Q3 2022 Operational Update

RNS Number : 4150E

Chaarat Gold Holdings Ltd

28 October 2022

 

28 October 2022

Chaarat Gold Holdings Limited

("Chaarat" or "the Company")

Q3 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 30 September 2022 (the "Quarter", "Q3" or the "Period") for its Kapan Mine ("Kapan") in Armenia and a general corporate update.

Kapan

· As previously disclosed, tragically there was a fatal workplace injury on 3rd September. Recordable injury frequency rate ("RIFR") (per one million hours worked) was 0.7.

· Chaarat remains on track to meet full year production guidance of 56-62koz for 2022 (50-53koz own ore and 6-9koz third-party ore¹).

· Q3 2022 production of 15,638 gold equivalent ounces² ("oz") vs 13,224 oz in Q3 2021 (+16.5%) because of higher mine rates and higher grades. 12,691 oz from own ore vs 10,120 oz in Q3 2021 (+25.4%) and 2,947 oz from third-party ore vs 3,303 oz in Q3 2021 (-10.8%) were produced.

· Third party ore treated was 29.9kt vs 27.9kt in Q3 2021 (+7.3%).

· All-in-sustaining cost ("AISC"³) was largely unchanged year on year at USD1,362 /oz vs USD1,366 /oz in Q3 2021.

· Preliminary unaudited standalone EBITDA contribution of USD1.0 million vs USD2.6 million in Q3 2021 (-54%). EBITDA was significantly affected by the adverse AMD/USD exchange rate and lower commodity prices. Q3 2022 saw an average exchange rate of 409 Dram to the dollar compared to 490 in Q3 2021 (-18%). Commodity prices also softened in the quarter with the realized gold price falling 12% from Q2 2022 and 4% from Q3 2021.

· Work commenced on the annual update on the resources, reserves and depletion for the mine. An updated Mineral Resource Estimate and Ore Reserves Estimate are planned for release mid and late Q4 2022 respectively.

Outlook for Kapan

· Chaarat remains on track to deliver on its 56-62koz guidance for the year, comprising of 50-53koz from own ore and 6-9koz from third-party ore.

· Third-party ore supply is expected to remain stable for the remainder of 2022.

· East Flank drilling has been optimised to offset the adverse effects of the strengthened exchange rate and weaking metal prices.

· 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

· The Tulkubash project remains ready for final investment decision ("FID") once project financing is finalised. Financing discussions continue with various parties. Despite the robust project economics and the added mine life earlier this year, the current macro-economic environment and volatility in financial markets has cautioned potential financiers and is likely to postpone decisions further. An update will be provided on the revised project schedule once the FID is made.

· The SGS metallurgical test work programme on the Kyzyltash core drilled in 2021 has been completed. Results showed good recoveries for all three of the technologies tested. The programme included testing milling indices, flotation, oxidation and then leaching using carbon in leach ("CIL"). Pressure Oxidation ("POX") and Albion™ had comparable results, with bio-oxidation ("BIOX") returning the best overall recoveries. Chaarat has released separate press releases on the results and will post the full mineralogical and metallurgical test results on its website in due course.

Corporate Finance

· Chaarat successfully extended the maturity of its secured convertible loan notes 2022 (the "Loan Notes") from  31 October 2022  to  31 July 2023 with strong noteholder support.

· Chaarat reduced the principal outstanding for the Kapan acquisition loan by a further USD2.2 million to USD12.1 million outstanding and drew down USD3.0 million from a new working capital facility resulting in unaudited Net Debt at group level of USD48.1 million⁴. A further USD2.4 million of the Kapan acquisition loan (including interest) is scheduled to be paid at the end of October 2022, which will reduce Net Debt to USD45.7 million.

· The Company continues discussions with various parties on project financing for the Tulkubash project as well as corporate financing options and will provide an update on the status of these discussions as appropriate.

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 are calculated on own ore production only and on a gold oz produced basis. These exclude smelter TC/RC charges, which in Q3 2022 add c. USD$ 248/oz of cost. The Q3 2022 AISC includes sustaining capex of c. USD1.7 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:

"Tragically we had a further fatal injury at Kapan mine and have increased our efforts to ensure we continue to improve the design of safe work.

Production for the quarter exceeded our targets. EBITDA for the quarter was impacted by the significant strengthening of the Armenian Dram versus the US Dollar. Steps have been taken to help mitigate this impact by reducing costs, renegotiating long term contracts, and securing alternative supply sources.

During the fourth quarter we will provide an updated JORC compliant Mineral Resource Estimate and Ore Reserves Estimate on our Kapan mine which is expected to meaningfully increase our Estimates and extend the mine life.

We are appreciative of the continuing support of our noteholders and the beneficial solution that was announced earlier in the quarter.

Recent media reports have commented on the corporate development efforts underway to add to the portfolio. Further updates will be provided as appropriate in due course. "

Enquiries
Chaarat Gold Holdings Limited	[phone]
Mike Fraser, Chief Executive Officer	[e-mail]
Canaccord Genuity Limited (NOMAD and Joint Broker)	+ 44 (0)20 7523 8000
Henry Fitzgerald-O'Connor
James Asensio Gordon Hamilton
finnCap Limited (Joint Broker)	[phone]
Christopher Raggett
Panmure Gordon (UK) Limited (Joint Broker)	[phone]
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/ .

Q3 2022 OPERATIONAL SUMMARY

	Q3 2022	Q3 2021
Ore mined (t)	160,080	143,258
AuEq Grade (g/t)	3.14	2.95
Total milled (t)	197,713	167,088
Own Ore milled (t)	167,766	139,188
Third-Party Ore milled (t)	29,947	27,900
AuEq Recovery Kapan (%)	77.6	77.2
Gold equivalent production (oz)	15,638	13,224
Incl. from Third-Party Ore	2,947	3,289
Gold production (oz)	8,967	7,322
Silver production (oz)	153,642	125,787
Copper production (t)	545	509
Zinc production (t)	1,241	1,230
AuEq Sales	13,689	8,534*
Realised gold price (USD/oz)	1,720	1,788

*Q3 2021 AuEq sales were impacted by discussions on export of cooper concentrate

ENDS

 

END

 

 

UPDBCBDGSSDDGDR