16:00 Tue 27 Jul 2021
Chaarat Gold Hlgs Ld - H1 2021 Operational Update
Chaarat Gold Holdings Limited
("Chaarat" or "the Company")
H1 2021 Operational Update
Chaarat (AIM:CGH), the AIM-quoted gold mining Company with an operating mine in
H1 2021 Highlights
Kapan
· Shahumyan mine production of 25,896 gold equivalent ounces1 ("oz") vs 27,140 oz in H1 2020 (-4.6%) in line with the mine plan and more than offset by third-party ore treatment
· Improved all-in-sustaining cost ("AISC"2) of
· Strong financial performance with preliminary unaudited standalone EBITDA contribution of
· Significantly increased third-party ore production of 70kt for H1 2021 vs 10kt for H1 2020 (+600%), in turn contributing
Tulkubash & Kyzyltash
· Updated bankable feasibility study ("BFS") released in
· Exploration drilling programmes for Tulkubash and Kyzyltash commenced in May. Results of the drilling on Tulkubash are expected for Q4 2021 and should lead to a revised resource and reserve update prior to year-end
Corporate Finance
· Funding package of
· Simplified partnership structure with Çiftay İnşaat Taahhüt ve Ticaret A.Ş ("Çiftay") where they become a strategic investor at Chaarat level and Chaarat maintains 100% ownership in Tulkubash and Kyzyltash.
· Debt financing is progressing with ongoing discussions with potential fixed income investors to provide a comprehensive financing solution for Chaarat. The Company is targeting signing in Q3 2021
· As previously disclosed, Kapan experienced a fatal workplace injury in early March. Recordable injury case rate (per one million hours worked) is 1.43 compared to 0.7 in H1 2020.
· COVID 19 measures remain in place throughout the site. The last wave in 2020 had minimal impact on operations. Despite the country wide lifting of restrictions, Chaarat Kapan continues to adhere to the COVID 19 protocols successfully used to date.
· Shahumyan mine ore production of 25,896 oz represents a 4.6% decrease on H1 2020 (27,140 oz). Fewer Shahumyan tonnes were treated as a result of delayed development work in Q4 2020 caused by last year's hostilities.
· Third-party ore treated was 70kt for H1 2021 vs 10kt for H1 2020 (+600%). Treatment was approximately 45kt above target as management was able to contract more material in order to maximize mill throughput for the period2.
· H1 2021 production consisted of:
o 13,466 ounces of gold;
o 272,635 ounces of silver;
o 852 tonnes of copper; and
o 3,170 tonnes of zinc;
· All-in-sustaining cost ("AISC" 3) of
· Realised gold price for the quarter of
· Tonnes mined were down year on year by 16.4%. This was partly due to lower development mining during the hostilities, and changes in mining method that are reducing overall dilution resulting in a grade improvement of 13.3% with 3.33 g/t AuEq in H1 2021 vs 2.94 g/t AuEq in H1 2020.
· Mill throughput increased year on year by 2.5% as the reduced mining volumes were more than compensated by additional third-party ore treatment.
· AuEq recoveries were at 79.4% in H1 2021 compared with 79.2% in H1 2020.
· Despite the above-mentioned reduced development work, the team was able to return to the planned development schedule in H1 2021. 11,783 metres were achieved in the period compared to 11,216 metres in H1 2020 (+5%).
· Capital expenditure ("CAPEX") was
· The exploration work on the East flank started in May and is progressing well. First results are expected by year end. If positive, development of a decline and ordering of equipment will occur in 2022 with an expected increase in production from 2023.
· Unaudited H1 2021 Kapan standalone EBITDA contribution of
Outlook for Kapan
· Chaarat remains on track to deliver on its AuEq 57koz guidance for the year4.
· Third-party ore supply is expected to remain in line with H1 for the remainder of 2021.
· An update to the current resource and reserve statement is in progress with completion and release of the new Life of Mine targeted for Q4 2021.
· East Flank drilling campaign is expected to deliver results leading to an initial JORC resource statement expected by end of year.
· The Company expects improved financial performance for the 2021 financial year vs 2020 due to increased commodity prices, higher-grade mining, and a consistent third-party ore supply.
1 Gold equivalent ounces for 2020 recalculated on 2021 budget prices with Au at
2 Production from third-party ore is excluded from the production numbers in this release as this source of third-party ore was treated on a tolling basis whereas last year's source was purchased and sold by Kapan to the international markets.
3 AISC on a gold oz produced basis exclude smelter TC/RC, penalty, MTM charges, others which add c.
4 57koz AuEq guidance includes third-party ore production based on the assumption that purchased ore was sold by Kapan, whereas in 2021 third-party ore is treated on a tolling basis.
Tulkubash and Kyzyltash Project Update
The updated BFS for the Tulkubash project was published along with revised mineral resource and ore reserve estimates summarising the progress achieved since the previous 2019 BFS. The full study is available on Chaarat's homepage.
Site infrastructure works and early construction works are limited pending completion of the debt financing.
The 2021 exploration programme commenced at the end of May with results expected late 2021 to early 2022. The focus is infill drilling of areas currently classified as inferred, as well as new exploration of nearby areas with high potential. By the end of June, 10 drill holes (out of 62 holes, 16%) and 1,633 metres (out of 9,540 metres, 17%) were completed. Out of the 4,000-metre trenching programme 2,484 metres were completed (62%).
Geotechnical drilling of the Tulkubash ore body is also being carried out this year to improve the final pit designs ahead of production.
Drilling to obtain core for metallurgical testing of Kyzyltash ore has also commenced.
Debt Financing
The Company continues to progress with a potential funding solution for the development of the Tulkubash project. As previously announced, the Company completed an equity fundraise in
The debt financing is progressing with ongoing discussions with potential fixed income investors. Chaarat has received healthy interest in subscribing to a fixed income solution. The proceeds from this financing would be used for the refinancing of existing corporate debt and to finance the costs related to the Tulkubash gold project.
As previously indicated, the debt financing timeline has been impacted by external factors. Despite having no direct impact on our operations in the
As a result, first gold pour is still expected for H2 2023 while the debt financing is targeted to be signed in Q3 2021.
Corporate Finance
The Company received strong demand for a funding package in
The financing led to a significant improvement in the Company's debt position, reducing it from
The Kapan acquisition loan facility was reduced by
As announced on
Chaarat continues to evaluate capital opportunities to either refinance existing financing facilities and/or reduce its overall cost of capital. One of the key priorities for the next months is to evaluate options to refinance the convertible bond due in
3 Excluding lease liabilities, contract liabilities and accrued interest on the convertible loan note.
"I am pleased to report another strong half year with a significantly higher EBITDA and slightly improved AISC at Kapan supporting our deleveraging of the asset and supporting our East Flank extension plans. I am very happy with the performance of the Kapan team in delivering production and financial results ahead of budget to achieve our targets for 2021. The team did very well this period in reducing dilution and optimising grade, as well as pushing tonnage through the mill from third party supplies.
The slight delay in the Tulkubash debt financing process was caused by external factors, despite our strong support in country and the confirmation of strong project economics in the updated BFS 2021 but we target signing of this financing in Q3 2021. Operations in country are progressing well and we are on time with our exploration and construction timeline."
Enquiries |
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Chaarat Gold Holdings Limited |
+44 (0)20 7499 2612 |
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Canaccord Genuity Limited (NOMAD and Joint Broker) |
+44 (0)20 7523 8000 |
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finnCap Limited (Joint Broker) |
+44 (0)20 7220 0500 |
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Panmure Gordon (UK) Limited (Joint Broker) |
+44 (0)20 7886 2500 |
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About Chaarat
Chaarat is a gold mining company which owns the Kapan operating mine in
Chaarat is engaged in active community engagement programmes 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 by building relationships based on trust and operating to the best environmental, social and employment standards. Further information is available at www.chaarat.com/.
H1 2021 PRODUCTION & OPERATIONAL SUMMARY
|
H1 2021 |
H1 2020 |
Tonnes ore mined |
301,658 |
360,957 |
AuEq Grade (g/t) |
3.33 |
2.94 |
Tonnes ore milled |
374,794 |
365,650 |
Tonnes ore milled (Third-Party Ore) |
70,005 |
10,127 |
AuEq Recovery Kapan (%) |
79.4 |
79.2 |
Gold equivalent production (oz) |
25,896 |
27,140 |
Gold production (oz) |
13,466 |
13,179 |
Silver production (oz) |
272,635 |
261,551 |
Copper production (t) |
852 |
960 |
Zinc production (t) |
3,170 |
3,997 |
AuEq Sales |
22,909 |
25,825 |
Realised gold price (USD/oz) |
1,783 |
1,665 |
AISC (USD/oz) |
1,063 |
1,076 |
ENDS
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