Update on Proposed Offer for the Kumtor Mine

RNS Number : 6583M

Chaarat Gold Holdings Ltd

01 May 2018

 

1 May 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")

Update on Proposed Offer for the Kumtor Mine

Chaarat (AIM: CGH), the AIM quoted exploration and development company with assets in the Kyrgyz Republic, confirms that the recent proposal it made in relation to the potential acquisition (the "Acquisition") of the Kumtor mine from Centerra Gold Inc. ("Centerra") values Kumtor at US$800 million, or approximately CA$1.025 billion at today's exchange rate (the "Consideration).

It is currently proposed that the Consideration will be funded by US$400 million in cash from Chaarat. It is also proposed that - subject to the Kyrgyz government's approval - US$400 million of Centerra shares currently held by Kyrgyzaltyn will be transferred to Centerra and cancelled, in exchange for a 50% direct preferred economic interest in the Kumtor mine. As a result, Chaarat will own all of the common equity of Kumtor, as well as control over management and operations of the mine; and Kyrgyzaltyn will own all of the preferred equity of Kumtor, and be entitled to 50% of the economic benefits from the mine.

Chaarat will fund the cash component of the offer 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. The names of these institutions have been confidentially disclosed to Centerra.

Chaarat strongly believes that the proposal is attractive to all stakeholders - including the people and government of the Kyrgyz Republic, Centerra and its shareholders, and Chaarat'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. Therefore the Company intends to invest up to US$600 million into other projects in the country's mining sector over the next five to seven years. Chaarat welcomes a fair and transparent debate in the country around the merits of its proposal, and will co-operate fully with any audit or inquiry into the deal that the Republic may commission.

Chaarat is also confident the proposal will benefit Centerra and its shareholders. Centerra has itself declared in its April 2018 investor presentation that Kumtor represents 33% of its Net Asset Value. Centerra's market capitalisation is currently CA$2.2 billion, implying that the market values Kumtor at approximately CA$740 million. Chaarat's proposal of US$800m (CA$1.025bn at today's exchange rate) represents a premium of more than 30% of the value the market currently places on Kumtor.

On this basis, Chaarat has sought a productive dialogue with Centerra's management, but has yet to receive any engagement with respect to its proposal.

The Company reserves the right to alter its offer should circumstances change, or a timely completion of the deal be unnecessarily delayed. 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)	[e-mail]
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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