REG - Chaarat Gold Hlgs Ld - Q3 2022 Operational Update

Chaarat Gold HoldingsAnnouncement

28/10/2022 07:00

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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™ 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

 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

 Gordon Hamilton

 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/) .

 

 

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

 

ENDS

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