CGH Chaarat Gold Holdings Ltd

 
TIDMCGH 
 
Chaarat Gold Holdings Limited 
                          ("Chaarat" or "the Company") 
 
          Update on the development strategy for the Tulkubash Project 
 
 
Road Town, Tortola, British Virgin Islands (16 April 2012) 
 
Chaarat (AIM-CGH), the gold exploration and development company operating in the 
Kyrgyz  Republic,  announces  an  update  on,  and  a change in strategy of, the 
development  of the Tulkubash Project, which is part of the Chaarat project area 
in the north west of the Kyrgyz Republic. 
 
Highlights 
 
  *  Design  and  engineering  of  the  Tulkubash  Project  completed confirming 
    sufficiency of funds 
 
  *  Infrastructure   development  and  construction  recommenced  after  winter 
    closure 
 
  * Development  strategy  reviewed  in  light  of  direct negotiations with the 
    Kyrgyz  Government  to  conclude  an  Investment  Agreement which includes a 
    "stabilisation clause" 
Chaarat has completed the design and engineering of its Tulkubash Project and is 
in  the  process  of  completing  the  infrastructure  elements.  The Company is 
satisfied  that the original budget, as presented  when the funds were raised in 
March  2011, remains adequate.   The possibility  of building  a larger capacity 
operation than planned (increasing expected capacity from 1,000-1,200 tonnes per 
day  to possibly double that or more)  within the original budget framework, has 
been established as viable  and is under consideration. 
 
The  Company has  been examining  the strategic  choices available  to it in the 
light  of the worldwide  changes to fiscal  regimes under which mining companies 
operate,  changes  that  have  been  brought  on  in  part by a more challenging 
economic  climate.  Chaarat's  Board is  likewise aware  that the  fiscal regime 
governing  mining companies in the Kyrgyz  Republic is currently under review by 
the  newly formed Government and,  in the Board's opinion,  is likely to change. 
 In  order to  mitigate any  uncertainty concerning  the possible  impact on the 
phased development of the Chaarat Project, the Company has decided to enter into 
direct  negotiations with the  Government.  The aim  of these is  to secure long 
term  stability for the Chaarat Project by  the development of a mutually agreed 
Investment  Agreement,  containing  a  "stabilisation  clause",  protecting  the 
Company  from changes  to taxation,  ownership structure  and royalties.  Such a 
commitment  embodied within the  Agreement would require  that it is ratified by 
the  Kyrgyz  Parliament.   The  Government  has  confirmed  its  support of this 
approach which the Board believes is the most responsible way to ensure economic 
predictability. 
 
In light of this decision, and pending negotiations with the Government, further 
capital  investment activities (other than  the infrastructure projects relating 
to  power  and  roads  which  have  already  commenced)  will be suspended until 
agreement  is  reached.   Drilling  aimed  at  increasing  the free milling open 
pittable  reserve  base  of  the  Tulkubash  Project will continue.  The Company 
believes  that, subject to no unforeseen  delays in the negotiation process, the 
implementation  of the Tulkubash Project will take place only a few months later 
than originally planned and that gold production will still be achieved in 2013. 
 
The  permitting process outlined  in the Tulkubash  Project update of 7 December 
2011 is  unchanged and the Company will have the necessary documents ready to be 
reviewed  as planned.  Negotiations  with the Government  will not interrupt the 
preparation of documents for the permitting process. 
 
Based  on recent encouraging drilling results  (reported on 20 September and 22 
November  2011) Chaarat will, during the suspension period, seek to increase its 
Tulkubash  mostly free  milling open  pittable reserve  base by further drilling 
and,  if  the  results  of  the  drilling  are as expected, develop a Definitive 
Feasibility  Study  underpinning  a  significantly  higher  production rate. The 
processing  plant  has  already  been  designed  to  be  capable of expansion to 
accommodate a larger production rate with minimal disruption. 
 
The strategy of the Company was to reach production with the funds raised during 
2011, which   will  be  achieved  at  the  lower  production  rate.   Additional 
investment  will be  required to  achieve both  an increased production rate and 
access  a lower  cost source  of power,  both of  which are  expected to further 
improve  the Project's NPV.  The Board will consider the options available to it 
when  the results of  the Definitive Feasibility  Study are known.   A number of 
alternative  financing options  are available  to the  Company, should the Board 
decide  to pursue the upgraded  Project, and an equity  fundraising will only be 
considered if it is at least equal to the March 2011 fundraising price of 50p. 
 
Dekel Golan CEO comments: 
"Many  countries have recently changed their mining fiscal regime and others are 
likely  to  follow.  This  situation  creates  uncertainty which makes financial 
planning harder, especially for junior companies. 
 
"The  Board  of  Chaarat  is  taking  a  proactive approach and is entering into 
negotiations with the Kyrgyz Government with a view to establishing an agreement 
in  law  that  is  both  satisfactory  for  the  Government and provides greater 
certainty over the financial planning horizon for the Company. 
 
"The Chaarat Project is significant in scale and requires long term planning. It 
is  a Project which will bring enormous  benefits to the Kyrgyz Republic, to the 
communities neighbouring the Project and to Chaarat shareholders.  A large-scale 
Project  of this nature must be based on firm foundations, which will have to be 
ratified  by  the  Kyrgyz  Parliament,  in  order  to ensure its undisputed long 
tenure. 
 
"The  Board  of  directors  of  Chaarat  has  decided that prudence requires the 
temporary  suspension of further capital  investment while the negotiations with 
the  Government about the long term agreement are undertaken. We have confidence 
that these discussions will yield a positive long term benefit for shareholders. 
 
"We  are pleased that the completion of engineering and design work has verified 
the  reliability of  the original  estimated costs  of the  Project.  During the 
period  of negotiations with the Government, our team will continue adding value 
to the Project." 
 
The Chaarat Project 
 
Chaarat  is  a  large  gold  province  within  which  the  Company has, to date, 
delineated  5.59 Million ounces of gold (as  announced on 6 March 2012). The Pre 
Feasibility  Study  (as  announced  on  30 June  2011) established  the economic 
viability  of the Project and its ability to produce over 200,000 ounces of gold 
per  annum. The  deposit has  two principal  sections; the Tulkubash mostly free 
milling  ore zone  and the  Kiziltash refractory  ore zones,  both of  which are 
economically viable and with significant additional upside. 
 
Current efforts are focused on developing a modest size production unit fed from 
the mostly free milling open pit section of the Tulkubash mineralised zone. 
 
The Tulkubash Project 
 
The Tulkubash Project is the development phase in which the mostly free milling, 
open  pittable  section  of  the  Chaarat  Project  will  be  developed.  It was 
originally  considered to  be comparatively  limited but  drilling in  the 2011 
season  established  that  the  Tulkubash  mineralisation is more extensive than 
previously  believed. The  potential of  this mostly  free milling open pittable 
section of the deposit is much larger than originally estimated. 
 
Chaarat  believes that the potential exists to significantly increase production 
from  this section at a marginal  incremental investment.  During the early part 
of  the 2012 season,  a 6,500 metre  drilling campaign  will demonstrate whether 
production  can be  increased.  If  so, a  Definitive Feasibility  Study will be 
prepared  to demonstrate the  revised IRR and  NPV of the additional investment. 
 The  delivery of the  Project as originally  planned is not  conditional on the 
success  of this drilling  programme and any  additional investment will only be 
undertaken if there is a strong economic argument to do so. 
 
Enquiries: 
 
 Chaarat Gold Holdings Limited               +44 (0) 20 7499 2612 
 
 c/o Central Asia Services Limited 
 
 Dekel Golan   CEO                           dekel@chaarat.com 
 
 Linda Naylor  FD                            linda.naylor@chaarat.com 
 
 Numis Securities Limited                    +44 (0) 20 7260 1000 
 
 Alastair Stratton, Stuart Skinner (NOMAD) 
 
 James Black (Broker) 
 
 Bankside Consultants                        +44 (0) 20 7367 8888 
 
 Simon Rothschild                            simon.rothschild@bankside.com 
 
 Smith's Corporate Advisory                  +44 (0) 20 7601 6100 
 
 Dominic Palmer- Tomkinson                   tomkinson@smiths-ca.com 
 
 
 
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.  The  Company  has  delineated  a JORC compliant mineral 
resource  of 5.590Moz at a grade of  4.08g/t gold. 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. 
 
Further information is available at www.chaarat.com 
 
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  in this  document to  reflect any 
change  in Chaarat's expectations with regard to  these 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. 
 
 
 
 
 
 
 
 
 
 
This announcement is distributed by Thomson Reuters on behalf of 
Thomson Reuters clients. The owner of this announcement warrants that: 
(i) the releases contained herein are protected by copyright and 
    other applicable laws; and 
(ii) they are solely responsible for the content, accuracy and 
     originality of the information contained therein. 
 
Source: Chaarat Gold Holdings Ltd via Thomson Reuters ONE 
[HUG#1602543] 
 

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