Clarification of fiscal regime in Kyrgyz Republic

RNS Number : 7336V

Chaarat Gold Holdings Ltd

17 January 2013

 



Chaarat Gold Holdings Limited

("Chaarat" or the "Company")

Clarification of the fiscal regime in Kyrgyz Republic

Road Town, Tortola, British Virgin Islands (17 January 2013)

Chaarat (AIM - CGH), the AIM quoted exploration and development company with assets in the Kyrgyz Republic, is pleased to provide an update on the fiscal regime in the Kyrgyz Republic.

Highlights

·     Updated Tax Code effective from 1 January 2013

·     Revenue based regime now in force

·     Move to clarity and transparency confirmed

Dekel Golan, CEO comments: "The implementation of changes to the Tax Code further simplifies and clarifies the operational environment in the Kyrgyz Republic. We are especially pleased with the specific allocation of a portion of the tax revenue for local development projects. This will create a direct link between the success of the Company and its local stakeholders and help to generate goodwill and support.

The recent amendments to the Tax Code, in addition to the simplified land allocation process and licensing regulations, will continue to demonstrate that the Kyrgyz Republic is becoming one of the best mining addresses in the Frontier Markets."

During the second half of 2012, the Kyrgyz Republic implemented a broad reform of laws related to the extractive industry with the view of making the relationship between state and industry clearer, more predictable and transparent.

The recent amendments to the Tax Code which came into effect from 1 January 2013 have moved the income tax regime for mining companies, engaged in production and sale of gold ore, gold concentrate, gold alloy and refined gold,to a strict and simple revenue based regime.

The new components of "Government Take" are:

-    Royalties which remain at 5% of gold sales;

-    Sales tax of 2% of revenue (net of VAT and sales tax) will be payable on exported gold (gold alloy, refined gold) as before;

-    A local infrastructure participation fee of 2% from revenue/proceeds (net of VAT and sales tax) is now payable into a fund aimed at supporting social and infrastructure projects in the region where the mine is located;

-    Income tax will no longer be payable by mining companies engaged in production and sale of gold ore, gold concentrate, gold alloy and refined gold. To simplify the calculation of tax and avoid uncertainty, income based tax payments will be replaced with a revenue based tax calculated as a percentage of revenue from gold sales. The percentage is calculated every month based on the average monthly world gold price and ranges from 0% if the gold price is at or below $1,200 per ounce and up to 20% when the gold price averages at or above $2,501 per ounce.  At the current gold price (between $1,601-1,700 per ounce) the tax rate is 9%. A full table of rates will made available on the Chaarat website.

·     This update to the Tax Code replaces the previous proposal to require mining companies to transfer 20% of their shares to the state as a "free carry" which will not be implemented.

Furthermore proposals by the Ministry of Economy of the Kyrgyz Republic will permit the negotiation of special concession arrangements with the government. Based on the draft legislation, the size and significance of Chaarat may give the Company the potential to negotiate a more favourable tax arrangement as we move closer to full production. The Board of Chaarat welcomes the certainty provided by the amended Tax Code and will update the market on any further discussions if the additional legislation is enacted.

Enquiries:  

Chaarat Gold Holdings Limited		[phone]
c/o Central Asia Services Limited
Dekel Golan   CEO		[e-mail]
Linda Naylor  FD		[e-mail]
Numis Securities Limited		[phone]
Alastair Stratton, Stuart Skinner (NOMAD)
James Black (Broker)
College Hill	[phone]
Matthew Tyler	[e-mail]
Anca Spiridon
Ali Roper

Further information is available at www.chaarat.com

NOTES TO EDITORS:

About Chaarat Gold

Chaarat Gold is an exploration and development company operating in the Kyrgyz Republic. Situated in the highly prospective Tien Shan gold belt the Company's principal strategy is the development of the Chaarat Gold Project with first gold production targeted during 2013. Chaarat's key objective is to become a low cost gold producer targeting annual production of 200,000 ounces.

In addition to the Chaarat Gold Project, the Company has several other promising prospects also located within the Kyrgyz Republic. An exploration programme is underway at both the Company's Chontash project, located in the Akshirak range of mountains, as well as at the Mironovskoye asset.

 

END

 

 

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