TIDMCGH
RNS Number : 7969S
Chaarat Gold Holdings Ltd
29 September 2014
Chaarat Gold Holdings Limited
("Chaarat" or "the Company")
UNAUDITED RESULTS FOR THE SIX MONTHS ENDED 30 JUNE 2014
Road Town, Tortola, British Virgin Islands (29th September
2014)
Chaarat (AIM - CGH), the AIM quoted exploration and development
company with assets in the Kyrgyz Republic, today publishes its
unaudited results for the period ended 30 June 2014.
HIGHLIGHTS
-- Data collection for the enlarged scope Definitive Feasibility
Study (DFS) complete and evaluation underway
-- Drilling in Tulkubash Zone to increase oxide resource for the
heap leach operation completed
-- Geotechnical and hydrological site investigation of the new production plant area completed
-- Community engagement strengthened
Dekel Golan, Chief Executive Officer of Chaarat, commented:
"We continue to manage our limited financial resources wisely
and diligently with the aim of delivering a solid feasibility study
on the basis of which we will either engage a Joint Venture partner
or pursue alternative project financing options. The results from
the DFS to date continue to demonstrate the potential of the
Chaarat Project as one of the largest and best undeveloped deposits
in the world."
Enquiries:
Chaarat Gold Holdings + 44 23 800 11747/+ 44
Limited 20 7499 2612
c/o Central Asia Services info@chaarat.com
Limited
Dekel Golan CEO
Linda Naylor FD
Numis Securities Limited +44 (0) 20 7260 1000
John Prior, Stuart Skinner
(NOMAD)
James Black (Broker)
Further information is available at www.chaarat.com
Chief Executive Officer's Report
During the summer our efforts have been focused on the data
collection required for the enlargement in scope of the DFS, since
we identified that the optimal strategic development of the Project
would be two production lines which would share infrastructure but
be economically viable as standalone projects.
In order to increase the returns generated from the first stage
standalone heap leach operation, we undertook about 6,500 metres of
diamond core drilling to both increase the resource of the open
pittable heap leachable Tulkubash Project as well as to identify
and demonstrate additional strike for its continuation to the
north. The results of this drilling will be included in the new
resource calculation currently being prepared. GeoSystems
International, Inc has been retained to review the current resource
model as well as update it for the latest drilling results.
All field data and most other relevant data have been collected
and collated relating to the new location for the production
facility in the adjacent valley. The design and costs of the tunnel
required to connect the deposit with the mine site will be
undertaken as part of the detailed work on the scope of the
Project. There are a number of critical decisions to be made with
regard to scope, which will be an iterative process and must be
worked through before we can move to the detailed planning
process.
We are encouraged by the appointment of NFC and NERIN to
complete the DFS that there will be a comprehensive review of
available development options for the Project so that we are in the
best possible position to make these critical decisions relating to
it.
On the metallurgy front, as previously reported, we are
reviewing bio-heap oxidation as an option for the oxidation of the
sulphide ore during the second stage of development of the Project.
This method, which was originally used and patented by Newmont at
its Carlin mine in Nevada, may offer a lower capital cost way to
oxidize the ore than pressure oxidation and also ensure an
acceptable level of gold extraction from the ore is obtained.
Initial results have been encouraging, but as with the project
scope, we will not draw conclusions before all results are
evaluated and considered.
As well as reviewing the bio-heap oxidation option, more and
larger scale metallurgical work is underway to maximize and
optimize the accuracy of the feasibility study work.
This time last year we said that "The Board considers that the
sale of the Project may take away any future "upside" from
shareholders and the preference of the Board is therefore to
introduce a significant partner or partners to the Project
company." A number of entities from different countries have
expressed interest in partnering with Chaarat in the development of
the Project. We do not expect any meaningful development on this
front before the feasibility study is nearer completion in 2015
when a value benchmark can be attributed to the Project for the
purpose of negotiations.
Community relations
We have continued to engage with the residents of the Chatkal
valley, the adjacent valley to the deposit. We have carefully
targeted our community engagement budget and with local help
ensured that its impact has been maximised.
The Community Consultation Group established last year has met
and been updated on the progress with the Project. This group is
the community representative body to discuss the Project with
Chaarat and the conduit to air the concerns and wishes of the local
population. Chaarat is committed to work according to the IFC and
Equator principles and to ensure its activities in the region are
undertaken in consultation with the local stakeholders.
We continue to work with the local Akimiat (council) on
improvement to the road infrastructure with sections of the road
being widened by our blasting and road building team. The water
distribution system in Jany- Bazar collapsed recently following
years of disrepair but has been restored following a combined
effort by Chaarat and the local council.
In addition to ongoing skill building activities, such as
scholarships for students and work placements, Chaarat assisted in
establishing two community operated shops. These delivered
essential supplies to the local population at prices obtained in
more competitive markets by cutting out some expensive middlemen.
The cost to Chaarat was minimal but the goodwill impact
significant.
Funding
The additional data collection due to the enlargement in scope
of the DFS has now been completed. The fixed price agreement with
NFC and NERIN to complete the DFS will retain the costs of the DFS
within the existing budget. With a reasonably high degree of
visibility over future costs the Board continues to monitor closely
all expenditure of a discretionary nature. As we have just reached
the end of the season a comprehensive review of all operational
areas is underway to ensure all staff and efforts are focused on
the complementary objectives of the DFS preparation and the
realisation of proceeds from equipment and fixed asset sales. The
realisation of proceeds will give the Board additional flexibility
to elect as and when additional funds need to be raised after
completion of the DFS. During the period USD 520,398 was raised
from the sale of equipment. Our exploration assets at Mironovskoye
and Kyzil Ompul have attracted expressions of interest from
potential buyers which are being vigorously pursued.
Dekel Golan
Chief Executive Officer
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 preparing a
Definitive Feasibility Study (DFS) and continuing its 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.
Consolidated income
statement
For the six months
ended 30 June
6 months 6 months 12 months
to to to
30 June 30 June 31 December
2014 2013 2013
(unaudited) (unaudited) (audited)
USD USD USD
Exploration expenses (1,484,299) (7,017,604) (4,780,317)
Impairment of assets - - (4,061,949)
Administrative expenses (1,753,273) (2,865,015) (4,962,471)
- Share options expense (120,990) (338,383) (756,356)
- Foreign exchange
gain/(loss) 16,826 (551,330) 8,309
------------------------------------- ------------ ------------ --------------
Total administrative
expenses (1,857,437) (3,754,728) (5,710,518)
Other operating income/(expense) 44,052 591 (43,027)
------------------------------------- ------------ ------------ --------------
Operating loss (3,297,684) (10,771,741) (14,595,811)
Finance income 31,612 110,315 219,601
------------------------------------- ------------ ------------ --------------
Loss for the period,
attributable to equity
shareholders of the
parent (3,266,072) (10,661,426) (14,376,210)
------------------------------------- ------------ ------------ --------------
Loss per share (basic
and diluted) - USD
cents (1.30) (4.26) (5.74)
------------------------------------- ------------ ------------ --------------
Consolidated statement
of comprehensive income
For the six months
ended 30 June
6 months 6 months 12 months
to to to
30 June 30 June 31 December
2014 2013 2013
(unaudited) (unaudited) (audited)
USD USD USD
Loss for the period,
attributable to equity
shareholders of the
parent (3,266,072) (10,661,426) (14,376,210)
Other comprehensive
income:
Exchange differences
on translating foreign
operations and investments (2,752,373) 494,377 (528,755)
Other comprehensive
income for the period,
net of tax (2,752,373) 494,377 (528,755)
Total comprehensive
loss for the period
attributable to equity
shareholders of the
parent (6,018,445) (10,167,049) (14,904,965)
-------------------------------- ------------ ------------ -------------
Consolidated balance
sheet
At 30 June
30 June 30 June 31 December
2014 2013 2013
(unaudited) (unaudited) (audited)
USD USD USD
Assets
Non-current assets
Intangible assets 73,019 120,942 103,718
Mining exploration
assets 6,803,149 8,349,367 7,192,913
Mine properties 23,151,084 13,676,260 21,657,042
Property, plant and
equipment 6,450,722 7,026,987 7,691,266
Assets in construction 13,782,021 14,863,864 14,477,613
50,259,995 44,037,420 51,122,552
----------------------------------- ------------------ ------------------ ------------------
Current assets
Inventories 1,251,030 2,336,790 1,753,802
Trade and other receivables 1,085,444 2,697,557 857,903
Cash and cash equivalents 7,122,223 20,727,659 11,163,079
9,458,697 25,762,006 13,774,784
Total assets 59,718,692 69,799,426 64,897,336
------------------------------------ ------------------ ------------------ ------------------
Equity and liabilities
Equity attributable
to shareholders
Share capital 2,504,778 2,504,778 2,504,778
Share premium 128,551,662 128,551,662 128,551,662
Other reserves 15,127,145 14,808,155 15,013,806
Translation reserve (5,270,181) (1,494,676) (2,517,808)
Accumulated losses (83,904,676) (77,143,793) (80,646,255)
------------------------------------ ------------------ ------------------ ------------------
57,008,728 67,226,126 62,906,183
----------------------------------- ------------------ ------------------ ------------------
Non- current liabilities
-------------------------------- ------------------ ------------------ ------------------
Deferred tax 487,000 472,961 475,772
------------------------------------ ------------------ ------------------ ------------------
Current liabilities
Trade payables 1,442,676 1,423,399 617,181
Accrued liabilities 780,288 676,940 898,200
------------------------------------ ------------------ ------------------ ------------------
2,222,964 2,100,339 1,515,381
----------------------------------- ------------------ ------------------ ------------------
Total liabilities 2,709,964 2,573,300 1,991,153
------------------------------------ ------------------ ------------------ ------------------
Total liabilities
and equity 59,718,692 69,799,426 64,897,336
------------------------------------ ------------------ ------------------ ------------------
Consolidated statement of changes in equity
For the six months ended 30 June
Share Share Accumulated Other Translation
capital premium losses reserves reserve Total
USD USD USD USD USD USD
Balance at 31
December 2012 2,504,778 128,551,662 (66,631,199) 14,618,604 (1,989,053) 77,054,792
-------------- --------- ----------- ------------ ---------- ----------- ------------
Currency
translation - - - - 494,377 494,377
-------------- --------- ----------- ------------ ---------- ----------- ------------
Other
comprehensive
income - - - - 494,377 494,377
-------------- --------- ----------- ------------ ---------- ----------- ------------
Loss for the
six months
ended
30 June 2013 - - (10,661,426) - - (10,661,426)
Total
comprehensive
income for
the
six months
ended
30 June 2013 - - (10,661,426) - 494,377 (10,167,049)
Share options
lapsed - - 148,832 (148,832) - -
-------------- --------- ----------- ------------ ---------- ----------- ------------
Share options
expense - - - 338,383 - 338,383
-------------- --------- ----------- ------------ ---------- ----------- ------------
Balance at 30
June 2013 2,504,778 128,551,662 (77,143,793) 14,808,155 (1,494,676) 67,226,126
-------------- --------- ----------- ------------ ---------- ----------- ------------
Currency
translation - - - - (1,023,132) (1,023,132)
-------------- --------- ----------- ------------ ---------- ----------- ------------
Other
comprehensive
income - - - - (1,023,132) (1,023,132)
-------------- --------- ----------- ------------ ---------- ----------- ------------
Loss for the
six months
ended
31 December
2013 - - (3,714,784) - - (3,714,784)
-------------- --------- ----------- ------------ ---------- ----------- ------------
Total
comprehensive
income for
the
six months
ended
31 December
2013 - - (3,714,784) - (1,023,132) (4,737,916)
Share options
lapsed - - 212,322 (212,322) - -
-------------- --------- ----------- ------------ ---------- ----------- ------------
Share options
expense - - - 417,973 - 417,973
-------------- --------- ----------- ------------ ---------- ----------- ------------
Balance at 31
December 2013 2,504,778 128,551,662 (80,646,255) 15,013,806 (2,517,808) 62,906,183
-------------- --------- ----------- ------------ ---------- ----------- ------------
Currency
translation - - - - (2,752,373) (2,752,373)
-------------- --------- ----------- ------------ ---------- ----------- ------------
Other
comprehensive
income - - - - (2,752,373) (2,752,373)
-------------- --------- ----------- ------------ ---------- ----------- ------------
Loss for the
six months
ended
30 June 2014 - - (3,266,072) - - (3,266,072)
-------------- --------- ----------- ------------ ---------- ----------- ------------
Total
comprehensive
income for
the
six months
ended
30 June 2014 - - (3,266,072) - (2,752,373) (6,018,445)
Share options
lapsed - - 7,651 (7,651) - -
-------------- --------- ----------- ------------ ---------- ----------- ------------
Share options
expense - - - 120,990 - 120,990
Balance at 30
June 2014 2,504,778 128,551,662 (83,904,676) 15,127,145 (5,270,181) 57,008,728
-------------- --------- ----------- ------------ ---------- ----------- ------------
Consolidated cash
flow statement
For the 6 months ended
30 June
6 months 6 months 12 months
to to to
30 June 30 June 31 December
2014 2013 2013
(unaudited) (unaudited) (audited)
USD USD USD
Operating activities
Loss for the period (3,145,082) (10,661,426) (14,376,210)
Adjustments:
Amortisation expense
- intangible assets 23,346 29,599 50,914
Depreciation expense
- property, plant
and equipment 445,658 647,360 1,076,025
(Profit)/loss on disposal
of property, plant
and equipment (520,398) 7,259 9,349
Impairment of assets - - 4,416,403
Finance income (31,612) (110,315) (219,601)
Share based payments 120,990 338,383 756,356
Foreign exchange (gains)/losses (16,826) (551,330) (8,309)
Decrease in inventories 502,772 446,533 1,029,521
(Increase)/Decrease
in accounts receivable (227,540) 902,907 2,285,494
Increase/(Decrease)in
accounts payable 718,811 (406,212) (988,359)
Net cash flow used
in operations (2,250,871) (9,357,242) (5,968,327)
------------------------------------------------------- ---- ------------ ------------ -------------
Investing activities
Purchase of computer
software (192) (28,582) (24,892)
Purchase of mine assets,
property, plant and
equipment (2,221,416) (7,249,367) (19,486,920)
Proceeds from sale
of equipment 520,398 - -
Interest received 31,612 110,315 219,601
------------------------------------------------------- ---- ------------ ------------ -------------
Net cash used in investing
activities (1,669,598) (7,167,634) (19,292,211)
------------------------------------------------------- ---- ------------ ------------ -------------
Net change in cash
and cash equivalents (3,920,469) (16,524,876) (25,260,538)
Cash and cash equivalents
at beginning of the
period 11,163,080 36,944,060 36,944,060
Effect of changes
in foreign exchange
rates (120,388) 308,475 (520,443)
------------------------------------------------------- ---- ------------ ------------ -------------
Cash and cash equivalents
at end of the period 7,122,223 20,727,659 11,163,079
------------------------------------------------------- ---- ------------ ------------ -------------
Notes to the financial statements
1 Loss per share
The loss per share is calculated by reference to the loss of USD
3,266,072 for the six months ended 30 June 2014 and the weighted
average number of shares in issue of 250,477,868 during the period.
There is no dilutive effect of share options.
2 Basis of preparation of financial statements
The financial information set out in this half-yearly report
does not constitute statutory accounts.
In the accounts for the year ended 31 December 2013 the payment
of USD 5.4m made to the government of the Kyrgyz Republic in
respect of the mining licence for the Chaarat Project was
capitalised. Accordingly the accounts for the period to 30 June
2013 have been restated to reflect this change in treatment, which
has reduced accumulated losses by USD 5,405,231, increased the
translation reserve by USD 236,887 and increased non-current assets
by USD 5,168,344.
The unaudited results for the period ended 30 June 2014 have
been prepared on the basis of the accounting policies adopted in
the audited accounts for the year ended 31 December 2013. The
results for the period are derived from continuing activities. The
figures for the period ended 31 December 2013 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.
As reported in the accounts for the year ended 31 December 2013,
the original scope of the DFS has been increased to cover
additional areas of work through further drilling and data
collection. These additional areas of work were undertaken to
support the assessment of the enlarged heap leach opportunity and
collect data relating to the new location for the production
facility. Whilst the results of this additional work will add value
to the Chaarat Project (by increasing production, reducing
operating costs and reducing the environmental impact) the costs of
the DFS were increased. We also reported that further funds may be
required to cover the shortfall between the original budget and
revised budgets for completion of the DFS. This situation was
addressed by signing a fixed price agreement for the DFS with NFC
and NERIN. With the consequent reduction in the risk of a DFS
budget overrun the Board is now confident that the costs of the DFS
will not exceed its original budget.
The Board continues to monitor and reduce all expenditure of a
discretionary nature, selling materials and equipment, which were
purchased when early stage production was envisaged, and other
assets of the Group. The sale of the equipment and materials will
give the Board additional flexibility to elect as and when
additional funds need to be raised after completion of the DFS.
During the period USD 520,398 was raised from the sale of
equipment.
Subject to the continued successful realisation of these
expectations, the Board is satisfied that it has sufficient funds
to maintain the Group as a going concern and therefore considers it
appropriate to prepare these unaudited results on a going concern
basis.
This information is provided by RNS
The company news service from the London Stock Exchange
END
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