Tulkubash Project - suspension lifted

RNS Number : 4819H

Chaarat Gold Holdings Ltd

12 July 2012

 

Chaarat Gold Holdings Limited

("Chaarat" or "the Company")

Tulkubash Project - suspension lifted

Road Town, Tortola, British Virgin Islands (12 July 2012)

Chaarat (AIM-CGH), the gold exploration and development company operating in the Kyrgyz Republic, announces an update on the development of the Tulkubash Project, which is part of the Chaarat project area in the north west of the country.

Highlights

·    Kyrgyz President set to ratify new legislation governing mining companies
which has been approved by Kyrgyz Parliament

·    New legislation provides clarity and long term stability sought by Chaarat without the need for the negotiation of an Investment Agreement

·    The suspension of further capital investment activities reported on 16 April 2012 has been lifted

·    The Company expects gold production to commence during H2 2013

Dekel Golan CEO comments: "We are pleased to report the Kyrgyz Government has put in place steps to adopt a clearer and investor friendly mining legislative code. Our progress to production can now continue without the need for further negotiation on stabilisation with the Kyrgyz Government."

New legislation and political situation - background

Since the formation of a new coalition government in the Kyrgyz Republic in December 2011, the legislation under which the mining industry operates has been under review with the aim of establishing a legal regime conducive to the development of the industry. Late in June 2012 a package of new legislation and amendments to existing laws was presented to Parliament with the aim of providing clarity, consistency and ease of operation for the industry.

The new legislation is a result of long deliberations between the Government and the mining industry. The Board of Chaarat believes that the Kyrgyz Republic will, on the basis of the proposed legislation, offer one of the more supportive legal regimes for the mining industry relative to other countries. 

In summary the important aspects of the new legal regime which will impact on the Company are:

Procedure for obtaining a mining permit

As reported on 27 June 2012 Chaarat has obtained a mining permit. The procedure for applying for a mining permit in future will not change but a clear time frame for the State Agency on Geology and Mineral Resources (SAGMR) will be established. Geological reports must be reviewed within 60 days of submission or are to be considered approved and accepted. The recent delays in issuing permits are chiefly related to the slow and lengthy process of approving geological reports. 

Title to a discovery

Any discovery (which is detailed in the geological report submitted to SAGMR) will result in the holder of the exploration licence for that discovery having an automatic right to obtain a mining permit. This is very different from the situation in certain other countries where the state becomes the owner of the discovery and an auction process determines the award of the mining permit.

Land allocation

The process of allocating state owned land to mining ventures has been  simplified. Previously any allocation of land to a foreign owned company required a government resolution. The status of foreign owned mining companies will now be made equivalent to that of local companies.

Taxation

The income tax regime will be changed to a strict revenue based regime in which a sliding scale of royalties increases with the gold price.

In view of these favourable changes to the mining regime, the clarity they will bring and the removal of consequent uncertainty which has been brought to the phased development of the Chaarat Project, the Board has decided that it is no longer necessary to continue the  direct negotiations with the Government to develop an Investment Agreement.  A further announcement will be made when these changes are passed into law and an update provided, if applicable, on any amendments.

Accordingly the Board has decided to lift the suspension of further capital investment activities (other than the infrastructure projects relating to power and roads which have continued uninterrupted) as previously announced on 16 April 2012.

Project update

As Chaarat is now in receipt of a mining permit (announced on 27 June 2012), the tentative allocation of land by the regional authorities can be formalised at the state level. This formal allocation is a pre-requisite for securing the building permits for the various facilities: the Company believes this will be obtained in the near future.

Applications for construction permits are being completed and will soon be presented to the Government.  Some permits have already been secured (principally for the access road, power supply and shift camp).

Wardell Armstrong International has been commissioned to prepare a gap analysis of the final project design. 

A new tender has been issued for additional road works, the tender for the process plant has been issued and contractors are being shortlisted. The mining fleet is being sourced and about 40% of the fleet has already been ordered.

Drilling in the flanks of the designed pit of the Tulkubash Project has continued with the aim of increasing the free milling open pittable reserve base. The Company expects the exploration programme to be completed by mid August and a conclusion as to the feasibility of increased production to be reached by November.

The recruitment of the mining operations team is almost complete, with all key positions in that team now filled.

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)
Bankside Consultants	[phone]
Simon Rothschild	[e-mail]
Smith's Corporate Advisory	[phone]
Dominic Palmer- Tomkinson	[e-mail]

Note to Editors:

About Chaarat Gold

Chaarat Gold is an exploration and development company operating in the Kyrgyz Republic. The Company's main activity is the development of the Chaarat Gold Project situated within the Middle Tien Shan Mountains, which form part of the Tien Shan gold belt. A JORC compliant mineral resource of 5.59Moz at a grade of 4.08g/t gold has been delineated at the Chaarat Gold Project. Chaarat's key objective is to become a low cost gold producer; with initial production from the Tulkubash project, targeting increased combined annual production of over 200,000 ounces as the full project comes on stream.

In addition to the Chaarat Gold Project, the Company has initiated an exploration programme at Chontash, located in the Akshirak range of mountains of the Kyrgyz Republic. A maiden resource for Chontash was compiled by Wardell Armstrong International and announced in April 2011.

Further information is available at www.chaarat.com

 

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