TIDMCGH
RNS Number : 0415H
Chaarat Gold Holdings Ltd
29 July 2019
29 July 2019
Chaarat Gold Holdings Limited ("Chaarat" or "the Company")
Kapan Resource and Operational Update
February-June 2019 inclusive (five months)
Chaarat (AIM:CGH), gold mining company with assets in the Kyrgyz
Republic and Armenia, provides an update regarding the Kapan mine
which the Company acquired on 30th January, 2019. All the
statistics below relate to the period ending 30 June 2019.
Operational highlights
- Environmental Social and Governance ("ESG") statistics for
2019 year to date reflect a safe working environment. One lost time
injury ("LTI") involving a contractor was reported for the period
under review. The Company has started introducing the same ESG
requirements for contractors
- Run of mine (RoM) ore production increased by 8% year on year
relative to the same five-month period in 2018
- RoM grade in gold equivalent (AuEq) terms declined 14% year on
year, resulting in a 6% decline in contained RoM metal
- Contained AuEq adjusted for all payable metals increased 9%
year on year Mill throughput in the first 5 months of ownership is
up 23% year on yeardue to the processing of RoM stockpile
material
- Production of copper concentrates was up 12% year on year in
conjunction with a 16% increase in AuEq ounces recovered to copper
concentrate
- Production of zinc concentrate was down 10% year on year due
to lower RoM zinc grades and slightly lower mill recoveries
- Milling rates of approximately 800,000 tonnes on an annualized
basis have been achieved for sustained periods over the period
under review, which gives us confidence that a further 5% increase
in mill throughput is achievable
- Costs per tonne of ore treated was 10% lower year on year.
This has enabled the Company not only to absorb the impact of the
lower RoM ore grades but also positions the company well for an
anticipated recovery in RoM grade as management develops a better
understanding of the ore body
- Legacy issues: a number of legacy issues and operational
challenges have been identified by the Chaarat management team.
These have had a negative effect on operations in the near term.
Management has installed mitigation measures to offset these
challenges and they are delivering results. Based on the current
work programme the Company believes the mine will reach its
operational targets by the end of Q3
- New Mineral Resource Estimate ("MRE"). New Mineral Resource of
1.775Moz AuEq (Measured & Indicated based on the results of
69,000 meters of drilling completed in 2018. The MRE gives
Management confidence based on historical resource to reserve
conversion rates at Kapan that the mine will continue to replace
mined reserves and should continue to extend mine-life for several
years beyond the current life of the mine. This work programme has
improved the Company's understanding of the ore body and will help
to optimize short, medium and long-term operational planning and
execution
- With the new team now fully integrated at the asset, the
Company is confident that Kapan will reach full year operational
target run rates by the end of Q3 2019, including our target of 65
Koz of AuEq for 2019
Artem Volynets, Chief Executive Officer of Chaarat Gold,
said:
"I'm pleased with the progress that the new management team are
making at Kapan. Our ESG statistics have been outstanding, showing
solid management commitment to establishing a safe operating
environment.
"Also positive is a revised and more accurate Mineral Resource
Estimate of 1.775Moz Au Eq in M&I Resource. This, based on
69,000m of exploration drilling done in 2018, better reflects the
underlying potential and value of the asset. We are especially
encouraged by the significant increase in M&I Resource of 54
per cent from 1.15 to 1.775Moz Au Eq, which supports our belief
that we will be able to replace reserves at Kapan on a continuous
bases going forward.
"Although this year has seen a challenging start to ownership
due to a number of legacy issues, our experienced management and
mine-site team identified these early and began remedial work
immediately with encouraging results.
"As we continue to streamline operations and drive other
improvements, we are confident that Kapan will achieve our targeted
operational results in Q3 of this year".
ESG update
There were no LTIs related to direct employees in the period
under review although there was one LTI involving a contractor.
Prior to Chaarat taking over the business, no data was recorded on
contractors' injuries. As part of an improved ESG management
system, the Company now includes contract employees in all aspects
of the new safety management programme.
Safety performance and safety culture on site are improving
overall with significant management focus applied to potentially
unsafe conditions, working practices and behaviours. The Company is
carrying out reinforcement work on the tailings facility to reduce
the risks related to the historic construction of the dam walls. A
full and independent assessment of the longer-term work
requirements is in progress.
Chaarat attaches great importance to sustainable community
development programmes, and is in partnership with the local
government on the various social projects considered most necessary
by the communities involved. For example, Chaarat is focused on
helping the wellbeing of children in the community, providing
donations to fund the establishment of new nursery facilities and
classrooms.
Operational update
Production Data: Feb - June 2018 2019 Delta
Ore Mined Tonnes 255,323 276,378 8 %
-------------------------- ------------- -------- -------- ------
Head grade AuEq (gpt) 3.76 3.25 -14 %
-------------------------- ------------- -------- -------- ------
Contained Metal AuEq (oz) 30,884 28,909 -6 %
------------- -------- -------- ------
Ore milled Tonnes 261,750 321,538 23 %
-------------------------- ------------- -------- -------- ------
Head grade AuEq (gpt) 3.74 3.24 -13 %
-------------------------- ------------- -------- -------- ------
Contained Metal AuEq (oz) 31,455 33,479 6 %
------------- -------- -------- ------
Copper Conc Produced Tonnes 3,505 3,925 12 %
-------------------------- ------------- -------- -------- ------
Grade AuEq (gpt) 145.71 151.20 4 %
-------------------------- ------------- -------- -------- ------
Recovery Au Eq % 52.20 57.00 9 %
-------------------------- ------------- -------- -------- ------
Contained Metal AuEq (oz) 16,418 19,082 16 %
------------- -------- -------- ------
Zinc Conc Production Tonnes 5,213 4,689 -10 %
-------------------------- ------------- -------- -------- ------
Grade AuEq (gpt) 50.79 52.17 3 %
-------------------------- ------------- -------- -------- ------
Recovery Au Eq % 27.1 23.5 -13 %
-------------------------- ------------- -------- -------- ------
Contained Metal AuEq (oz) 8,512 7,865 -8 %
------------- -------- -------- ------
AuEq to all
Contained Metals concs (oz) 24,931 26,947 8%
------------- -------- -------- ------
AuEq to all
Payable Metals concs (oz) 22,881 24,927 9 %
------------- -------- -------- ------
The asset has presented more operational challenges than was
anticipated before the acquisition was finalized, resulting in
medium-term pressure on Kapan's financial performance. Because of
the lower grades in the ore, profitability in the first months of
ownership has been below the Company's initial expectations.
Following completion of the acquisition, actions were taken
immediately to stabilize the operations and mitigate production and
processing issues. Management is streamlining both mine planning
and maintenance programmes, as well as improving the metallurgical
performance of the mill.
These measures are being taken without delay. For example; to
redress a temporary shortfall in ore mined due to legacy haul truck
constraints, the Company has taken immediate action to obtain the
required engine replacements on an expedited basis. To balance the
interim period Chaarat's mining contractor has assisted by
increasing its fleet size resulting in increased trucking
rates.
Mill throughput has increased by 23% in the first five months
compared to the same period for 2018.
The production of copper concentrate is 12% up on the same
period last year. Operational improvements have also resulted in a
16% increase in AuEq ounces being recovered to copper concentrates.
Improved recovery of precious metals to copper concentrates has
also, in turn, improved profitability, due to the higher payable
levels for Au and Ag.
Zinc concentrate production is down 10% year on year due to
lower zinc grades in mined ore and slightly lower recoveries.
Actions are underway to replace one of the cyclone packs on the
mill circuit to resolve this issue. AuEq ounces in concentrate are
also down (-8%), mostly due to the improvements in the copper
circuit which have resulted in higher metal pulls to the copper
concentrate.
Additional efforts are also in place to achieve targeted grades,
reduce costs, and increase margins:
-- A cost reduction program is underway to review all major
expenditure areas and identify operational efficiencies. This will
include reviewing all contracts and procurement plans.
-- Additional sources of feed are being identified to allow the
excess capacity of the mill to be fully utilized.
-- A review of Mining Methods and Mine Planning is in progress
to identify ways to improve ore grade and reduce dilution.
-- Mill improvements through equipment and reagents are ongoing
to continue to improve recoveries and enhance concentrate
values.
The Company is confident that these initiatives will generate
additional profit for the business. A comprehensive financial
update will be provided with the H1 2019 results.
Overview of exploration and Mineral Resource Estimates
The Company announces an updated Mineral Resource Estimate
("MRE") demonstrating an increase in resources at Kapan. These have
been identified from previous exploration campaigns. The Company is
confidenct that the discovery of additional resources is likely to
maintain the life of the asset well beyond the current reserve
estimate.
The MRE is based on 69,000 metres of underground drilling
conducted during 2018. Through future exploration, it is expected
that annual replacement of depleted resources will be maintainable
on an ongoing basis. There also exists numerous exploration
opportunities for discovery of additional ore proximal to the
current workings.
The MRE update involved geological assessment of the exploration
drilling, and optimization of the modelling methodology. Since
taking ownership of the Kapan mine, Chaarat has been working to
develop a JORC-compliant resource model that better reflects
historical mining results. Sampling methods and practices have been
reviewed and modified to correct the previous resource model's
historical tendency to overestimate grade in order to achieve a
more realistic estimate. This has also led to an increase in
M&I tonnage compared to the last published Polymetal Resource
Estimate (effective 1 January, 2018).
The Company considers the current MRE to be a more technically
robust and realistic grade model than the previous one used by
Polymetal. As more mine to mill reconciliation data is obtained,
the grade estimation methodology will be further optimized to
continue improving the model.
An updated reserve statement is being developed as part of the
Midyear LoM planning process, and will be issued on completion
The new model is fully JORC-compliant and yields 8.9mt in the
Measured and Indicated category with a gold equivalent grade of
6.20g/t. The updated MRE now comprises:
Cut-off 2.5g/t AuEq Grade Metal
Class Tonnes Density Au Ag Cu Zn AuEq Au Ag Cu Zn AuEq
(mt) (g/t) (g/t) (%) (%) (g/t) (koz) (koz) (t) (t) (koz)
------- -------- ------- ------- ----- ----- ------- ------- ------- ------- -------- -------
Measured 0.65 3.05 4.01 74.88 0.88 3.44 9.01 83 1,550 5,645 22,167 186
------- -------- ------- ------- ----- ----- ------- ------- ------- ------- -------- -------
Indicated 8.27 3.02 2.57 51.70 0.59 2.37 5.99 681 13,725 48,726 195,835 1,589
------- -------- ------- ------- ----- ----- ------- ------- ------- ------- -------- -------
M&I 8.92 3.03 2.67 53.38 0.61 2.45 6.20 764 15,275 54,370 218,002 1,775
------- -------- ------- ------- ----- ----- ------- ------- ------- ------- -------- -------
Inferred 8.69 3.02 2.30 50.78 0.56 2.07 5.42 641 14,164 48,298 179,995 1,513
------- -------- ------- ------- ----- ----- ------- ------- ------- ------- -------- -------
Notes: The figures above are effective as of 10 June 2019. The
results are reported at a cut-off grade of 2.5g/t AuEq. The AuEq is
calculated AuEq = Au + Ag/84 + Cu/0.6 + Zn/1.3 based on metals
prices of $1,250/ounce Au, $15.50/ounce Ag, $6,000/tonne Cu, and
$2,500/tonne Zn and on metallurgical recoveries as determined at
site.
Conference call and Web cast:
Chaarat will hold a conference call and webcast on Wednesday,
31(st) July, 2019 at 09:00 BST. Please see the below dial-in and
webcast details.
Dial-in: +44 (0)203 059 5868
Webcast:
https://secure.emincote.com/client/chaarat/chaarat002
Competent Person
The Competent Person with responsibility for technical content
of 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 the report of the
matters based on this information in the form and context in which
it appears.
Enquiries
Chaarat Gold Holdings Limited +44 (0)20 7499 2612
Martin Andersson (Executive Chairman)
Artem Volynets (CEO) 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 Gold
Chaarat Gold 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 programs 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
"Au" chemical symbol for gold
"cut off" the lowest grade value that is included in a
resource statement. It must comply with JORC
requirement 19: "reasonable prospects for eventual
economic extraction" the lowest grade, or quality,
of mineralised material that qualifies as economically
mineable and available in a given deposit. It
may be defined on the basis of economic evaluation,
or on physical or chemical attributes that define
an acceptable product specification
"g/t" grammes per tonne, equivalent to parts per million
"Inferred Resource" that part of a Mineral Resource for which tonnage,
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
"koz" thousand troy ounces of gold
"Measured Resource" that part of a Mineral Resource for which tonnage,
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 Resource" a concentration or occurrence of material of
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 (= 31.103477 grammes)
"Reserve" the economically mineable part of a Measured
and/or Indicated Mineral Resource
"t" tonne (= 1 million grammes)
This information is provided by RNS, the news service of the
London Stock Exchange. RNS is approved by the Financial Conduct
Authority to act as a Primary Information Provider in the United
Kingdom. Terms and conditions relating to the use and distribution
of this information may apply. For further information, please
contact rns@lseg.com or visit www.rns.com.
END
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