TIDMCGH
RNS Number : 0141V
Chaarat Gold Holdings Ltd
05 August 2022
05 August 2022
Chaarat Gold Holdings Limited
("Chaarat" or "the Company")
H1 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 half year ended 30 June 2022 ("H1" or
the "Period") for its Kapan Mine ("Kapan") in Armenia and a general
corporate update.
Kapan
-- As previously disclosed, Kapan experienced a fatal workplace
injury on May 14(th) . This was the first recordable injury in over
14 months. Recordable injury frequency review ("RIFR") (per one
million hours worked) is now 0.74 compared to 1.4 in H1 2021.
-- Ore mined of 321.1 thousand tonnes ("kt") vs 303.7 kt in H1
2021 represents a year-on-year increase of 6.5%. 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), and mill AuEq recovery for own ore was also
stable at 79.5% in H1 2022 compared with 79.4% in H1 2021.
-- Kapan production of 30,562 gold equivalent ounces(1) ("oz")
vs 33,248 oz in H1 2021 (-8.1%) consisting of 22,877 oz from own
ore and 6,685 oz from third-party ore. Full-year guidance of
56-62koz of total own-ore and third-party ore production remains
unchanged for 2022.
-- There were 62.7 thousand tonnes ("kt") of ore on stockpile at the end of the period.
-- All-in-sustaining cost ("AISC"(2) ) of USD1,420 /oz vs
USD1,063 /oz in H1 2021 (+33.6%). The increase is due to the
strengthening of the Armenian Dram in Q2 2022 (AMD/USD + 10.3% vs
H1 2021 average), increases in energy prices and cost of other raw
materials in line with inflation seen across the mining sector
globally.
-- Preliminary unaudited standalone EBITDA(3) contribution of
USD8.1 million vs USD13.5 million in H1 2021 (-40%). While EBITDA
in Q1 was higher than in the same period last year, the decrease in
EBITDA for H1 2022 was mainly driven by provisional pricing
adjustments due to lower commodity prices and the adverse AMD/USD
exchange rate in Q2 2022 increasing costs. If commodity prices
remain soft, the Company expects an offsetting positive impact on
the costs in H2 2022.
-- Third-party ore treatment of 63.5kt for H1 2022 vs 70kt for
H1 2021 (-9.3%) was in line with budget and contributed USD1.7
million to the above-mentioned EBITDA for H1 2022. This compares
with a contribution of USD1.8 million for H1 2021 (-6%).
-- The exploration work on the East flank is ongoing. First
assay results of this multi-year project are expected by Q4
2022.
Outlook for Kapan
-- Chaarat remains on track to deliver on its 50-53koz own ore
and 6-9koz third-party ore guidance for the year.
-- Third-party ore supply is expected to remain in line with H1 for the remainder of 2022.
-- East Flank drilling campaign is ongoing as part of a 2-year
programme to develop an initial JORC resource and reserve statement
which is currently expected by the end of 2023.
-- 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
-- Chaarat performed a Tulkubash Reserve and Resource update
including a 13% increase from 571koz to 647koz in Ore Reserves
through a tonnage and grade increase based on the 2021 drilling
programme results and a $1,600/oz pit shell optimisation.
-- Discussions with potential debt providers are ongoing. The
Company expects these to be assisted by the recent resolution of
the dispute between the Kyrgyz Government and Centerra Gold.
Centerra Gold announced the closing of the agreement with the
Kyrgyz government on 29 July 2022.
-- As previously indicated, construction activity will resume once financing has been secured.
-- 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.
Corporate Finance
-- The Company continues discussions with various parties,
including existing bondholders, regarding proposals in relation to
the convertible bond due at the end of October 2022 and will
provide an update on the status of these discussions in due
course.
-- Chaarat reduced the principal outstanding for the Kapan
acquisition loan by a further USD2.2 million to USD14.3 million
outstanding resulting in unaudited Net Debt at group level of
USD44.4 million(4) . A further USD2.3 million has been paid in July
2022, further reducing the Net Debt to USD42.1 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 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 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).
(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:
"The tragic fatal event at Kapan on the 14(th) May was felt
deeply across the Company. A detailed internal and external
investigation was conducted, and remedial actions are underway.
Kapan made good progress operationally in the quarter despite
mining in narrower vein areas which had an impact on grade.
Financial performance was impacted by lower commodity prices and a
higher Armenian Dram compared to the US Dollar.
We are pleased to note in the final resolution of the dispute
between Centerra and the Kyrgyz government. This was a material
condition to progressing funding of our Tulkubash project in the
second half of 2022.
Chaarat continues to evaluate opportunities for inorganic growth
in line with our growth agenda. Gold equities have been impacted by
reduced liquidity in the sector, but this in turn provides a unique
opportunity to grow the value of the Company."
Enquiries
+44 (0)20 7499
Chaarat Gold Holdings Limited 2612
Mike Fraser, Chief Executive Officer IR@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 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/ .
H1 2022 PRODUCTION & OPERATIONAL SUMMARY
H1 2022 H1 2021
Tonnes ore mined 321,136 301,658
AuEq Grade (g/t) 2.94 3.30
Tonnes ore milled 373,323 374,794
Tonnes ore milled (Third-Party
Ore) 63,511 70,005
AuEq Recovery Kapan (%) 79.5 79.4
Gold equivalent production
(oz) 30,562 33,285
-------------------------------- -------- --------
Gold equivalent production
(own ore) 23,877 26,266
Gold equivalent production
(third party ore) 6,684 6,982
Gold production (oz) 17,944 18,154
Silver production (oz) 269,687 331,381
Copper production (t) 941 1,161
Zinc production (t) 2,804 3,170
-------------------------------- -------- --------
AuEq Sales 25,118 22,909
Realised gold price (USD/oz) 1,858 1,783
AISC (USD/oz) 1,420 1,063
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