1
million), reflecting stronger commodity prices and a higher volume of own ore
sales (25,118 ounces of AuEq in H1 2022 vs 22,909 ounces in H1 2021).
Positive adjusted Group EBITDA¹ in H1 2022 of US$4.9 million (H1 2021:
US$10.4 million), reflecting cost inflation and the adverse AMD/USD exchange
rate during the period.
Cash and cash equivalents as at 30 June 2022 of US$6.2 million (31 December
2021: US$11.1 million) as a result of continued expenditure on development
activities.
Group net debt² increased from US$39.6 million at 31 December 2021 to US$44.4
million at 30 June 2022 mainly reflecting utilisation of cash balances.
Kapan
Full-year guidance of 56-62koz of total own-ore and third-party ore
production remains unchanged for 2022. This comprises 50-53koz own ore and
6-9koz third-party ore.
Own ore all-in-sustaining cost ("AISC"(3)) of US$1,420 /oz in H1
2022 vs US$1,063 /oz in H1 2021 (+33.6%) due to the strengthening of the
Armenian Dram in Q2 2022 (AMD/USD + 10.3% vs H1 2021 average) and cost
increases experienced in energy prices and raw materials in line with
inflation seen across the mining sector globally.
Standalone Kapan adjusted EBITDA contribution of US$8.1 million in
H1 2022, a 41% decrease compared to H1 2021 adjusted EBITDA contribution of
US$13.8 million due to the above stated reasons.
Production was 30,562 gold equivalent ounces⁴ ("oz"), 23,877
oz from own ore vs 33,248 oz (-28.2%) in H1 2021, and 6,685 oz vs from third
party ore versus 6,982 in H1 2021(-4.3%).
Third-party ore treatment of 63.5kt for H1 2022 vs 70kt for H1 2021
(-9.3%) was in line with budget and contributed US$1.7 million to EBITDA for
H1 2022.
Exploration of the East Flank area adjacent to the existing
Kapan mine is progressing according to schedule.
Tulkubash, Kyzyltash and Kyrgyz Exploration
Chaarat issued updated Resource and Reserve estimates in May 2022 that showed
a 13% increase in Ore Reserves (571koz to 647koz) based on the 2021 drilling
programme results and a $1,600/oz gold price.
2022 Exploration commenced in June 2022 and is progressing as per budget and
schedule. The scope of this year's work is to determine the exploration
potential of the wider licence area to help identify potential targets for the
future.
Metallurgical test work on the Kyzyltash core drilled in 2021 continues as
planned. Full results are expected in Q3 2022. Initial findings indicate
strong gold recovering across alternative processing routes.
Outlook for 2022
Kapan remains on track to deliver on its full-year guidance of
56-62koz, comprising of 50-53koz from own ore and 6-9koz from third-party ore.
Discussions with potential project finance providers for Tulkubash
are ongoing. The Company expects these to be assisted by the resolution of the
dispute between the Kyrgyz Government and Centerra Gold. An update will be
provided on the revised project schedule once a Final Investment Decision
(FID) is made, which is expected in 2023.
The Company continues discussions with various parties and the loan
noteholders on proposals in relation to the convertible loan notes due on 31
October 2022 and will provide an update on the status of these discussions in
due course. The Company also continues to investigate cost saving initiatives
at corporate level. Please refer to Note 2 of the Financial Statements, the
Going Concern Statement, for further information on the Company's financing
requirements.
( 1) In reporting financial information, the Group presents adjusted 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. Adjusted EBITDA is calculated by
adjusting profit/(loss) for depreciation and amortisation, net finance costs,
unrealised foreign exchange gain/(loss), fair value gain on warrant, change in
provisions and share-based payment charges.
² 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.
(3 AISC on a gold oz produced basis exclude smelter TC/RC charges, which in H1
2022 add c. USD 160/oz of cost. The H1 2022 AISC includes sustaining capex of
c. USD3.1 million incurred during the period (which excludes non-sustaining
capex i.e., development capex).)
⁴ 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.
Mike Fraser, Chief Executive Officer, commented:
"Kapan made good operational progress in the first half of 2022 despite mining
in narrower vein areas which had an impact on grade. Financial performance was
impacted by lower realised commodity prices, higher energy and raw materials
cost and a higher Armenian Dram compared to the US Dollar. We are monitoring
the exchange rate development closely and are working on various initiatives
to counter the cost increases and exchange rate impact.
We are pleased to note the final resolution of the dispute between Centerra
and the Kyrgyz government. This was a material condition to progressing
funding of our Tulkubash project. Engagement on all financing alternatives is
ongoing.
Discussions for a solution on the convertible bond maturing at the end of
October this year are in progress and we expect to update the market in due
course."
Analyst and Investor conference call and presentation
Chaarat will host an analyst and investor conference call and presentation on
Thursday, 8th September, at 9:00 BST. Participants can register via the link
below and will receive a link to the Zoom presentation and dial-in numbers in
their inbox.
https://www.investormeetcompany.com/chaarat-gold-holdings-ltd/register-investor
(https://www.investormeetcompany.com/chaarat-gold-holdings-ltd/register-investor)
Participants are invited to submit questions prior to the presentation to
IR@chaarat.com (mailto:IR@chaarat.com) .
The presentation will be available for download from the Company's website two
hours before the call at
https://www.chaarat.com/report_category/presentations/
(https://www.chaarat.com/report_category/presentations/) .
A recording of the conference call will subsequently be available on the
Company's website.
This announcement contains inside information for the purposes of Article 7 of
Regulation (EU) 596/2014 (which forms part of domestic UK law pursuant to the
European Union (Withdrawal) Act 2018).
Enquiries
Chaarat Gold Holdings Limited
+44 (0)20 7499 2612
Mike Fraser (Chief Executive
Officer)
info@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 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
(http://www.chaarat.com) .
Forward-looking statements
This announcement may include or incorporate by reference statements that may
constitute "forward-looking statements" in respect of Chaarat's operations,
performance, prospects, and/or financial condition. Forward-looking statements
are sometimes, but not always, identified by their use of a date in the future
or such words and words of similar meaning as "anticipates", "aims", "due",
"could", "may", "will", "should", "expects", "believes", "intends", "plans",
"potential", "targets", "goal" or "estimates". By their nature,
forward-looking statements involve a number of risks, uncertainties and
assumptions and actual results or events may differ materially from those
expressed or implied by those statements. Accordingly, no assurance can be
given that any particular expectation will be met, and reliance should not be
placed on any forward-looking statement. Additionally, forward-looking
statements regarding past trends or activities should not be taken as a
representation that such trends or activities will continue in the future. No
responsibility or obligation is accepted to update or revise any
forward-looking statement resulting from new information, future events or
otherwise. Nothing in this announcement should be construed as a profit
forecast. This announcement does not constitute or form part of any offer or
invitation to sell, or any solicitation of any offer to purchase any shares or
other securities in the Company, nor shall it or any part of it or the fact of
its distribution form the basis of, or be relied on in connection with, any
contract or commitment or investment decisions relating thereto, nor does it
constitute a recommendation regarding the shares or other securities of the
Company. Past performance cannot be relied upon as a guide to future
performance and persons needing advice should consult an independent financial
adviser. Statements in this announcement reflect the knowledge and information
available at the time of its preparation. Liability arising from anything in
this announcement shall be governed by English law. Nothing in this
announcement shall exclude any liability under applicable laws that cannot be
excluded in accordance with such laws.
OPERATIONAL REVIEW
Kapan
As previously disclosed, Kapan experienced a fatal workplace injury in May
2022. This was the first recordable injury in over 14 months at the mine.
Recordable injury frequency rate ("RIFR") per one million hours worked is 0.74
for H1 2022 compared to 1.4 in H1 2021. Regrettably, since the period end,
another fatal injury involving a Chaarat employee occurred which is currently
being investigated. An update to the market may be provided after the
investigation is completed. Further improvement actions are being
implemented and awareness trainings are being held.
A total of 30,562 gold equivalent ounces was produced in the period,
consisting of:
23,877 AuEq ounces produced from Kapan ore which represents an 8.1%
decrease on H1 2021 (33,248 oz).
6,685 AuEq ounces from Third-party AuEq which represents a 4.3% decrease
from H1 2021 (6,982 oz).
Own-ore production contained the following for H1 2022 and H1 2021:
H1 2022 H1 2021
Gold (oz) 12,815 13,466
Silver (oz) 226,129 272,635
Copper (tonnes) 741.5 852.1
Zinc (tonnes) 2,804 3,169
Own-ore All-in-sustaining cost ("AISC") of US$1,420 /oz has increased year on
year due to inflationary pressure and lower gold production compared to
US$1,063 /oz in H1 2021 (+33.6%).
Third-party ore treated was 63.5kt for H1 2022 vs 70.0kt for H1 2021 (-9.3%).
This is in line with plan of 120kt for the year.
Realised gold price for the half was US$1,858 /oz versus US$1,783 /oz in H1
2021 (+4%).
Tonnes mined was up year on year by 6.5%. Ore mined was 321.1 thousand tonnes
("kt") vs 303.7 kt in H1 2021. Mine grade was 12.2% lower at 2.94 g/t AuEq
in H1 2022 compared to 3.35 g/t AuEq in H1 2021. Focus for H2 2022 remains on
reducing dilution and developing areas of the mine with wider veins.
Mill throughput was stable at 373.3 kt year on year (-0.5%, H1 2021 374.8 kt).
Mill AuEq recovery for own ore was 79.5% compared with 79.4% in H1 2021. This
is despite a 12% decrease in head grade.
Kapan has experienced significant price challenges during H1 related to
increasing global inflation, the strengthening of the Dram and the flow
through of higher commodity prices impacting reagents and consumables.
Sourcing initiatives and cost reduction initiatives have managed to mitigate
some of the impact and have kept costs in line with the 2022 plan.
Resource drilling was 33,772m in H1 2022 vs 30,796m in H1 2021 (+9.7%).
Development metres were 12,919m in 2022 vs 11,783m in H1 2021 (9.6%).
Capital expenditure ("CAPEX"), including development expenditure of $0.4
million, was US$3.5 million in line with budget for the year. Annual CAPEX
is still expected to be ca. US$8 million.
Development of the exploration drive has been progressing and diamond drilling
is planned to commence in H2 2022. Work will continue throughout 2023.
Available results are expected to be incorporated into the 2023 resource model
for inclusion in the annual resource and reserve update.
Outlook
Kapan remains on track to deliver on its full-year guidance of 56-62koz,
comprising of 50-53koz from own ore and 6-9koz from third-party ore.
Third-party ore supply is expected to be in line with H1.
Development of the East Flank is progressing with first drill results expected
by year end.
The Company is assessing several changes to the mining methods utilised at
Kapan. The broad areas of mineralisation experiences initially at the
Shahumyan deposit are progressively giving way to narrower and more variable
veins. These require new methods to be adopted to manage the increasing
dilution being experienced. Trial areas are being developed in several parts
of the mine to assess the relative cost savings and ease of operability of the
various methods. Smaller loaders and trucks previously retired from service
are being overhauled and returned to operation to allow the test work to be
carried out.
The Company is also looking to transition its fleet to electric vehicles over
the next few years. This will reduce carbon intensity and improve working
conditions in the mine due to the reduction of vehicle exhaust. Initial trials
to retrofit existing equipment is underway and the focus for new equipment
purchases will target electric vehicles whenever suitable.
Performance for the 2022 financial year is being impacted by the increases in
energy prices and cost of other raw materials in line with inflation seen
across the mining sector globally. The strengthening of the Armenian Dram in
late Q2 2022 is also putting additional pressure on costs. The Dram
strengthened 20% in late Q2 vs 2021 levels. Higher commodity prices have also
adversely impacted reagents, fuel, explosives and consumables costs. Sourcing
and cost reduction initiatives have managed to mitigate some of the impact and
are helping to keep close to the 2022 plan.
Tulkubash, Kyzyltash and Kyrgyz Exploration Update
The updated mineral resource and ore reserve estimates were released in May
2022. The full reports are available on Chaarat's website. Highlights include:
Contained gold ounces in the Ore Reserves increased by 13% to 647 thousand
ounces ("koz") compared to 571 koz in the 2021 bankable feasibility study
(BFS).
Proven & Probable Reserves increased from 20.9Mt to 23.1Mt (+11%) with a
slightly increased grade of 0.87 g/t compared to 0.85 g/t (+2%) in the BFS;
The pit shell optimisation for the Ore Reserve was based on a US$1,600/oz gold
price vs US$1,450/oz gold price in the 2021 BFS as per latest long term gold
price forecasts. 2022 Exploration programmes for Tulkubash commenced in June
2022 and is progressing as per budget and schedule.
Metallurgical test work on the Kyzyltash core drilled in 2021 continues as
planned. Full results are expected in Q3 2022. To date the results, support
the findings of the previous Kyzyltash studies. The results of the
metallurgical study will be used to determine the most appropriate processing
route for the refractory sulphide ore and to develop an initial prefeasibility
level study in 2023-24.
2022 Exploration commenced in June 2022. The scope of this years' work is to
assess the exploration potential of the wider license area and identify
potential targets for further exploration. Work consists of aerial
reconnaissance using drone technology and targeting trenching of high
prospectivity areas. Work is progressing as per budget and schedule.
Site infrastructure and construction works were limited pending completion of
the debt financing.
Corporate
Mike Fraser joined the company as Chief Executive Officer and member of the
Board on 17 January 2022 bringing over 20 years of extensive experience in the
global mining and metals industry.
Warren Gilman retired from the Board on 17 May 2022 following his decision not
to seek re-election at the Company's 2022 annual general meeting due to other
business commitments.
FINANCIAL REVIEW
Income statement
Revenue in the period amounted to US$50.4 million (H1 2021: US$48.1 million),
comprising US$41.4 million of own-ore revenue and US$9.0 million of
third-party revenue (H1 2021: US$37.1 million own ore and US$11.0 million
third-party revenue). During this period, Kapan sold 25,118 ounces of AuEq (H1
2021: 22,909 ounces), including third-party sales, with a realised gold price
per ounce of US$1,858 (H1 2021: US$1,783), a realised silver price per ounce
of US$23 (H1 2021: US$26), a realised copper price per tonne of US$9,816 (H1
2021: US$8,752) and a realised zinc price per tonne of US$3,807 (H1 2021:
US$2,890).
The Group operating profit for the period was US$1.4 million (H1 2021: US$7.8
million) and the Group adjusted EBITDA¹ was US$4.9 million (H1 2021: US$10.4
million). The decrease in adjusted EBITDA was mainly driven by cost inflation
seen across the mining sector globally as well as the adverse AMD/USD exchange
rate during the period which increased costs further (AMD/USD + 10.3% vs H1
2021 average).
2022 Armenia 2022 2022 2021 2021 2021
Kyrgyz Republic & Corporate Total Armenia Kyrgyz Republic & Corporate Total
US$'000 US$'000 US$'000 US$'000 US$'000 US$'000
Adjusted EBITDA¹ 8,134 (3,197) 4,937 13,788 (3,375) 10,413
Depreciation and amortisation (5,396) (249) (5,645) (2,385) (252) (2,637)
Net finance costs (1,412) (1,839) (3,251) (1,580) (2,856) (4,436)
Unrealised foreign exchange gain 2,568 - 2,568 1,293 - 1,293
Fair value gain on warrant - 319 319 - 163 163
Change in provisions (74) - (74) - - -
Share-based payment charge - (373) (373) - (1,251) (1,251)
Profit/(loss) before tax 3,820 (5,339) (1,519) 11,116 (7,571) 3,545
Income tax charge (1,177) - (1,177) (2,173) - (2,173)
Profit/(loss) after tax 2,643 (5,339) (2,696) 8,943 (7,571) 1,372
(1) Adjusted EBITDA has been calculated as basic EBITDA, adjusted for
unrealised foreign exchange gains, fair value gain on warrant, change in
provisions and share-based payment charges, all of which are non-cash items.
Finance costs in H1 2022 were US$3.3 million (non-cash US$2.5 million)
compared to US$4.4 million (non-cash US$3.3 million) in the comparable period.
The variance related mainly to financing costs of US$0.9 million that were
incurred in H1 2021 in connection with the Labro Facility. As this Facility
expired on 30 June 2021, no further financing costs were incurred beyond this
date.
Income taxes in H1 2022 were US$1.2 million compared to US$2.2 million in H1
2021, reflecting the lower profit achieved at Kapan. Consequently, the Group
made a loss after tax of US$2.7 million in H1 2022 compared to a profit after
tax of US$1.4 million in the comparative 2021 period.
Balance sheet
The borrowings at the balance sheet date of US$50.6 million (31 December 2021:
US$50.7 million) comprised US$27.5 million of convertible loan notes due in
October 2022 (31 December 2021: US$25.6 million), US$16.3 million of other
loans (31 December 2021: US$21.3 million), US$5.4 million of contract
liabilities (31 December 2021: US$2.4 million), US$1.3 million of lease
liabilities (31 December 2021: US$1.0 million) and US$0.1 million of warrant
financial liabilities (31 December 2021: US$0.4 million).
The Group's net debt increased from US$39.6 million at 31 December 2021 to
US$44.4 million at 30 June 2022, primarily as a result of the lower cash and
cash equivalents balance on hand at 30 June 2022.
Non-current assets increased from US$119.7 million at 31 December 2021 to
US$131.1 million at 30 June 2022. The increase was mainly due to the
purchase of property, plant, and equipment at Kapan. Additionally, exploration
and evaluation costs of US$1.8 million were capitalised relating to the asset
in the Kyrgyz Republic.
Current assets were US$39.1 million at 30 June 2022 compared to US$51.8
million at 31 December 2021. The decrease was mainly due to final receipts
from Kapan's customers for sales before the 2021 year-end. Current assets at
30 June 2022 included cash and cash equivalents of US$6.2 million (31 December
2021: US$11.1 million).
Total liabilities at 30 June 2022 were US$92.2 million compared to US$94.7
million at 31 December 2021. This reduction was mainly due to repayments of
bank debt in the amount of US$5.7 million (including interest), offset by
accrued interest on borrowings for the H1 2022 period (US$2.7 million) and a
prepayment from Kapan's customer of $3.0 million. The movement in liabilities
is set out in more detail in Note 9 to the interim financial statements,
including the split between long-term and short-term components. In addition,
liabilities at 30 June 2022 included a provision for environmental obligations
at Kapan of US$13.7 million (31 December 2021: US$10.5 million). The increase
mainly related to foreign currency translation effects at 30 June 2022 due to
the movement in the AMD/USD exchange rate.
Total equity was US$78.0 million at 30 June 2022 compared to US$76.9 million
at 31 December 2021.
Cash flow
Cash and cash equivalents decreased from US$11.1 million at 1 January 2022 to
US$6.2 million at 30 June 2022. The movement comprised of:
net operating cash flows of US$7.7 million (H1 2021: US$3.0 million),
reflecting the EBITDA contribution from Kapan offset by working capital
movements
net cash used in investing activities of US$5.7 million (H1 2021: US$8.7
million) relating to the purchase of property, plant, and equipment at Kapan
and in the Kyrgyz Republic together with capitalised exploration and
development spend in the Kyrgyz Republic
cash outflows from financing activities of US$6.1 million (H1
2021: inflows of US$22.9 million) relating to external debt repayments,
including interest, of US$5.7 million
At 1 September 2022, the Group had approximately US$3.3 million of cash and
cash equivalents on hand.
Going concern
In order to achieve the planned future capital developments of assets, to
sustain corporate activities and to refinance the convertible loan notes due
on 31 October 2022, management will need to raise financing. There are
currently no binding agreements in place in respect of any additional funding
and there is no guarantee that any course of funding will proceed such that
the ability to refinance the convertible loan notes prior to 31 October 2022
represents a material uncertainty. However, management is committed to raising
additional funds and has an established track record of successfully achieving
this in the past as demonstrated by the fundraising activities in 2020 and
2021. Accordingly, the Directors have adopted the going concern basis of
accounting in preparing the interim financial statements. Further details of
the Group's status as a going concern and expected future financing plans are
set out below in Note 2 to these financial statements.
Mike
Fraser
David Mackenzie
Chief Executive Officer
Interim Chief Financial Officer
7 September 2022
Consolidated Income Statement
For the six months ended 30 June 2022
6 months ended 6 months ended
30 June 2022 30 June 2021
(Unaudited) (Unaudited)
US$'000 US$'000
Revenue 50,391 48,095
Cost of Sales (42,617) (33,385)
Gross profit 7,774 14,710
Selling expenses (1,149) (956)
Administrative expenses (5,212) (5,958)
Other income - 22
Operating profit 1,413 7,818
Finance income 15 9
Finance costs (3,266) (4,445)
Fair value gain on warrant 319 163
(Loss)/profit before tax for the period, attributable to equity shareholders (1,519) 3,545
of the parent
Income tax charge (1,177) (2,173)
(Loss)/profit after tax for the period, attributable to equity shareholders of (2,696) 1,372
the parent
(Loss)/earnings per share (basic and diluted) - US$ cents (0.39) 0.21
Consolidated Statement of Comprehensive Income
For the six months ended 30 June 2022
6 months ended 6 months ended
30 June 2022 30 June 2021
(Unaudited) (Unaudited)
US$'000 US$'000
(Loss)/profit for the period, attributable to equity shareholders of the (2,696) 1,372
parent
Items which may subsequently be reclassified to profit and loss
Exchange differences on translating foreign operations and investments 3,387 687
Other comprehensive income for the period, net of tax 3,387 687
Total comprehensive profit for the period attributable to equity shareholders 691 2,059
of the parent
Consolidated Balance Sheet
As at 30 June 2022
As at As at
30 June 2022 (Unaudited) 31 December 2021 (Audited)
Note US$'000 US$'000
Assets
Non-current assets
Exploration and evaluation costs 8 68,148 66,305
Other Intangible assets 1,326 1,213
Property, plant, and equipment 56,223 47,306
Prepayments for non-current assets 743 530
Deferred income tax assets 4,682 4,381
Total non - current assets 131,122 119,735
Current assets
Inventories 19,173 18,442
Trade and other receivables 13,737 22,247
Cash and cash equivalents 6,202 11,134
Total current assets 39,112 51,823
Total assets 170,234 171,558
Equity and liabilities
Equity attributable to shareholders
Share capital 6,897 6,894
Share premium 242,757 242,695
Own shares reserve (123) (132)
Convertible loan note reserve 1,420 1,420
Merger reserve 10,885 10,885
Share option reserve 10,292 11,383
Translation reserve (11,046) (14,433)
Accumulated losses (183,078) (181,836)
Total equity 78,004 76,876
Liabilities
Non-current liabilities
Provision for environmental obligations 13,670 10,521
Lease liabilities 9 795 732
Other loans 9 5,500 9,688
Total non-current liabilities 19,965 20,941
Current liabilities
Trade and other payables 25,645 30,717
Contract liabilities 9 5,354 2,379
Lease liabilities 9 552 246
Other loans 9 10,832 11,640
Warrant financial liability 61 380
Convertible loan notes 9 27,464 25,625
Other provisions for liabilities and charges 2,357 2,754
Total current liabilities 72,265 73,741
Total liabilities 92,230 94,682
Total liabilities and equity 170,234 171,558
Consolidated Statement of Changes in Equity
For the six months ended 30 June 2022
Share Capital Share Premium Own Shares Convertible loan note Merger Reserve Share Option Translation Reserve Accumulated Losses Total
Reserve Reserve Reserve
US$'000 US$'000 US$'000 US$'000 US$'000 US$'000 US$'000 US$'000 US$'000
As at 31 December 2020 (Audited) 5,401 191,594 (216) 2,493 10,885 14,103 (15,282) (184,527) 24,451
Loss for the year - - - - - - - (3,588) (3,588)
Translation losses for the year - - - - - - 849 - 849
Total comprehensive loss for the year - - - - - - 849 (3,588) (2,739)
Share options lapsed - - - - - (715) - 715 -
Share-based payments charge - - - - - 1,251 - - 1,251
Issuance of shares for cash 841 28,711 - - - - - - 29,552
Issuance of shares for settlement of liabilities 652 22,390 - - - - - (101) 22,941
Transfer of treasury shares - - 84 - - (3,256) - 3,172 -
Modification of convertible loan notes - - - (1,073) - - - 2,493 1,420
As at 31 December 2021 (Audited) 6,894 242,695 (132) 1,420 10,885 11,383 (14,433) (181,836) 76,876
Loss for the period - - - - - - - (2,696) (2,696)
Translation gains for the period - - - - - - 3,387 - 3,387
Total comprehensive income for the period - - - - - - 3,387 (2,696) 691
Share options lapsed - - - - - (1,092) - 1,092 -
Share-based payment charge - - - - - 373 - - 373
Issuance of shares for settlement of liabilities 3 62 - - - - - - 65
Transfer of treasury shares - - 9 - - (371) - 362 -
As at 30 June 2022 (Unaudited) 6,897 242,757 (123) 1,420 10,885 10,292 (11,046) (183,078) 78,004
Consolidated Cash Flow Statement
For the six months ended 30 June 2022 6 months ended 30 June 2022 6 months ended 30 June 2021
(Unaudited) (Unaudited)
US$'000 US$'000
Cash flows from operating activities
Operating profit 1,413 7,818
Depreciation and amortisation 5,645 2,637
(Gain)/Loss on disposal of property, plant, and equipment (11) 4
Non-cash expenses - 59
Change in provisions (618) -
Unrealised foreign exchange gains (1,989) (1,339)
Share-based payments 373 1,251
Decrease/(increase) in inventories 2,572 (2,806)
Decrease/(increase) in trade and other receivables 12,863 (5,967)
(Decrease)/increase in trade and other payables (12,321) 4,026
Increase/(decrease) in contract liabilities 2,167 (1,583)
Cash generated in operations 10,093 4,100
Income taxes (paid)/refunded (2,372) (1,107)
Net cash generated in operations 7,721 2,993
Investing activities
Purchase of property, plant & equipment (4,177) (6,533)
Exploration and evaluation costs (1,524) (2,003)
Purchase of intangible assets (10) (144)
Proceeds from sale of property, plant & equipment 13 -
Interest received 15 3
Net cash used in investing activities (5,683) (8,677)
Financing activities
Proceeds from issue of share capital - 29,983
Share issue costs paid - (432)
Repayments of principal portion of lease liabilities (374) (334)
Finance costs paid for modifications of other loans - (104)
Repayments of principal amount of loan (4,938) (5,050)
Payments of interest (790) (1,193)
Net cash from financing activities (6,102) 22,870
Net change in cash and cash equivalents (4,063) 17,186
Cash and cash equivalents at beginning of the period 11,134 6,928
Effect of changes in foreign exchange rates (869) 494
Cash and cash equivalents at end of the period 6,202 24,608
Notes to the Financial Statements
1. General information and group structure
Chaarat Gold Holdings Limited (the "Company") (registration number 1420336) is
incorporated in the British Virgin Islands (BVI) and is the ultimate holding
company for the companies set out below (the "Group"). The Company's shares
are admitted to trading on the Alternative Investment Market of the London
Stock Exchange (AIM:CGH). The registered address of the Company is: Palm Grove
House, PO Box 438, Road Town, Tortola, British Virgin Islands, VG1110.
As at 30 June 2022 the Group consisted of the following companies all of which
are wholly owned:
Group company Country of incorporation Principal activity
Chaarat Gold Holdings Limited BVI Ultimate holding company
Zaav Holdings Limited BVI Holding company
Chon-tash Holdings Limited BVI Holding company
At-Bashi Holdings Limited BVI Holding company
Akshirak Holdings Limited BVI Holding company
Goldex Asia Holdings Limited BVI Holding company
Chon-tash Mining LLC* Kyrgyz Republic Exploration
At-Bashi Mining LLC* Kyrgyz Republic Exploration
Akshirak Mining LLC* Kyrgyz Republic Exploration
Goldex Asia LLC* Kyrgyz Republic Exploration
Chaarat Zaav CJSC* Kyrgyz Republic Exploration
Chaarat Gold International Limited Cyprus Holding company
Chaarat Gold Services Limited England & Wales Services company
Chaarat Kapan CJSC* Armenia Production company
*Companies owned indirectly by the Company.
2. Going concern
As at 1 September 2022 the Group had approximately US$3.3 million of cash and
cash equivalents and US$42.2 million of debt (excluding lease liabilities and
contract liabilities) comprising the following:
US$28.1 million convertible loan notes, including accrued interest to 1
September 2022
US$14.1 million borrowings outstanding
Kyrgyz Republic and corporate activities
In order to achieve the planned (though as yet uncommitted) capital
developments of assets in the Kyrgyz Republic and to sustain corporate
activities, future financing will need to be secured.
Kapan
The Board has based the cash flow forecasts for Kapan on the most recent
budgets which show that Kapan is expected to generate sufficient revenue to
cover its operating costs and principal and interest payments and meet its
covenants. Based on current forecasts, covenants will be met, however,
performance of Kapan is sensitive to commodity prices and production. If these
were to decrease, there is a risk that covenants will be breached.
Convertible Loan Notes
By 31 October 2022, the convertible loan notes are due to be redeemed by
conversion into equity, at the holders' option, or will be repaid in cash for
a total of up to US$28.8 million (which includes accrued interest).
Conclusion
The convertible loan notes will need to be refinanced with cash or alternative
funding, to the extent that loan note holders do not choose to convert to
equity, prior to 31 October 2022. To proceed with the development in Kyrgyz
Republic and to sustain corporate activities further financing will also be
required. A number of workstreams are underway to secure financing for the
Company for these purposes.
However, there are currently no binding agreements in place in respect of any
additional funding and there is no guarantee that any course of funding will
proceed. Therefore, this indicates the existence of a material uncertainty
which may cast significant doubt over the Group's ability to continue as a
going concern and, therefore, it may be unable to realise its assets and
discharge its liabilities in the normal course of business. The financial
statements do not include the adjustments that would result if the Group were
unable to continue as a going concern.
Notwithstanding the above, the directors consider there is a reasonable
expectation that sufficient funding will be raised and therefore have
continued to adopt the going concern basis.
3. Accounting policies
The significant accounting policies which have been consistently applied in
the preparation of these interim financial statements are summarised below:
Basis of preparation
The consolidated interim financial information has been prepared using
policies based on International Financial Reporting Standards (IFRS and IFRIC
interpretations) issued by the International Accounting Standards Board
("IASB"). It does not include all disclosures that would otherwise be required
in a complete set of financial statements and should be read in conjunction
with the 2021 Annual Report. The results for the period are derived from
continuing activities. The figures for the year ended 31 December 2021 have
been extracted from the statutory financial statements, prepared in accordance
with United Kingdom adopted international accounting standards and
International Financial Reporting Standards (IFRSs) as issued by the
International Accounting Standards Board (IASB) and on a historical cost
basis, which are available on the Group's website www.chaarat.com. The
auditor's report on those financial statements was unqualified and noted a
material uncertainty in respect of the Group's ability to continue as a going
concern.
The consolidated interim financial information for the six months ended 30
June 2022 and 30 June 2021 (unaudited) does not constitute statutory accounts
as defined in Section 435 of the Companies Act 2006.
New standards, interpretations and amendments adopted by the Group
The accounting policies adopted in the preparation of the consolidated interim
financial information are consistent with those adopted in the preparation of
the Group's annual consolidated financial statements for the year ended 31
December 2021. There were no new applicable standards that became effective on
1 January 2022 and the Group has not early adopted any amendment, standard or
interpretation that has been issued but is not yet effective. It is expected
that where applicable, these standards and amendments will be adopted on each
respective effective date.
Critical accounting judgements and key sources of estimation uncertainty
The preparation of interim financial information requires management to make
judgements, estimates and assumptions that affect the application of
accounting policies and the reported amounts of assets and liabilities,
income, and expenses. Actual results may differ from these estimates.
In preparing the consolidated interim financial information, the significant
judgements made by management in applying the Group's accounting policies and
the key sources of estimation uncertainty were the same as those that applied
to the consolidated financial statements for the year ended 31 December 2021.
4. Revenue
The revenue recognised from contracts with customers for the 6 months ended 30
June 2022 and 30 June 2021 consisted of the following:
2022 2021
US$'000 US$'000
Copper concentrate 39,692 40,294
Zinc concentrate 9,897 7,198
Zinc concentrate freight 802 603
Total 50,391 48,095
The Group's sales of copper and zinc concentrate are based on provisional
1-3-month commodity forward prices and as such, contain an embedded derivative
which is marked-to-market at each month end.
The Group's sales are to internationally well-established commodity traders
under standard offtake terms.
In 2022, Copper concentrate sales are made on an Ex Works-basis meaning that
control passes to the buyer when the concentrate is loaded on the truck at the
Kapan mine. Zinc concentrate sales are made on a cost, insurance, and freight
("CIF") basis meaning that control passes to the buyer when the concentrate is
loaded on the vessel in the port of shipment (e.g., port of Poti, Georgia).
In addition to the Group's own concentrates, it processes third party ore into
concentrate and sells it to customers. Of the US$50.4 million generated from
concentrate sales in H1 2022, US$41.4 million relates to own concentrate sales
and US$9.0 million relates to third-party concentrate sales (2021: US$37.1
million and US$11.0 million).
In 2022, the Group has continued to recognise contract liabilities in relation
to its contracts with customers for prepayments received for the future
transfer of concentrates, as set out in Note 9.
5. Segmental analysis
Operating segments are identified based on internal reports about components
of the Group that are regularly reviewed by the Board, in order to allocate
resources to the segments and to assess their performance.
Based on the proportion of revenue and profit within the Group's operations
and on the differences in principal activities, the Board considers there to
be two operating segments:
Exploration for mineral deposits in the Kyrgyz Republic ("Kyrgyz
Republic")
Exploration and production of copper and zinc concentrates at Kapan
in Armenia ("Armenia")
Kyrgyz Republic Armenia Corporate Total
30 June 2022 US$'000 US$'000 US$'000 US$'000
Revenue
Sales to external customers - 50,391 - 50,391
Total segment revenue - 50,391 - 50,391
Operating profit/(loss) (1,068) 5,232 (2,751) 1,413
Finance income - 15 - 15
Finance costs - (1,427) (1,839) (3,266)
Fair value gain on warrant - - 319 319
Profit/(loss) before income tax (1,068) 3,820 (4,271) (1,519)
Income tax charge - (1,177) - (1,177)
Profit/(loss) after income tax (1,068) 2,643 (4,271) (2,696)
Assets
Segment assets - non-current 81,419 49,702 - 131,121
Segment assets - current 551 34,340 4,221 39,112
Total assets 81,970 84,042 4,221 170,233
Liabilities
Segment liabilities 2,707 61,805 27,718 92,230
Total liabilities 2,707 61,805 27,718 92,230
Kyrgyz Republic Armenia Corporate Total
30 June 2021 US$'000 US$'000 US$'000 US$'000
Revenue
Sales to external customers - 48,095 - 48,095
Total segment revenue - 48,095 - 48,095
Operating profit/(loss) (995) 12,695 (3,882) 7,818
Finance income - 3 6 9
Finance costs - (1,583) (2,862) (4,445)
Fair value gain on warrant - - 163 163
Profit/(loss) before income tax (995) 11,115 (6,575) 3,545
Income tax charge - (2,173) - (2,173)
Profit/(loss) after income tax (995) 8,942 (6,577) 1,372
Assets
Segment assets - non-current 73,495 39,158 - 112,653
Segment assets - current 267 30,348 21,168 51,783
Total assets 73,762 69,506 21,168 164,436
Liabilities
Segment liabilities 2,063 55,993 26,927 84,983
Total liabilities 2,063 55,993 26,927 84,983
6. Finance costs
The finance costs for the 6 months ended 30 June consisted of the following:
2022 2021
US$'000 US$'000
Interest on convertible loan notes 1,839 1,802
Interest on other loans 724 1,266
Interest on lease liabilities 71 69
Interest on contract liabilities 77 128
Unwinding of discount - provision for rehabilitation 554 315
Financing costs - 865
Total 3,266 4,445
Interest on the convertible loan notes amounted to US$1.8 million in H1 2022,
in line with the comparable period.
The interest on other loans of US$0.7 million includes interest on the Kapan
acquisition loan of US$0.6 million and interest on other borrowings of US$0.1
million. The interest charge in the comparative period was higher as it
included interest on the Labro Term Loan of US$0.2 million (which was
extinguished in H1 2021) and interest on the Kapan acquisition loan of US$1.0
million due to a higher outstanding principal balance.
The financing costs of US$0.9 million in H1 2021, a non-cash cost, related to
the amortisation of the Labro Facility commitment fee. As this Facility
expired on 30 June 2021, no further financing costs were incurred beyond this
date.
7. Loss per share
Loss per share is calculated by reference to the loss for the 6 months ended
30 June 2022 of US$2.7 million (2021: profit of US$1.4 million) and the
weighted average number of ordinary shares in issue during the period of
689,654,696 (2021: 657,425,878).
At 30 June 2022, 8,920,341 (2021: 8,920,341) warrants, 41,541,933 (2021:
55,027,006) share options and convertible loan notes have been excluded from
the diluted weighted average number of ordinary shares calculation because
their effect would have been anti-dilutive.
8. Exploration and evaluation costs
Tulkubash Kyzyltash Total
US$'000 US$'000 US$'000
At 1 January 2022 56,204 10,101 66,305
Additions 1,788 55 1,843
At 30 June 2022 57,992 10,156 68,148
Exploration and evaluation assets comprise costs associated with exploration
for, and evaluation of, mineral resources together with costs to maintain
mining and exploration licences for mining properties that are considered by
the Directors to meet the requirements for capitalisation under the Group's
accounting policies. As at 30 June 2022, management does not consider there to
be any indicators of impairment in respect of these assets.
9. Liabilities
Reconciliation of liabilities
Convertible loans Contract liabilities Lease liabilities Other loans Total
Liabilities from financing activities US$'000 US$'000 US$'000 US$'000 US$'000
At 1 January 2022 25,625 2,379 978 21,328 50,310
Cash flows:
Cash proceeds - 3,000 - - 3,000
Payment of interest - - - (790) (790)
Payment of principal amount - - - (4,938) (4,938)
Lease payments - - (374) - (374)
Net proceeds - 3,000 (374) (5,728) (3,102)
Non-cash items:
Additions - - 537 - 537
Interest accrued 1,839 77 71 724 2,711
Settlement of interest against receivables - (16) - - (16)
Reversal of lease liability - - (66) - (66)
Amounts recognised as revenue - (833) - - (833)
Effect of currency translation - 747 201 8 956
Total liabilities from financing activities at 30 June 2022 27,464 5,354 1,347 16,332 50,497
Non-current - - 795 5,500 6,295
Current 27,464 5,354 552 10,832 44,202
Convertible loan notes
During the period there were no new issues of convertible loan notes. The only
movement in the period was accrued interest of US$1.8 million (2021: US$1.8
million).
2021 Notes US$'000
At 1 January 2022 25,625
Cash proceeds -
Transaction costs -
Net proceeds -
Amount classified as equity -
Accrued interest 1,839
At 30 June 2022 27,464
Non-current -
Current 27,464
The number of shares to be issued on conversion is fixed. There are no
covenants attached to the convertible loan notes.
The 2021 notes accrued interest at 10% p.a. until 30 April 2020 and then at a
rate of 12% p.a. until 31 October 2022. The notes are secured on the shares of
the Group's principal operating subsidiary, Chaarat Zaav CJSC via the
intermediate holding company Zaav Holdings Limited. The notes are repayable on
31 October 2022 and can be redeemed by the Company at any time subject to
paying a minimum of 5% interest. The notes, including accrued interest, can be
converted into shares at any time at the holder's option. If not converted,
the notes will be repaid in cash for a total of US$28.8 million in October
2022, as disclosed in Note 2.
On 21 October 2021, the maturity date of the convertible loan notes was
extended from 31 October 2021 to 31 October 2022 and the conversion price
reduced, which was treated as a substantial modification for accounting
purposes. The coupon interest rate remains at 12% p.a.
The value of the liability and equity conversion component was reassessed at
the date of modification. The fair value of the liability component was
calculated using a market interest rate of 15% for an equivalent instrument
without conversion option.
As the notes fall due in October 2022, they have been classified as current
liabilities at 30 June 2022.
Contract liabilities
The movements in the Group's contract liabilities for the period are presented
below:
US$'000
At 1 January 2022 2,379
Cash received in advance of performance 3,000
Interest on contract liabilities 77
Settlement of interest against receivables (16)
Amounts offset against receipts from customers (833)
Effect of currency translation 747
At 30 June 2022 5,354
Non-current -
Current 5,354
The contract liabilities balance relates to prepayments received from one of
Chaarat Kapan's customers for the sale of concentrates. The prepayments accrue
interest at a rate defined in the sales contract of 6-month LIBOR plus 5% p.a.
and are settled by way of deduction against future outstanding invoices.
Lease liabilities
The Group's leases are accounted for by recognising a right-of-use asset and a
lease liability except for leases of low value assets and leases with a
duration of 12 months or less.
The Group leases equipment and land in the jurisdictions from which it
operates, the most notable being the land that is leased in Armenia. Certain
items of property, plant and equipment are also leased in the Kyrgyz Republic
which contain variable payments over the lease terms, therefore these leases
do not fall within the scope of IFRS 16, and right-of-use assets and lease
liabilities are not recognised as a result.
The movements in the Group's right-of-use assets and lease liabilities for the
period are presented below:
Right-of-use assets
Land Equipment Total
US$'000 US$'000 US$'000
At 1 January 2022 760 3 763
Additions - 537 537
Depreciation charge (61) (270) (331)
Effect of currency translation 127 40 167
At 30 June 2022 826 310 1,136
Lease liabilities
Land Equipment Total
US$'000 US$'000 US$'000
At 1 January 2022 839 139 978
Additions - 537 537
Interest expense 47 24 71
Lease payments (87) (287) (374)
Reversal of lease liability - (66) (66)
Effect of currency translation 144 57 201
At 30 June 2022 943 404 1,347
Non-current 795 - 795
Current 148 404 552
The maturity of the gross contractual undiscounted cash flows due on the
Group's lease liabilities is set out below based on the period between 30 June
2022 and the contractual maturity date:
Within 6 months 6 months to 1 year 1 to 5 years Over 5 years Total at 30 June 2022
US$'000 US$'000 US$'000 US$'000 US$'000
Land leases 131 117 908 112 1,268
Equipment leases 414 - - - 414
Total 545 117 908 112 1,682
As at 30 June 2022, the contractual discounted cash flows due on the Group's
lease liabilities amounts to US$1.4 million (31 December 2021: US$1.0
million).
The discount rate used in calculating the lease liabilities is the rate
implicit in the lease, unless this cannot readily be determined, in which case
the Group's incremental rate of borrowing is used instead. In 2022, a discount
rate of 12% per annum has been used to calculate the Group's lease liabilities
for its land and equipment leases.
Other loans
The movements in the Group's other loans for the period are presented below:
Borrowings Other Borrowings Total
US$'000 US$'000 US$'000
At 1 January 2022 19,286 2,042 21,328
Interest accrued 655 69 724
Payment of interest in cash (721) (69) (790)
Payment of principal in cash (4,938) - (4,938)
Effect of currency translation 8 - 8
At 30 June 2022 14,290 2,042 16,332
Non-current 5,500 - 5,500
Current 8,790 2,042 10,832
Borrowings
On 30 January 2019, the documentation was finalised for the Kapan Acquisition
Financing totalling US$40 million, which is syndicated with Ameriabank CJSC
(US$32 million), HSBC Bank Armenia CJSC (US$5 million) and Ararat Bank OJSC
(US$3 million). The loan incurs interest at Libor plus 8% and was originally
repayable through quarterly payments over a four-year period however in July
2021, the maturity date of the facility was extended from 31 January 2023 to 2
October 2023.
This bank financing has certain covenants attached to it that the Group needs
to adhere to. All covenants were met as at 30 June 2022 and as such the Group
remains in full compliance with the loan.
Other Borrowings
Other borrowings include an amount owing to one of Chaarat Kapan's customers
in respect of prepayments for the future sale of concentrates. The prepayments
accrue interest at 1-month LIBOR plus 6% p.a. and are expected to be settled
in cash in accordance with a repayment schedule defined in the sales contract.
The prepayments can be requested upon notice and therefore are repayable on
demand.
10. Other provisions
Other provisions for liabilities and charges relate mainly to employment
disputes in Armenia ("Legal Claims Provision") of US$0.7 million at 30 June
2022 (31 December 2021: US$1.2 million) and a legal claim of US$1.4 million at
30 June 2022 (31 December 2021: US$1.3 million) that was charged against
Chaarat in the Kyrgyz Republic whereby compensation for agricultural losses
was demanded ("Land Provision").
US$0.8 million of the employment dispute provision was covered by an indemnity
included in the original Kapan acquisition agreement. At 31 December 2021, the
Directors considered recoverability virtually certain and accordingly
recognised a corresponding within other receivables, however this has
subsequently been provided against at 30 June 2022 as recoverability is no
longer virtually certain.
The provisions have been recognised as, based on the Group's legal views, it
is considered probable that an outflow of resources will be required to settle
the disputes, however there is uncertainty around the timing of payments to be
made. There are no expected reimbursements relating to these provisions.
The movement in provisions in 2022 is as follows:
Legal Claims Provision Land Provision Other Provision Total
US$'000 US$'000 US$'000 US$'000
At 1 January 2022 1,207 1,342 205 2,754
Change in provision (98) - - (98)
Settlement of provision in cash (520) - - (520)
Foreign exchange on conversion 124 89 9 221
At 30 June 2022 713 1,432 214 2,357
11. Related party transactions
Remuneration of key management personnel
Remuneration of key management personnel for the 6 months ended 30 June 2022
and 30 June 2021 is as follows:
2022 2021
US$'000 US$'000
Short term employee benefits 907 904
Share-based payments charge 373 856
Total 1,280 1,760
Included in the above key management personnel are 8 directors (one of whom
retired on 17 May 2022) and 2 key managers (2021: 8 and 2).
Regarding the share-based payments charge, in January 2022, the Company
granted options over five million ordinary shares of US$0.01 each in the
Company to the newly appointed Chief Executive Officer, Mr. Michael Fraser,
under the Chaarat Gold Holdings Limited Management Incentive Plan 2019 (the
"MIP"). The options are exercisable at a price of £0.42 per share between 18
January 2022 and 18 January 2027 subject to the rules of the MIP.
No further share awards have been granted for 2022, however should any such
awards be made later this year, they will be accounted for in H2 2022.
Entities with significant influence over the Group
At 30 June 2022, Labro Investments Limited, Chaarat's largest shareholder,
owned 44.51% (31 December 2021: 44.17%) of the ordinary US$0.01 shares in
Chaarat ("Ordinary Shares") and US$1.0 million of 10% secured 2021 convertible
loan notes which, assuming full conversion of principal and interest to
maturity on 31 October 2022, are convertible into 3,579,088 Ordinary Shares.
12. Post balance sheet events
A fatal incident involving an employee occurred on 3rd September 2022. This
followed injuries sustained at the Kapan mining operation. The area where the
incident occurred was closed immediately and an internal investigation is
underway. Chaarat is currently working with the authorities to facilitate
their investigation of this tragic incident. Following a safety stop, mining
operations are continuing in all other areas. Production guidance for the
year from the Kapan mine remains unaffected
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