TIDMCGH
RNS Number : 7842J
Chaarat Gold Holdings Ltd
29 April 2022
29 April 2022
Chaarat Gold Holdings Limited
("Chaarat" or "the Company")
Q1 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 31 March 2022 (the
"Quarter", "Q1" or the "Period") for its Kapan Mine ("Kapan"), in
Armenia and a general corporate update.
Q1 2022 Highlights
Macro
-- The conflict in Ukraine and associated sanctions against
Russia have had minimal impact on the Company's operations in
Armenia and Kyrgyz Republic in Q1 2022. The Company is continuing
to monitor the developments closely.
Kapan
-- Chaarat Kapan has achieved a 12-month recordable injury
frequency rate ("RIFR") of zero for the first time in its history.
The RIFR for Q1 2022 was zero vs 0.78 in Q1 2021.
-- Ore mined of 163,652 tonnes vs 149,102 tonnes for Q1 2021
(+9.8%). Strong mine production has resulted in 41kt of own ore on
stock ready for processing during the remainder of 2022.
-- Total production of 15,266 gold equivalent ounces(1) ("oz")
vs 16,174 oz in Q1 2021 (-6.9%) consisting of 12,381 oz from own
ore and 2,885 oz from third-party ore. Production was lower due to
reduced third-party processing and lower grade ore currently being
mined. Performance was in line with the Company's plan based on the
areas currently being mined.
-- All-in-sustaining cost ("AISC"(2) ) of USD1,352 /oz vs
USD1,024 /oz in Q1 2021 (+32.0%) due to increases in energy prices,
other raw materials costs and increased development work.
-- Preliminary unaudited standalone Kapan EBITDA contribution of
USD7.6 million vs USD6.9 million in Q1 2021 (+10.1%).
Tulkubash & Kyzyltash
-- Resolution of the dispute between the government of Kyrgyz
Republic and Centerra Gold regarding the Kumtor mine was announced
on 4 April 2022 and allowed Chaarat to recommence financing
discussions on the Tulkubash project.
-- Updated mineral resource and reserve statements on the
Tulkubash project are on track to be released in Q2 2022.
-- Ongoing project work will focus on engineering completion and
appropriate construction activities to optimise full activities
once debt financing is secured.
-- Metallurgical test work on the Kyzyltash drill core is
underway at SGS Lakefield and results are on track for Q3 2022. The
results will enable the Company to undertake an economic assessment
to determine the optimum processing route in 2023.
Corporate
-- Mike Fraser joined the company as Chief Executive Officer and
member of the Board on 17 January and has had the chance to
familiarize himself with the Company, its people, and the assets in
Q1 2022.
-- The Company has started discussions on various solutions for
the convertible bond due in October 2022. A variety of options are
being assessed.
-- Chaarat reduced the principal outstanding for the Kapan
acquisition loan by another USD2.8 million to USD16.3 million
outstanding resulting in an unaudited Net Debt(3) at group level of
USD42.5 million.
(1 Gold equivalent ounces for 2021 recalculated on 2022 budget
prices with Au at $1,775/oz and gold ratios of 75 for silver, 6,597
for copper and 20,381 for zinc. In last year's Q1 2021 operations
update, 2021 oz were based on gold ratios of 68 for silver, 7,287
for copper and 21,862 for zinc leading to a lower AuEq number
reported in that previous year.)
(2 AISC on a gold oz produced basis exclude smelter TC/RC
charges, others which add c. USD$ 142/oz. Sustaining capex of c.
USD6.6 million p.a. is included in the AISC, of which capex of
USD1.9 million was spent in Q1 2022.)
(3) (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:
"Kapan continues to operate on a steady state basis with the
team focusing on value, not just volume, and managed to increase
utilisation of equipment and efficiency. The on-site stockpile will
give us improved operational flexibility in the coming
quarters.
The continued strong price environment has offset the pressures
of anticipated increased energy and raw materials costs which
enabled us to increase our Kapan Q1 EBITDA by 10.1% vs Q1 last
year.
At Tulkubash, the resource and reserve update including the 2021
drilling results will be available this quarter and feed into an
updated economic model for the project."
Kapan Polymetallic Mine - Q1 Highlights and Outlook
Chaarat Kapan has achieved a 12-month recordable injury
frequency rate (RIFR) of zero for the first time in its history.
The RIFR for Q1 2022 was zero vs 0.78 in Q1 2021.
Production of 15,266 oz represents a 6.9% decrease on Q1 2021
(16,174 oz). Production was lower due to reduced third-party
processing and lower grade ore currently being mined. Performance
was in line with plan based on the areas currently being mined.
Ore hauled of 163,652t vs 149,101 in Q1 2021 (9.8%) while grade
was 3.09 g/t vs 3.30 g/t (-6.4%) in Q1 2021.
Total ore milled was flat with 178,117 tonnes vs 180,507 tonnes
in Q1 2021. This is despite 4 days of mill downtime during March
due to national grid outages. Such outages are very unusual with
national power supply normally being very stable.
Own ore milled of 151,429 tonnes vs 146,482 tonnes in Q1 2021.
Third-party ore treated was 27kt for Q1 2022 vs 34kt for Q1 2021
(-20.6%). Own ore run-of-mine stockpile has accumulated to 41kt.
This will allow for strong milling rates for the remainder of
2022.
Own ore contained gold equivalent ("AuEq") was 12,382 oz in Q1
2022 compared with 12,575 oz in Q1 2021 (-1.5%).
Q1 2022 production consisted of:
o 8,721 ounces of gold;
o 138,257 ounces of silver;
o 481 tonnes of copper; and
o 1,492 tonnes of zinc;
AuEq recoveries were flat at 79.5% in Q1 2022 compared with
79.8% in Q1 2021.
Resource development metres drilled were 17,181 in Q1 2022
compared with 11,234 in Q1 2021 (+52.9%).
Underground development of 6,474 metres achieved in the quarter,
compared to 5,755 metres in Q1 2021 (12.5%).
Capital expenditure was USD1.9 million compared to USD1 million
last year in line with budget.
Realised gold price for the quarter of USD1,853 /oz versus
USD1,762 /oz in Q1 2021 (+5.1%) in line with the average gold price
for Q1 2022. Continuing strong price environment, especially with
realised copper prices of USD9,891/t vs USD8,590 in Q1 2021 (+15.1
% vs Q1 2021) above budgeted prices.
All-in-sustaining cost ("AISC" (2) ) of USD1,352 /oz was higher
compared to Q1 2021 (USD1,024 /oz, +32.0%). AISC has started to
decrease in March compared to January and February 2022 and the
Company sees this trend continuing. The team is working on its
sourcing and cost planning in order to optimise the cost
structure.
Unaudited Q1 2022 Kapan standalone EBITDA contribution of USD7.6
million vs USD6.9 million in Q1 2021 (+10.1%).
Outlook for Kapan
Chaarat remains on track to deliver on its AuEq 56-62koz
guidance for the year including third-party ore production, as
previously set out in its FY 2021 Production, Operational and
Financial Update on 9 February 2022.
Third-party ore supply and mill throughput is expected to remain
stable for the remainder of 2022 with the approximately 41 kt
stockpile of own ore available for processing in the next
quarters.
East Flank 2022 drilling campaign is ongoing as part of a 2-year
programme to develop a JORC-compliant resource and reserve for this
potential new ore body.
Tulkubash and Kyzyltash Project Update
A resolution of the dispute around the Kumtor mine was announced
on 4 April which was perceived as a positive signal by several
institutional investors. Chaarat has started to reengage on its
previous debt financing discussions and also opened new debt
financing discussions in April and is still expecting to close the
project financing in H2 2022.
The 2022 focus on site will be to conclude the detailed
engineering work of the remaining items and ensure a full
construction ramp up once debt financing is in place.
A revised Mineral Resource Estimate ("MRE") and Ore Reserve
Estimate ("ORE") including the results of the 2021 programme is
being developed and will be released in Q2 2022 which will feed
into an updated economic model for the project .
Metallurgical test work on the Kyzyltash ore samples is
continuing at SGS Lakefields laboratories and on track for results
in Q3 2022.
Corporate Finance
The Kapan acquisition facility was reduced by a further USD2.8
million in January 2022 and stands now at USD16.3 million
(principal only).
Chaarat is assessing different options for the convertible loan
notes due in October 2022 in order to find a solution in a timely
manner.
Corporate debt position comprising of convertible loan notes is
USD26.5 million, including accrued interest of USD6.8 million, with
the group cash at the 31 March 2022 at USD6.6 million.
Enquiries
+44 (0)20 7499
Chaarat Gold Holdings Limited 2612
Mike Fraser, Chief Executive Officer IR@chaarat.com
Canaccord Genuity Limited (NOMAD + 44 (0)20
and Joint Broker) 7523 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 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/ .
Q1 2021 PRODUCTION SUMMARY
Q1 2022 Q1 2021
Tonnes ore mined 163,652 149,102
AuEq Grade (g/t) 3.1 3.25
Tonnes own ore milled 151,429 146,482
Tonnes ore milled (Third-Party
Ore) 26,688 34,025
AuEq Recovery Kapan (%) 79.5 79.8
Gold equivalent production
(oz) 15,266 16,403
from Third-Party Ore 2,885 3,792
Gold production (oz) 8,721 8,893
Silver production (oz) 138,257 160,945
Copper production (t) 481 605
Zinc production (t) 1,492 1,527
AuEq Sales 12,333 12,775
Realised gold price (USD/oz) 1,853 1,762
AISC (USD/oz) 1,352 1,024
ENDS
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