TIDMCGH
RNS Number : 8856S
Chaarat Gold Holdings Ltd
11 November 2019
11 November 2019
Chaarat Gold Holdings Limited
("Chaarat" or the "Company")
Kapan Mine Revised Mine Plan and Reserves Update
Chaarat (AIM:CGH), an AIM-listed gold mining company (the
Company) with assets in Armenia and the Kyrgyz Republic, is pleased
to announce an update for their Kapan polymetallic mine (the Mine)
located in the Republic of Armenia. This is the first Ore Reserve
statement from Chaarat since acquiring the Mine in February
2019.
The mineral resources and ore reserves, detailed in this press
release, have been reported following the guidelines and
requirements of the Australasian Code for Reporting of Exploration
Results, Mineral Resources and Ore Reserves ('the JORC Code'), 2012
(JORC 2012).
In July 2019 (see press release dated 29 July 2019), the Company
provided an update to the Kapan Mineral Resource Estimate.
The Mineral Resources have since been updated to account for
depletion as well as new assay and geological data derived from 627
meters of underground drilling completed since the July update,
included within the 24,321 meters of underground drilling completed
to date in 2019 (of a budget of 48,000 meters for 2019). This
updated Mineral Resource Estimate forms the basis for the revised
Ore Reserves and mine plan presented here.
Highlights:
-- The Life of Mine Plan (LOMP) has a life of 7 years, with AuEq
production averaging 60 koz per annum.
-- The overall contained gold equivalent ounces (AuEq oz) in the
Measured and Indicated Resource ("M&I") is 1,663k AuEq oz
indicating that near-mine exploration continues to replace the
mined tonnes.
-- The average grade of the Kapan M&I resource has decreased
from 6.20 grammes per tonne (g/t) gold equivalent (AuEq) (July 19),
to 5.89 g/t AuEq, due to an update in the gold equivalence formula
in order to reflect revised pricing and estimation parameters that
match mill results through reconciliation exercises.
-- The LOMP delivers an EBITDA averaging $20 million.
-- Updated Ore Reserves comprise of 4.5 Mt of Proven and
Probable ore at grades of 1.69g/t Au, 31.72g/t Ag, 0.35% Cu and
1.34% Zn at a cut off of 2.5g/t AuEq.
-- The LOMP's average Operating Cash Cost and All in Sustaining
Cost ("AISC") are US$817/AuEq oz produced and US$1,032/AuEq oz
produced respectively.
-- Sustaining Capex guidance for the LMP is approximately $4
million per annum. This will be primarily focused on mining fleet
replacement.
-- Pre-tax cash flow for the LOMP averages $ 16 million per annum.
-- Pre-tax NPV for the LOM is $102 million at a discount rate of 5%.
-- Historical upgrade of Inferred Resource to M&I Resource
that can be converted to reserves suggests that the life of mine
can be further extended from the anticipated upgrading of a portion
of the current Inferred Resource. Ongoing exploration is expected
to continue adding to this inventory.
-- We are confident that significant upside potential remains on
the property through the conversion of Mineral Resources to Ore
Reserves that are not currently included in the 2019 LOMP.
Summary information on the LOMP can be found in appendix 1.
Significant production potential remains through the conversion
of resources currently outside the LOMP. As a result, the actual
mine life is expected to be longer than 7 years. There is good
potential to add reserves from upgrading and conversion of these
resources. Historically Kapan reserve depletion has been
replenished through ongoing exploration and development. This is
expected to continue.
In addition, there are known exploration targets within the
existing license area and others further away but still close to
the current mine infrastructure. Exploration and development of
these areas over the next few years should allow Kapan to open up
new operating areas with the potential to debottleneck mine
production and allow further expansion of the mill. Capacity for up
to 1.2Mt of ore is already installed in the mill and can be put
into service with minimal capital cost.
Artem Volynets, the Company's CEO, commented:
"We are very pleased with this update for Kapan. The resource
and reserve update show that depletion continues to be replaced
with new reserves through our well-developed and successful
exploration program. In addition, the work this year has allowed us
to improve mine life while at the same time maintaining our target
of $20 million run-rate EBITDA from the operation. This ongoing
replacement of resource through exploration continues to give us
the confidence that this mine should have many years of ongoing
operation well beyond the current LOMP. Indeed, the fact that we
bought the Kapan Mine in early 2019 with a 5-year LOM and now, net
of depletion, we have a 7-year LOM, supports this confidence.
"We are also encouraged by the fact that there is still
significant exploration potential in the broader area, including
the existing flank areas to the main workings. These are areas of
potential we will look to further scope over the next year or two
as we look to continue to develop the Kapan mine."
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)
SP Angel +44 (0) 20 3470 0470
Ewan Leggat (Joint Broker)
Tavistock
Charles Vivian +44 (0)20 7920 3150
Gareth Tredway chaarat@tavistock.co.uk
Barney Hayward
Mineral Resources
The following table summarizes the current Mineral
Resources:
Grade Metal
Classification Tonnes Density Au Ag Cu Zn AuEq Au Ag Cu (t) Zn (t) AuEq
(mt) (g/t) (g/t) (%) (%) (g/t) (koz) (koz) (koz)
------- -------- ------ ------ ----- ------ ------ ------ ------- ------- -------- ------
Measured 0.76 3.04 4.23 68.62 0.74 3.24 8.21 103 1,674 5,640 24,648 200
------- -------- ------ ------ ----- ------ ------ ------ ------- ------- -------- ------
Indicated 8.04 3.02 2.72 52.37 0.57 2.31 5.67 703 13,515 46,132 186,016 1,463
------- -------- ------ ------ ----- ------ ------ ------ ------- ------- -------- ------
M & I 8.80 3.02 2.85 53.77 0.59 2.39 5.89 806 15,189 51,772 210,664 1,663
------- -------- ------ ------ ----- ------ ------ ------ ------- ------- -------- ------
Inferred 7.64 3.01 2.46 51.22 0.58 2.16 5.29 602 12,562 44,034 164,792 1,298
------- -------- ------ ------ ----- ------ ------ ------ ------- ------- -------- ------
Notes: The effective date of the Resources is 1(st) August 2019.
Mineral Resources that are not mineral Reserves do not have
demonstrated economic viability. Numbers may not sum due to
rounding.
The gold equivalency formula is:Au Eq = Au + ((Ag g/t * ($15.5 /
$1,250) + ((Cu % * ($6,000*31.1035/$1,250)/100) + ((Zn % *
($2,500*31.1035/$1,250)/100
Mineral Resources are Inclusive of Ore Reserves
The resource estimate was classified following the requirements
of the JORC Code (2012) reporting code.
Ore Reserves
For the Kapan Ore Reserves, Chaarat developed a mining block
model by applying the modifying factors necessary for conversion of
Mineral Resources to Ore Reserves. Those factors included amongst
others, operating costs, mining dilution and extraction
factors.
The total Proven and Probable Ore Reserves are 4.5 Mt at a grade
of 1.69g/t Au, 31.72g/t Ag, 0.35% Cu and 1.34% Zn at a cut off
grade of 2.5g/t AuEq. A summary of the Ore Reserves by category is
shown in the following Table:
Grade Metal
Classification Tonnes Au Ag Cu (%) Zn (%) AuEq Au Ag Cu (Kt) Zn (Kt) AuEq
(Mt) (g/t) (g/t) (g/t) (Koz) (Koz) (Koz)
------- ------- ------- ------- ------- ------- ------- -------- -------- -------- -------
Proven 0.17 2.65 40.39 0.42 2.06 4.8 14 220 0.71 3.49 26
------- ------- ------- ------- ------- ------- ------- -------- -------- -------- -------
Probable 4.34 1.65 31.38 0.34 1.31 3.19 230 4373 14.86 56.88 445
------- ------- ------- ------- ------- ------- ------- -------- -------- -------- -------
Total P & P 4.5 1.69 31.72 0.35 1.34 3.25 245 4594 15.57 60.38 471
------- ------- ------- ------- ------- ------- ------- -------- -------- -------- -------
Notes: The Ore Reserves have been compiled and reported
fulfilling the requirement of the JORC Code (2012) reporting
code.
Ore Reserves are based on long-term metal prices of USD1,400/oz
Au, USD17/oz Ag, USD6,000/t Cu, and USD2,400 Zn.
Ore Reserves are based on a gold equivalent cut-off of 2.5g/t
Au.
Mineral Resources which are not Ore Reserves do not have
demonstrated economic viability.
Table subject to rounding errors.
The average density of Measured and Indicated Resources is 3.02
t/m3. A density of 2.64 t/m3 was used for diluting waste
material.
Tones reported are in situ, dry tonnes.
Revised Mine Plan (the Plan)
-- Mine design and planning were completed using Mineable Shape
Optimizer (MSO) and Datamine Studio 5D Planner.
-- The Mine Plan has been developed to maximize both value and
mine life. The Plan is based on an average mine production of
700,000 tonnes per annum (tpa).
-- Mill throughput of 750,000t is achieved by purchasing and
treating an additional 50,000t of third-party ore per annum.
Exploration and Future Potential at Kapan
-- Total resources that presently sit outside of the Plan amount
to 7.64 Mt at 5.29 g/t AuEq for 1.298koz AuEq oz.
-- These resources will continue to be drilled to move Inferred Resource to M&I.
-- There are several known areas of satellite mineralization
that sit within the license area that have the potential for future
development.
-- Additional target areas exist in close proximity to the mine
that have future potential as exploration targets.
Historically, underground development and drilling has enabled
Resources to be converted to Reserves at a rate that matches
depletion, and so maintaining an approximately 5 year LOM. It is
expected that the current exploration drilling program should
provide for future conversion of Resource to Reserve at least the
same rates.
Resources are estimated in Datamine by Ordinary Kriging in a 10m
* 10m * 10m block, sub-blocked to match the geometry of the
wireframe interpretation. Search parameters and variogram
parameters are derived per vein, of which there are more than 200,
and estimated as independent domains. Where numbers of samples are
low, veins are aggregated into groups to get sufficient sample
support for grade estimation.
Quality Assurance/Quality Control Procedures: Sampling
Methodology and Quality Control
All results are from diamond core holes. Samples are shipped to
the ALS Global Laboratory in Kara-Balta, Kyrgyz Republic for sample
preparation and assay. Gold is analysed using a 30-gramme fire
assay with an atomic absorption spectroscopy (AAS) finish. A
quality control/quality assurance protocol is employed in the
programme which includes standards and blanks in every batch of
assays. Check assays are conducted on every 20(th) sample by a
second independent laboratory.
Geological Modelling Procedures
Geological interpretation of potentially economic mineralization
is done in Leapfrog geo. Data used includes, but is not limited to,
drill hole samples, channel samples, underground mapping (face and
backs). Where appropriate, a minimum mining width is applied to the
interpretation.
Mineral Resource Estimates
Tonnages and grades were estimated using Datamine Studio 3
software. Grade and other data was interpolated by Ordinary Kriging
into 10m x 10m x 10m block, sub-blocked to match the geometry of
the wireframe interpretation. Search parameters and variogram
parameters are derived for each vein, of which there are more than
200, and estimated as independent domains. Where numbers of samples
are low, veins are aggregated into groups to get sufficient sample
support for some veins.
Competent Persons
The updated Mineral Resource Estimate was prepared by Mr. Joe
Hirst, B.Sc., M.Sc. European Geologist (EurGeol) and Chartered
Geologist (CGeol). Mr. Hirst is Senior Resource Geologist at
Chaarat and is a "Competent Person" as such term is defined by the
JORC code. Mr. Hirst has reviewed the technical and scientific
information in this press release relating to the Mineral Resource
Estimates and has approved the use of the information contained
herein.
The updated Ore Reserves were prepared by Chaarat and reviewed
by Alan Turner, CEng MIMMM. Mr. Turner is Principal Mining Engineer
at AMC Consultants (AMC) and is a "Competent Person" as defined by
the JORC code. Mr. Turner has reviewed the technical and scientific
information in this press release relating to the Ore Reserves and
has approved the use of the information contained herein.
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 the report of the matters based on
this information in the form and context in which it appears.
Appendix 1 LOMP Summary
Year 2020 2021 2022 2023 2024 2025 2026
Summary
--------------- -------- ------------ ------------ ------------ --------------- ------------ ------------ ------------
Production
AuEq Produced oz 60,363 60,138 59,016 57,886 61,093 56,796 43,064
Sales
AuEq Payable oz 52,960 52,711 51,900 51,240 53,816 50,298 37,791
3rd party ore
EBITDA
Contribution USDk 1,000 1,000 1,000 1,000 1,000 1,000 1,000
Operating Cash
Cost
AuEq produced USD/oz (842) (840) (824) (845) (798) (752) (531)
AuEq sold USD/oz (959) (958) (938) (955) (906) (850) (605)
All In
Sustaining
Cost
AuEq produced USD/oz (1,051) (1,049) (1,038) (1,056) (1,016) (985) (823)
AuEq sold USD/oz (1,198) (1,196) (1,180) (1,193) (1,153) (1,112) (938)
Price
assumptions Implied conversion rates
--------------- -------- ------------ ------------------------------------------- ------------ ------------
Zinc USD/t 2,400 Ag/Au 78
Copper USD/t 6,000 Cu/Au 7,502
Silver USD/oz 18.0 Zn/Au 18,755
Gold USD/oz 1,400
(1) Operating Cash Cost - back of mine operating, administrative
and commercial costs excl. royalty
(2) AISC - Cash cost plus royalty, tax, stay in business capital
expenditure and others
(3) Average production and cost calculated on 2020 - 2025 basis
as 2026 is not a full year in the LOMP
Appendix 2: Glossary of Technical Terms
Ag chemical symbol for silver
=================== ========================================================
Au chemical symbol for gold
=================== ========================================================
AuEq the value of a tonne of mineralised material
calculated by summing the value of each contained
payable metal and expressing it as an equivalent
gold content at a given set of metals prices
=================== ========================================================
Cu the chemical symbol for copper
=================== ========================================================
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 Resource that part of a Mineral Resource for which tonnage,
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)
=================== ========================================================
Pb the chemical symbol for lead
=================== ========================================================
Probable Reserve the part of Indicated and in some cases Measured
Resource that can be mined at a profit. It includes
diluting materials and allowances for losses
that may occur during mining.
=================== ========================================================
Proven Reserve the part of Indicated Measured Resource that
can be mined at a profit. It includes diluting
materials and allowances for losses that may
occur during mining.
=================== ========================================================
Reserve the part of a Measured and/or Indicated Mineral
Resource that can be mined at a profit. Reserves
are subdivided in order of increasing confidence
into Probable and Proven categories when reporting
under JORC.
=================== ========================================================
t tonne (= 1 million grammes)
=================== ========================================================
Zn the chemical symbol for zinc
=================== ========================================================
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