TIDMCGH
RNS Number : 5103W
Chaarat Gold Holdings Ltd
26 April 2021
26 April 2021
Chaarat Gold Holdings Limited
("Chaarat" or "the Company")
Q1 2021 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 31 March 2021 (the
"Quarter", "Q1" or the "Period") for its Kapan Mine ("Kapan"), in
Armenia and a general corporate update.
Chaarat Gold will host an investor and analyst presentation
tomorrow, 27 April 2021, at 9:00 am BST. Participants can access
the presentation by registering here:
https://us02web.zoom.us/webinar/register/WN_mD9-07tESLOLPtZzQT2BKQ
Q1 2021 Highlights
Kapan
-- Production of 16,174 gold equivalent ounces(1) ("oz") vs 13,353 oz in Q1 2020 (+21%)
-- Third party ore treated was 34kt for Q1 2021 vs 0kt for Q1 2020
-- All-in-sustaining cost ("AISC"(2) ) of USD1,024 /oz vs USD1,074 /oz in Q1 2020 (-4.7%)
-- Preliminary unaudited standalone EBITDA contribution of
USD6.9 million vs USD2 million in Q1 2020 (+245%)
Tulkubash & Kyzyltash
-- Strong support and appreciation for investment and community
support received from new government and head of investment agency
in Kyrgyz Republic
-- Updated bankable feasibility study ("BFS") expected to be released in May 2021
-- Project financing on track for closing in H1 2021
-- Tulkubash and Kyzyltash drilling programmes to commence in May 2021
Corporate Finance
-- Funding package of USD52.2 million closed in February 2020
reducing the net debt position from USD64.5 million as at 31
December 2020 to USD12 million (-82%).
Kapan Polymetallic Mine - Q1 Highlights and Outlook
-- As previously disclosed, one fatality occurred in early
March. Initial investigations by Chaarat, the mining contractor and
relevant authorities have concluded and identified that the
drilling contractor's employee walked over a blocked ore pass
against basic general safety practices and behavioural safety
principles. Actions are ongoing to continue to reinforce a mature
safety culture that will prevent such incidents occurring in the
future.
-- Because of that incident, one lost time injury in Q1 and the
recordable injury case rate (per one million hours worked) is 0.78
compared to 0.39 in Q1 2020 and 0.0 in Q4 2020.
-- COVID 19 measures remain in place throughout the Company's
operations. Incident rates in country dropped during Q1 but are now
starting to increase again. There has been no impact to our
operations to date where strict adherence to COVID 19 protocols has
continued.
-- Production of 16,174 oz represents a 21% increase on Q1 2020
(13,353 oz) as a result of increased third-party ore treatment, and
improved mine grade.
-- Third party ore treated was 34kt for Q1 2021 vs 0kt for Q1
2020, approximately 10kt above the target for the Period.
-- Q1 2021 production consisted of:
o 8,893 ounces of gold;
o 160,945 ounces of silver;
o 605 tonnes of copper; and
o 1,527 tonnes of zinc;
-- All-in-sustaining cost ("AISC" (2) ) of USD1,024 /oz also
improved compared to Q1 2020 (USD1,074 /oz, -4.7%) due to further
efficiency gains realised in the milling circuit.
-- Realised gold price for the quarter of USD1,762 /oz versus
USD1,565 /oz in Q1 2020 (+12.6%) in line with the average gold
price for Q1 2021. Continuing strong price environment, especially
with realised copper prices of USD8,590/t vs USD5,283 in Q1 2020
(+63 % vs Q1 2020) above budgeted prices.
-- Contained gold equivalent ("AuEq") in own ore was 12,382 oz
in Q1 2021 vs 13,353 in Q1 2020 (-7%). Tonnes were down year over
year by 16.3%, but grade improved 13.6% due to mining changes to
reduce dilution.
o Total tonnes mined of 149kt vs 178kt in Q1 2020 (-16.3%).
Mining rates were lower due to reduced development activity in Q4
2020 as a result of the conflict between Armenia and Azerbaijan.
This led to a follow-on impact of reduced mining tonnes in Q1 2021.
However, early in the Quarter, development mining reverted to
historical levels and therefore mining levels are expected to be in
line with historical results from Q2 2021 onwards.
o Grade improved to 3.25g/t AuEq vs 2.94g/t AuEq in the same
period last year (+10.5%). Changes were made to reduce dilution
using the existing mining fleet, but new mining methods were also
introduced to optimise mining of narrow high-grade areas which
would be less valuable if mined using conventional mechanised
methods.
o Mill throughout increased year over year by 3% primary due to
increase in treatment of Third party-ore.
o AuEq recoveries were flat at 79.8% in Q1 2021 compared with Q1
2020 (79.6%).
-- Underground development of 5,755 metres achieved in the
quarter, compared to 5,623 metres in Q1 2020 (+2.3%). This was
achieved through additional work by the drilling contractors who
compensated for the mining staff temporarily involved in the
previously mentioned conflict.
-- CAPEX spent was USD1 million, 30% lower than expected given
some delivery delays of spare parts and replacement equipment,
mainly a surface loader.
-- Unaudited Q1 2021 Kapan standalone EBITDA contribution of
USD6.9 million vs USD2.0 million in Q1 2020 (+245%).
Outlook for Kapan
-- COVID 19 vaccination programs are expected to commence in Q2
as COVAX supplied vaccines are delivered which will hopefully ease
the increasing rates seen in the beginning of Q2.
-- Chaarat remains on track to deliver on its AuEq 57koz
guidance for the year, as previously set out in its FY 2020
Production, Operational and Financial Update on 21 January
2021.
-- Third-party ore supply is expected to remain stable for the remainder of 2021.
-- East Flank drilling campaign is planned to commence in May
2021 with an updated resource statement expected by end of
year.
-- An update to the current resource and reserve statement is
underway with completion and release of the new Life of Mine
targeted for Q4 2021.
-- Financial performance in H1 2021 is expected to be improved
vs H1 2020 as a result of higher-grade areas, constant third-party
ore supply, further improved milling performance and increased
commodity prices.
(1) Gold equivalent ounces for 2020 recalculated on 2021 budget
prices with Au at $1,700/oz and gold ratios of 68 for silver, 7,287
for copper and 21,862 for zinc. In last years' Q1 2020 operations
update, 2020 oz were based on gold ratios of 83 for silver, 7,778
for copper and 20,968 for zinc leading to a lower AuEq number
reported in that previous year.
(2) AISC on a gold oz produced basis exclude smelter TC/RC
charges, others which add c. USD$ 133/oz. Sustaining capex of c.
USD 8 million p.a. is included in the AISC, of which capex of USD1
million was spent in Q1 2021.
Tulkubash and Kyzyltash Project Update
Chaarat Executive Chairman, Martin Andersson, held meetings with
the new government and investment agency of the Kyrgyz Republic in
March 2021 receiving strong support and positive feedback for the
development of Tulkubash and Kyzyltash and appreciation for the
investments and community support to date.
Project preparation work for Tulkubash has progressed as
expected, with mobilisation after the winter period planned for
May. Full stage construction activities to commence once project
financing is completed.
The 2021 exploration program is planned to commence soon.
Resource drilling is planned for areas with potential close to the
current planned pit areas and existing reserves. Further drilling
is targeted for previously drilled areas with good results just to
the north east of the current reserve to identify mine life
extension opportunities. The plan consists of approximately 5,000m
of drilling and a further 4,000m of trenching.
The updated BFS for the Tulkubash project is being peer reviewed
and the Company expects it to be published in May 2021 along with a
revised Mineral Resource estimate and Ore Reserve.
Additional drilling is also planned on the Kyzyltash deposit
this season to collect core in preparation for the metallurgical
test programme later this year. This core will be used to develop
understanding of the metallurgical processing options for the
deposit. The result of this program would be available early
2022.
Project Financing
Chaarat is on track to secure a debt facility that, together
with an equity contribution from the Company, will fully fund the
USD110 million required for the construction of Tulkubash and
enable the asset to be brought into production during H1 2021. It
is envisioned that the debt facility will comprise standard project
finance conditions, including the requirement for the Company to
contribute equity to the financing of the project. As previously
announced, the Company will utilise a substantial portion of the
funds raised in February 2021 to meet the equity contribution
required for the project.
Corporate Finance Update
The Company received strong demand for a funding package in
February 2021 for a total of USD52.2 million which included issuing
USD30.0 million in equity to new institutional investors and family
offices as well as existing shareholders and conversion of debt
into equity of USD22.2 million.
The Financing led to a significant improvement in the Company's
debt position reducing it from USD70.5 million as at 31 December
2020 to USD46 million now, a reduction of 35%(3) . The net debt
position is reduced from USD64.5 million as at 31 December 2020 to
USD12 million, a reduction of 82%.
The funds received from the equity fundraise will predominantly
be contributed to the remainder of the upfront equity portion
required to fund the Tulkubash project in the Kyrgyz Republic and
fulfils one of the key criteria in order to draw on any debt
project finance facility that is arranged.
With the debt-to-equity conversion, the Labro Term Loan has been
extinguished, saving the Company USD2.1 million a year in interest
payments from 2021 to 2024.
The Kapan acquisition loan facility was reduced by another USD2
million to USD26 million at the end of Q1 2021 in accordance with
the amortisation schedule.
Chaarat continues to evaluate capital opportunities to either
refinance existing financing facilities and/or reduce its overall
cost of capital. One of the key priorities for the next months is
to evaluate options on the upcoming convertible bond in October
2021 that create most shareholder value which could include the
conversion or refinancing of this bond.
(3) Excluding lease liabilities, contract liabilities and
accrued interest on the convertible loan note.
Artem Volynets, Chief Executive Officer, commented:
"I am pleased that we can report another strong quarter with
further improvements to the mine. Especially the work on minimising
dilution and increasing efficiencies supported by the continuing
strong commodity price environment have resulted in strong first
quarter performance. I am very happy with the performance of the
Kapan team in delivering higher production this quarter by mining
higher grade areas and treating more third-party ore, offsetting a
temporary reduction in own tonnes mined.
At Tulkubash, the BFS update is almost ready for release along
with a revised mineral resource estimate and ore reserve. The teams
are ready to commence exploration works and construction works.
Project financing discussions are on track for closing in H1
2021."
Enquiries
+44 (0)20 7499
Chaarat Gold Holdings Limited 2612
Artem Volynets (CEO) info@chaarat.com
Canaccord Genuity Limited (NOMAD and + 44 (0)20 7523
Joint Broker) 8000
Henry Fitzgerald-O'Connor
James Asensio
+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 with an initial focus on the
FSU 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/ .
Q1 2021 PRODUCTION & OPERATIONAL SUMMARY
Q1 2021 Q1 2020 Q1 2021 Q4 2020
Tonnes ore mined 149,102 178,144 149,102 152,091
AuEq Grade (g/t) 3.25 2.94 3.25 3.77
Tonnes ore milled 180,507 175,948 180,507 185,567
Tonnes ore milled (Third-Party
Ore) 34,025 0 34,025
AuEq Recovery Kapan (%) 79.8 79.6 79.8 79.7
Gold equivalent production
(oz) 16,174 13,353 16,174 9,023
Incl. from Third-Party
Ore 3,792 0 3,792
Gold production (oz) 8,893 6,656 8,893 5,972
Silver production (oz) 160,945 130,366 160,945 118,526
Copper production (t) 605 455 605 355
Zinc production (t) 1,527 1,886 1,527 1,656
AuEq Sales 12,775 11,161 12,775 13,186
Realised gold price
(USD/oz) 1,762 1,565 1,762 1,512
AISC (USD/oz) 1,024 1,074 1,024 1,242
ENDS
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