Proposed offer for the Kumtor Mine

RNS Number : 8461L

Chaarat Gold Holdings Ltd

24 April 2018

 

24 April 2018

The information contained within this announcement is deemed by the Company to constitute inside information as stipulated under the Market Abuse Regulations (EU) No. 596/2014 ("MAR").

Chaarat Gold Holdings Limited

("Chaarat" or the "Company")

Proposed offer for the Kumtor Mine

Chaarat (AIM: CGH), the AIM quoted exploration and development company with assets in the Kyrgyz Republic, notes recent media speculation and confirms that it has made a proposal in relation to the potential acquisition (the "Acquisition") of the Kumtor mine from Centerra Gold Inc. ("Centerra").

The Acquisition would form part of a proposed three-way transaction between Chaarat, Centerra and the Kyrgyz state consortium, Kyrgyzaltyn OJSC ("Kyrgyzaltyn"). Chaarat has proposed that Chaarat and Kyrgyzaltyn will acquire Kumtor from Centerra, in an arrangement that will give Chaarat ownership of Kumtor's common equity, as well as management and operation of the mine; while Kyrgyzaltyn will own Kumtor's preferred equity and be entitled to 50% of the economic benefits of Kumtor.

Chaarat will fund its portion of the consideration with cash, and Kyrgyzaltyn - subject to the Kyrgyz government's approval - will transfer most of the shares it currently holds in Centerra to Centerra.

Chaarat will fund the cash consideration through a mixture of debt and equity, backed by two major international financial institutions, which have made private indications of support for the transaction to the parties concerned.

Chaarat strongly believes that the proposal is attractive for all stakeholders - including the people and government of the Kyrgyz Republic, Centerra and its shareholders, and Centerra's own investors.

As a long-term partner to the Kyrgyz Republic, Chaarat recognises the need for a committed approach to developing the Republic's mining assets. The company therefore intends, as part of this deal, to invest up to $600 million into two other projects in the country's mining sector over the next five to seven years.

The proposed Acquisition would constitute a Reverse Takeover as defined under the AIM Rules, due (among other things) to the size of the Acquisition. Accordingly, Chaarat's Board of Directors has requested that trading in Chaarat's shares be suspended with immediate effect pending the publication of the required AIM Admission Document.  

The Kumtor mine is one of the largest gold mines in Central Asia. In the year ended 2017 it produced more than 500,000 ounces of gold and generated $188m of free cash flow. It has a history of 21 years of uninterrupted profitable production, and has more than 4 million ounces remaining in open pit reserves which should be extracted at low cost, with an additional 3.4 million ounces of inferred resources @ 7.3 g/t.

Chaarat is ideally placed to take advantage of the opportunities presented by this world-class asset. The proposed Acquisition represents a substantial increase in the overall scale of Chaarat's business and Chaarat's Board of Directors is confident that Chaarat can achieve significant value for its shareholders. In the medium term, the Acquisition will serve as a platform for further acquisitions and generate significant and stable dividends. Chaarat is committed to the Kyrgyz Republic and wishes to enhance its contribution to the development of the mining industry in the country through the acquisition of Kumtor.

For Centerra and its shareholders, Chaarat's offer provides a unique opportunity to realise the full value of Kumtor and reinvest the proceeds in Centerra's business. In line with Centerra's stated strategy, the deal will also enable Centerra to reposition its geographic profile and focus on its developed market asset base.

However, there can be no certainty at this stage that the proposed Acquisition will be completed, and Chaarat will provide updates in respect of further developments as appropriate.

Enquiries

Chaarat Gold Holdings Limited      

Martin Andersson (Chairman)	[phone]
Linda Naylor (FD/Company Secretary)	[e-mail]
Numis Securities Limited
John Prior, Paul Gillam (NOMAD)	[phone]
James Black (Corporate Broking)
BMO Capital Markets Limited
Jeffrey Couch, Neil Haycock,	[phone]
Thomas Rider (Joint Broker)
Powerscourt
Conal Walsh	[phone]
Matthew Attwood
Isabelle Saber
[e-mail]

About Chaarat Gold

Chaarat Gold is an exploration and development company operating in the Kyrgyz Republic with a large, high grade resource - the Chaarat Gold Project. The Company's key objective is to become a low-cost gold producer generating significant production from the development of the Chaarat Gold Project. Chaarat is engaged in an active community engagement programme 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 in the Kyrgyz Republic by building relationships based on trust and operating to the best environmental, social and employment standards.

Further information is available at www.chaarat.com 

 

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