TIDMCGH
RNS Number : 0477B
Chaarat Gold Holdings Ltd
04 June 2019
The information contained within this announcement is deemed by
the Company to constitute inside information as stipulated under
the Market Abuse Regulations (EU) No. 596/2014 ("MAR").
4 June 2019
Chaarat Gold Holdings Limited
("Chaarat" or the "Company")
Tulkubash Feasibility Study Update
Significant increase in reserves and mine life
Chaarat (AIM:CGH), the AIM-quoted gold mining company with
assets in the Kyrgyz Republic and Armenia, is pleased to provide an
update of the JORC compliant bankable feasibility study for its
majority owned Tulkubash Oxide Gold Project ("Tulkubash"). The
bankable feasibility study ("BFS") update was independently
prepared by LogiProc (Pty) Ltd in South Africa.
Overview
The feasibility study produced a 22.2Mt reserve, an increase of
39%, at an average grade of 0.92 g/t gold over an initial mine life
of 5.3 years. Ongoing exploration will be carried out in parallel
with the project development and the Company is confident that
future exploration results will add significantly to the initial
mine life ahead of first production, to enable Tulkubash to become
a long-term cash generator to sustain the organic growth of
Chaarat.
Highlights
- Initial reserve base of 22.2Mt ore grading 0.92g/t gold
containing 658koz ounces of gold, an increase of 39%
- Average gold production of 94,000 ounces per annum, with peak
production during steady state operations in excess of 111,000
ounces per annum
- Average cash operating cost of US$678 per ounce
- All-in sustaining cost of US$819 per ounce, including all taxes
- Ongoing exploration in 2019 and beyond expected to significantly add to existing reserves
- Tulkubash is now seen as an emerging gold district, with
potential to host multiple gold deposits
Financial highlights
- Significant capital expenditure optimisation, which has
resulted in an overall reduction from $132M to $110M
- Improved post tax NPV of $70M (at 5% discount rate) and IRR of 20%
- Projected annual post tax free cash flow of US$44M during steady state operational period
The initial post-tax net present value for Tulkubash, using a 5%
discount rate and a long-term gold price of US$1,300 per ounce, is
projected to increase to US$70M with an undiscounted total cash
flow of US$114M. These metrics are expected to be significantly
enhanced as ongoing exploration extends the reserve base along
strike.
Chaarat has developed a new recovery model based on the
relationship between gold recovery and the oxidation state of the
ore. This relationship allows the recovery estimate to better fit
results from two major metallurgical test programs. As a result,
the recovery has decreased from the original feasibility study to
69% from 75%. Nevertheless, the new estimate of recoverable ounces
is far more robust, significantly reducing project risk.
The Tulkubash resource and reserve, as currently defined, remain
open along strike to the northeast. The 2019 drilling programme,
which has already begun, will be focused on extending
mineralization along strike and on infill drilling within the
current resource footprint with the objective of further enhancing
project economics. The 2018 exploration programme added over
650,000 ounces of gold to Measured and Indicated Resource. The
Company has every reason to expect similar results in 2019.
Full text of the BFS can be found on:
https://www.chaarat.com/investors/reports/agm-notices-and-other/.
A press release providing an update on the Company's ongoing
exploration programme will be issued during the next few weeks.
Future funding plans
In March 2019, Chaarat signed a binding term sheet to enter into
a Joint Venture with Çiftay İnsaat Tahhüt ve Ticaret A.S.
("Çiftay"), the Turkish mining and mine construction contractor, to
collaborate on the Tulkubash project, providing a significant
amount of the required equity for the Tulkubash project. Under the
agreement, based on an agreed valuation of US$252M (post money) for
the Tulkubash and Kyzyltash projects, Çiftay would progressively
invest US$31.5M for a 12.5% equity stake in both projects.
The vast majority of the remaining capital expenditure is
expected to be debt funded, thus avoiding substantial dilution to
Chaarat's shareholders, a key strategic objective for the Company.
Chaarat is in the process of securing the remaining project
financing which is targeted to close in Q3 2019.
Construction is ongoing at Tulkubash and the first gold
production remains on schedule for 2021.
Artem Volynets, Chief Executive Officer, commented:
"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.
"The project team's highly successful optimization of the
project improves the value of the project and decreases the risks
associated with its delivery. We plan to immediately advance the
project development and are confident that our 2019 drilling
programme will deliver similar results, further adding to the mine
life of the project."
Tulkubash Mineral Resource Statement (effective 31st December
2018)
Classification Quantity Grade Au Contained
(M/t) (g/t) Metal Au
(koz)
======================== ========= ========= ==========
Measured 5.66 1.35 246
========= ========= ==========
Indicated 36.30 1.18 1,378
========= ========= ==========
Measured and Indicated 41.96 1.20 1,624
========= ========= ==========
Inferred 2.33 0.46 33
======================== ========= ========= ==========
Tulkubash Ore Reserve Estimate - Effective Date 1st April
2019
Category Quantity Grade Content Content
(Mt) (g/t) (t) (koz)
====================== ========= ======= ======== ========
Proven Ore Reserve 6.75 0.95 6.42 206
========= ======= ======== ========
Probable Ore Reserve 15.43 0.91 14.04 451
========= ======= ======== ========
Combined Ore Reserve 22.18 0.92 20.46 658
====================== ========= ======= ======== ========
Competent Person
The Competent Person with overall responsibility for this press
release for the Company, and who has reviewed the information
contained herein, is Dorian L. (Dusty) Nicol (FAussIMM), the
Company's Senior Vice President, Exploration. He is a geologist
with more than 40 years of experience in the resource industry who
has sufficient experience relevant to the style of mineralisation
and type of deposit under consideration and to the activity which
he is undertaking to qualify as a Competent Person as defined in
the 2012 Edition of the 'Australasian Code for Reporting of
Exploration Results, Mineral Resources and Ore Reserves'. He has
supervised the work which is the subject of this release. Mr. Nicol
consents to the inclusion in this announcement of the matters based
on this information in the form and context in which it
appears.
Enquiries
Chaarat Gold Holdings Limited
Artem Volynets (CEO) +44 (0)20 7499 2612
info@chaarat.com
Numis Securities Limited
John Prior, Paul Gillam (NOMAD) +44 (0) 20 7260 1000
James Black (Corporate Broking)
Powerscourt
Conal Walsh +44 (0)20 7250 1446
Sam Austrums chaarat@powerscourt-group.com
About Chaarat
Chaarat is a gold mining company which owns the Kapan operating
mine in Armenia as well as Tulkubash and Kyzyltash Gold Projects in
the Kyrgyz Republic. The Company has a clear strategy to build a
leading emerging markets gold company with an initial focus on
Central Asia and the FSU through organic growth and selective
M&A.
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.
Glossary of Technical Terms
"g/t" grammes per tonne, equivalent to parts per million
"Inferred that part of a Mineral Resource for which tonnage,
Resource" grade and mineral content can be estimated with
a low level of confidence. It is inferred from
geological evidence and assumed but not verified
geological and/or grade continuity. It is based
on information gathered through appropriate
techniques from locations such as outcrops,
trenches, pits, workings and drill holes which
may be limited or of uncertain quality and reliability
"Indicated that part of a Mineral Resource for which tonnage,
Resource" densities, shape, physical characteristics,
grade and mineral content can be estimated with
a reasonable level of confidence. It is based
on exploration, sampling and testing information
gathered through appropriate techniques from
locations such as outcrops, trenches, pits,
workings and drill holes. The locations are
too widely or inappropriately spaced to confirm
geological and/or grade continuity but are spaced
closely enough for continuity to be assumed
"JORC" The Australasian Joint Ore Reserves Committee
Code for Reporting of Exploration Results, Mineral
Resources and Ore Reserves 2012 (the "JORC Code"
or "the Code"). The Code sets out minimum standards,
recommendations and guidelines for Public Reporting
in Australasia of Exploration Results, Mineral
Resources and Ore Reserves
"M" million
"Measured that part of a Mineral Resource for which tonnage,
Resource" densities, shape, physical characteristics,
grade and mineral content can be estimated with
a high level of confidence. It is based on detailed
and reliable exploration, sampling and testing
information gathered through appropriate techniques
from locations such as outcrops, trenches, pits,
workings and drill holes. The locations are
spaced closely enough to confirm geological
and grade continuity
"Mineral a concentration or occurrence of material of
Resource" intrinsic economic interest in or on the Earth's
crust in such form, quality and quantity that
there are reasonable prospects for eventual
economic extraction. The location, quantity,
grade, geological characteristics and continuity
of a Mineral Resource are known, estimated or
interpreted from specific geological evidence
and knowledge. Mineral Resources are sub-divided,
in order of increasing geological confidence,
into Inferred, Indicated and Measured categories
when reporting under JORC
"Mt" million tonnes
"oz" troy ounce (= 31.1035 grammes)
"Reserve" the economically mineable part of a Measured
and/or Indicated Mineral Resource
"t" tonne (= 1 million grammes)
"tpd" tonnes per day
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END
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