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Chaarat Gold Holdings Ltd

Chaarat Gold continues to build scale in Central Asia


Chaarat is looking to expand the resource at Tulkubash


Quick facts: Chaarat Gold Holdings Ltd

Price: £0.35

Market: AIM
Market Cap: £144.71 m
  • Plans to act as consolidator of Central Asian gold projects

  • Pushing Tulkubash towards two million ounces

  • New Kapan gold mine should deliver 65,000 ounces of production


What Chaarat Gold Holdings does:

Chaarat Gold Holdings Ltd (LON:CGH) is rapidly emerging as a key mid-tier player in Central Asia’s gold space. The company is actively seeking to consolidate the disparate Central Asian gold market through judicious acquisitions of projects.

What Chaarat Gold Holdings owns:

Chaarat Gold Holdings was built around the Tulkubash project in Kyrgyzstan. The company is currently drilling Tulkubash with a view to pushing the resource up towards the two million ounce mark.

A recent feasibility study envisioned mining an average of 94,000 ounces per year at Tulkubash, at all-in sustain costs of US$819 per ounce.

The project is estimated to require US$110mln to get it up and running, and has an internal rate of return of 20%. Total undiscounted cashflow is likely to be US$114mln.

Chaarat also recently acquired the Kapan mine in Armenia. This mine boasts a resource of nearly 1.2mln ounces and is expected to produce 65,000 ounces of gold in 2019.

The company also owns significant exploration acreage around Tulkubash.

What the boss says - Artem Volynets, chief executive

"An almost 40% year-on-year increase in Tulkubash's gold reserves demonstrates the remarkable future growth potential of the Tulkubash Project. To achieve this whilst also reducing the level of capital expenditure required to bring the mine into production again illustrates the quality of this asset,” said Artem Volynets, Chaarat’s chief executive.

Broker view:

“Chaarat’s strategy builds on both organic as well as acquisitive growth to deliver value from ‘Five Steps’, including disciplined M&A, exploration upside, operational efficiencies, geographical/operational synergies and a reduction in cost of capital,” says broker SP Angel.

“The US$55mln acquisition of the polymetallic Kapan underground operation closed in Jan 2019 and is an example of the management team’s ability to source and execute on a successful M&A transaction. The acquisition was completed at an attractive price (0.5x P/NPV on c.$110m NPV8% estimate using spot commodity prices) and included minimum dilution ($5m cash, $10m convertibles, US$40mln bank loan).

The broker has also run the rule on Chaarat’s valuation: “We initiate coverage on Chaarat Gold with a buy recommendation supported by our sum-of-the-parts valuation of US$266mln or 42p per share, comprised of US$91mln in net assets, or 14p per share for Kapan and $221mln or 35p for assets in Kyrgyzstan.”

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