HALF YEAR RESULTS TO 30 JUNE 2008
Chaarat Gold Holdings
Ltd
9 September 2008
Ticker- AIM:CGH
HALF YEAR RESULTS TO 30 JUNE 2008
Chaarat Gold Holdings (AIM -CGH) ('Chaarat or the 'Company') is
pleased to announce its half-year financial results for the six
months ended 30 June 2008.
Highlights
* The Company continued its underground exploration throughout the
winter and re-commenced surface exploration in June.
* The Company released its resource update recording estimated
resources of 3.13million ounces of gold at an average grade of
4.41 grams/tonne, demonstrating the success of its 2007
exploration programme. (See news release dated 22 April 2008).
* Drilling results from the first drill chamber demonstrated
increased width and grade of the mineralised zone at the adit
level and below as compared to the surface width and grade. (See
news release dated 5 August 2008).
* A positive scoping study was completed by consultants Behre
Dolbear International Ltd. This indicated the economic viability
of the Chaarat Project and suggested a possible mining rate of
over 200,000 ounces of gold per annum. (See news release dated 19
June 2008).
* Subsequent to 30 June, Chaarat received a routine two year
renewal of its exploration licence over its 604 square kilometre
property. The renewal extends to the period from 1 January 2009
to 31 December 2010. (See news release dated 26 August 2008).
Dekel Golan - CEO comments; "2008 has seen successful and encouraging
progress, well on track for moving Chaarat from its current advanced
exploration phase towards planned production during 2012. The
Scoping Study prepared by Behre Dolbear has allowed us to refine our
planning of infrastructure, extraction technology, legal and
environmental studies and sustainability. Good progress is being made
on all these fronts and we plan to shortly proceed to a
Pre-Feasibility Study, with a target completion date during 2009".
Disclaimer
This press release includes forward-looking statements. Such
forward-looking statements involve known and unknown risks,
uncertainties and other important factors beyond Chaarat's control
that would cause the actual results, performance or achievements of
Chaarat to be materially different from future results, performance
or achievements expressed or implied by such forward-looking
statements. Such forward-looking statements are based on numerous
assumptions regarding Chaarat's present and future business
strategies and the environment in which Chaarat will operate in the
future. Any forward-looking statements speak only as at the date of
this document. Chaarat expressly disclaims any obligation or
undertaking to disseminate any updates or revisions to any
forward-looking statements contained herein to reflect any change in
Chaarat's expectations with regard thereto or any change in events,
conditions or circumstances on which any such statements are based.
As a result of these factors, the events described in the
forward-looking statements in this press release may not occur either
partially or at all.
+-------------------------------------------------------------------+
| Enquiries: | |
|------------------------------------------------+------------------|
| Chaarat Gold Holdings Ltd | Tel: +44 (0) 20 |
| | 7499 2612 |
|------------------------------------------------+------------------|
| Dekel Golan - Dekel@chaarat.com | |
|------------------------------------------------+------------------|
| Terry Cross - terry@caserve.co.uk | |
|------------------------------------------------+------------------|
| Canaccord Adams Limited | Tel: +44 (0) 20 |
| | 7050 6500 |
|------------------------------------------------+------------------|
| Mike Jones - Mike.Jones@canaccordadams.com | |
|------------------------------------------------+------------------|
| Smith's Corporate Advisory | Tel: +44 (0) 20 |
| | 7239 0140 |
|------------------------------------------------+------------------|
| Dominic Palmer-Tomkinson - | |
| Tomkinson@smiths-ca.com | |
+-------------------------------------------------------------------+
Chief Executive's Report
I am pleased to present Chaarat Gold's Half Year Results for the six
months to 30 June 2008.
Exploration
For the first time Chaarat successfully operated throughout the year,
without ceasing exploration activities during the winter season. On
22 April 2008 the Company released its resource update recording
estimated JORC compliant resources of 3.13million ounces of gold at
an average grade of 4.41 grams/tonne, thereby demonstrating the
success of its 2007 exploration programme. These results represented
a 68% increase over the estimated 1.86 million ounce resource
declared after the 2006 season.
The majority of the exploration work carried out during the first
half of 2008 was conducted underground, with surface work being
initiated following the winter season.
The exploration adit passed through extensive mineralisation in the
Contact zone in February 2008. Two drifts running parallel to the
strike of the mineralised body in the hanging wall are on schedule.
The results of drilling from the first underground drill chamber were
very encouraging. Drilling is currently being conducted from Drill
Chamber #2 which was excavated and equipped in May 2008, with
drilling scheduled for completion by the end of September 2008.
Subsequent to completion of drilling in Drill Chamber #2, drilling
will commence from Drill Chamber #3, situated 200metres to the North
of Drill Chamber #2. If positive results from Drill Chamber #2 and
horizontal drilling from the drift confirm the exploration value of
this approach to delineation of the resource, a fourth drill chamber
will be developed 200metres to the South of Drill Chamber #2.
The current underground drilling program will allow us to extend the
current resource of 1.248Moz in the Contact Zone both along strike
and to depth, along a strike length of some 640 metres, which is a
still only a small part of the almost 10 kilometre strike of the
contact zone. Should the grade and width found in drilling from Drill
chambers #1 and #2 prove consistent, the C53 Project will become very
significant in its own right and permit the generation of the first
mine planning block model for a pre-feasibility study.
In order to facilitate the exploration work, exclusively conducted by
local contractors, Chaarat is actively supporting the development of
local contractors. We view this approach as good operational practice
as well as an integral part of the sustainable development approach
of the Company. We have assisted a number of local contractors in
acquiring modern or new equipment and we regularly provide expert
assistance to improve their skills base. Such assistance, mostly by
way of advances and loans, has proven very useful.
Scoping and Pre-Feasibility Studies
The Company commissioned Behre Dolbear International Ltd. ("Behre
Dolbear"), an independent and internationally recognised engineering
consulting firm, to prepare a scoping study on the economic viability
of the Chaarat Project, as well as setting out a recommended work
programme to develop the project to the mining stage.
The Scoping Study was completed during June 2008. The details of the
scoping study can be found in the press release published on 19 June
2008. The report concluded that the Chaarat property is an
economically viable property and that the targeted production rate of
a minimum of 200,000 saleable ounces of gold per year can technically
and operationally be achieved.
Discussions are underway with a number of parties about the
commissioning of a pre-feasibility study. We expect to announce
shortly the party or group of parties who will undertake this study.
Project Development:
Staff
A new Project Manager, Mr. Scott Salisbury, joined the Company during
May. Scott brings with him significant experience in mining in
Australia as well as managing operations in less developed
environments such as Tanzania and Mauritania.
Metallurgy
In parallel with metallurgical studies to develop a gold dor�
product, following the advice of a number of experts, the Company has
decided to also direct more effort towards investigating the
alternative possibility of producing a high grade gold and silver
concentrate. The ability to produce such concentrate would allow the
Company to either treat the concentrate in a location where the
environmental concerns can be minimised, or to sell the concentrate
outright. The Company is commissioning Mintek, a South African
metallurgical laboratory with significant experience in similar ores,
to develop a suitable process.
Development
A number of potentially suitable locations for the plant and tailings
dam have been identified. The required geotechnical work to
substantiate the suitability of those locations is being planned and
is likely to take place during the 2009 summer season.
The survey and design of the access road up the Sandalash river
valley, to link an existing public road system to site and provide
year-round access to site, was commissioned by Maccafferri in August
2008. The length of the road to be planned and built is approximately
20 km, significantly less than previously believed.
Environmental work
With a better understanding of the area of influence of the project,
the detailed planning of the Environmental Baseline Study has
commenced. A review of potential project infrastructure sites and
access routes has identified that the study area was significantly
larger then originally estimated. Our environmental advisors, Knight
Piesold and Co. (USA), are working with us to determine a revised
scope of work, to ensure that the study is executed to the highest
international standards. The initial study phase incorporating the
full area of influence covered by the project will commence in the
spring of 2009.
Dekel Golan
Chief Executive Officer
Consolidated income statement
For the six months ended 30 June
6 months to 6 months to 12 months to
30 June 30 June 31 December
2008 2007 2007
(unaudited) (unaudited) (audited)
USD USD USD
Exploration expenses (2,997,849) (740,665) (5,298,560)
Administrative expenses (1,739,306) (287,530) (1,623,792)
Other operating income/(expense) 14,569 858 (2,852)
Operating loss (4,722,586) (1,027,337) (6,925,204)
Financial expense (247,475) - -
Financial income 178,239 87,387 384,858
Loss for the period,
attributable to equity
shareholders of the Company (4,791,822) (939,950) (6,540,346)
Loss per share (basic and
diluted) - USD cents (6.67)c (1.70)c (11.21)c
All amounts relate to continuing activities.
Consolidated balance
sheet
At 30 June
30 June 30 June 31 December
2008 2007 2007
(unaudited) (unaudited) (audited)
USD USD USD
Assets
Non-current assets
Intangible assets 25,628 - 4,797
Property, plant and
equipment 2,064,833 613,683 1,215,273
Other receivables 38,388 37,886 37,740
2,128,849 651,569 1,257,810
Current assets
Inventories 294,167 - 475,846
Trade and other
receivables 1,706,812 903,768 742,433
Cash and cash
equivalents 7,004,269 3,756,955 13,128,822
9,005,248 4,660,723 14,347,101
Total assets 11,134,097 5,312,292 15,604,911
Liabilities and equity
Equity attributable to
shareholders
Share Capital 718,834 3,739 718,834
Share premium 15,665,928 11,204,939 15,665,928
Other reserves 11,405,955 258,647 11,048,357
Foreign currency reserve (421,416) 12,979 (408,059)
Retained losses (16,787,682) (6,395,464) (11,995,860)
10,581,619 5,084,840 15,029,200
Current liabilities
Trade payables 481,972 117,452 401,253
Accrued liabilities 70,506 110,000 174,458
552,478 227,452 575,711
Total liabilities and equity 11,134,097 5,312,292 15,604,911
Consolidated cash flow
statement
For the six months ended 30
June
6 months to 6 months to 12 months to
30 June 30 June 31 December
2008 2007 2007
(unaudited) (unaudited) (audited)
USD USD USD
Operating activities
Result for the period before (4,791,822) (939,950) (6,540,346)
and after tax
Adjustments:
Amortisation expense
intangible assets 2,671 - 430
Depreciation expense
property, plant and
equipment 256,757 46,717 200,415
Loss on disposal of
property, plant and
Equipment 5,838 2,091 3,541
Interest income (179,498) (65,809) (263,558)
Share based payment expense 357,598 10,138 163,306
Foreign exchange 247,475 1,178 87,875
(Increase)/decrease in 181,679 - (475,846)
inventories
(Increase)/decrease in (965,027) (815,168) (633,208)
accounts receivable
Increase/(decrease) in (23,233) 142,601 490,859
accounts payable
Net cash flow used in
operations (4,907,562) (1,618,202) (6,966,532)
Investing activities
Purchase of computer (23,560) - (5,227)
software
Purchase of property plant (1,129,357) (541,482) (1,297,372)
and equipment
Proceeds from sale of 2,644 5,208 13,750
equipment
Loans repaid - - 40,000
Interest received 179,498 65,809 203,079
Net cash used in investing
activities (970,775) (470,465) (1,045,770)
Financing activities
Proceeds from issue of share - 4,999,049 23,264,751
capital
Issue costs - - (2,453,076)
Net cash from financing
activities - 4,999,049 20,811,675
Net change in cash and cash
equivalents (5,878,337) 2,910,382 12,799,373
Cash and cash equivalents at
beginning of the period 13,128,822 846,573 846,573
Effect of changes in foreign (246,216) - (517,124)
exchange rates
Cash and cash equivalents at
end of the period 7,004,269 3,756,955 13,128,822
Consolidated statement of changes in
equity
For the six months ended 30 June
Share Share Retained Other Translation
Capital Premium losses Reserves Reserve Total
USD USD USD USD USD USD
Balance at 3,431 6,454,707 (5,455,514) - 11,801 1,014,425
31 December
2006
Currency - - - - 1,178 1,178
translation
Net gain - - - - 1,178 1,178
recognised
directly in
equity
Loss for the
six months - - (939,950) - - (939,950)
ended
30 June 2007
Total
recognised
income and
expense for
the six
months
attributable
to equity
shareholders
of the
Company - - (939,950) - 1,178 (938,772)
Issuance of
shares and
options for
cash 308 4,750,232 - 248,509 - 4,999,049
Share options
expense - - - 10,138 - 10,138
Balance at 3,739 11,204,939 (6,395,464) 258,647 12,979 5,084,840
30 June 2007
Currency - - - - (421,038) (421,038)
translation
Net loss - - - - (421,038) (421,038)
recognised
directly in
equity
Loss for the
six months - - (5,600,396) - - (5,600,396)
ended
31 December
2007
Total
recognised
income and
expense for
the six
months
attributable
to equity
shareholders
of the
Company - - (5,600,396) - (421,038) (6,021,434)
Transfer to
reserves -
reverse
acquisition * (3,739) (11,204,939) - 11,208,678 - -
Share for
share
exchange -
reverse
acquisition * 572,136 - - (572,136) - -
Share options
expense - - - 153,168 - 153,168
Issuance of
shares for
cash 146,698 18,119,004 - - - 18,265,702
Share issue - (2,453,076) - - - (2,453,076)
costs
Balance at 718,834 15,665,928 (11,995,860) 11,048,357 (408,059) 15,029,200
31 December
2007
Currency - - - - (13,357) (13,357)
translation
Net gain - - - - (13,357) (13,357)
recognised
directly in
equity
Loss for the
six months - - (4,791,822) - - (4,791,822)
ended
30 June 2008
Total
recognised
income and
expense for
the six
months
attributable
to equity
shareholders
of the
Company - - (4,791,822) - (13,357) (4,805,179)
Share options
expense - - - 357,598 - 357,598
Balance at 718,834 15,665,928 (16,787,682) 11,405,955 (421,416) 10,581,619
30 June 2008
* The transfers to reserves during 2007 represented the issued share
capital and share premium of subsidiary Chaarat Gold Limited prior to
its reverse acquisition of Chaarat Gold Holdings Ltd
Notes:
1 Dividend
No dividend is proposed in respect of the period.
2 Loss per share
The loss per share is calculated by reference to the loss of
USD4,791,822 for the six months ended 30 June 2008 and the
weighted average number of shares in issue of 71,883,433
during the period. There is no dilutive effect of share
options or warrants.
The numbers of shares used in loss per share calculations for
the periods ended 30 June 2007 and 31 December 2007 have been
adjusted for the 300:1 share exchange of 7 September 2007.
3 Basis of preparation of financial statements
The unaudited results have been prepared on a going concern
basis and on the basis of the accounting policies adopted in
the audited accounts for the year ended 31 December 2007.
The results for the period are derived from continuing
activities.
The financial information set out in this half-yearly report
does not constitute statutory accounts. The figures for the
period ended 31 December 2007 have been extracted from the
statutory financial statements, prepared under IFRS, which are
available on the Group's website www.chaarat.com. The
auditor's report on those financial statements was
unqualified.
4 Selected accounting policy
Mining exploration and development costs
During the exploration phase of operations, all costs are
expensed in the Income Statement as incurred.
A subsequent decision to develop a mine property within an
area of interest is based on the exploration results, an
assessment of the commercial viability of the property, the
availability of financing and the existence of markets for the
product. Once the decision to proceed to development is made,
exploration, development and other expenditures relating to
the project are capitalised and carried at cost with the
intention that these will be depreciated by charges against
earnings from future mining operations over the relevant life
of mine on a units of production basis.
5 Share options
On 30 June 2008 the Company awarded 1,335,000 share options to
staff, at an exercise price of GBP�0.54 per share. The total
number of share options outstanding were:
At 31 December 2007 6,540,000
Awarded 30 June 2008 1,335,000
At 30 June 2008 7,875,000
An amount of USD 357,598 was recognised as share based payment
expense during the six month period ended 30 June 2008 (six
months ended 30 June 2007:USD 10,138; 12 months ended 31
December 2007: USD 163,306)
Directors and Advisers
Directors
C Palmer-Tomkinson Non-executive Chairman
D Golan Chief Executive Officer
T A Cross Finance Director
A Novak Executive Director
S R Comline Non-executive Director
O R Greene Non-executive Director
Company Secretary Auditors Solicitors (UK)
Watson, Farley &
Chateau Management Limited Grant Thornton UK LLP Williams LLP
PO Box 693 Grant Thornton House 15 Appold Street
Hamilton Estate Melton Street London, EC2A 2HB
Charlestown London, NW1 2EP
Solicitors
Nevis (Guernsey)
Tel +41 22 316 6620 Registrars Ogier
Capita Registrars
lee@chateaufid.ch (Guernsey) Ltd Ogier House,
2nd Floor, No 1 Le St. Julien's
Truchot Avenue
Registered Office St Peter Port St. Peter Port
Palm Grove House Guernsey Guernsey, GY1 1WA
PO Box 438
Road Town, Tortola Depositary Solicitors (BVI)
British Virgin Islands, Capita IRG Trustees
VG1110 Limited Ogier
Qwomar Complex,
Registered Number 1420336 The Registry 4th Floor
PO Box 3170 Road
34 Beckenham Road Town
Kyrgyz Republic Office Beckenham Tortola
British Virgin
Chaarat Zaav CJSC Kent, BR3 4TU Islands, VG 1110
Chokmorova Street, 127
Solicitors (Kyrgyz
720040, Bishkek Principal Bankers Republic)
Royal Bank of Scotland Kalikova &
Kyrgyz Republic International Associates
71 Erkindik
Royal Bank Place Boulevard
Web Site 1 Glategny Esplanade Bishkek, 720040
www.chaarat.com St Peter Port Kyrgyz Republic
Guernsey
Nominated Advisor and
Broker
Canaccord Adams Limited
Cardinal place, 7th
Floor
80 Victoria Street
London, SW1E 5JL
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