TIDMCGH
RNS Number : 0025V
Chaarat Gold Holdings Ltd
04 August 2020
4 August 2020
Chaarat Gold Holdings Limited
("Chaarat" or "the Company")
H1 2020 Production and Operational Update
Chaarat (AIM:CGH), the AIM-quoted gold mining Company with an
operating mine in Armenia and assets at various stages of
development in the Kyrgyz Republic, announces its production and
operational results for the half year ended 30 June 2020 (the "half
year", "H1" or the "Period") for its Kapan Gold Mine ("Kapan"), in
Armenia, progress at the Tulkubash project and a general corporate
update.
COVID-19 update
-- COVID-19 prevention measures have been successfully implemented
at all Chaarat offices and sites since mid-February leading
to no cases on record within the group during H1.
-- We have also worked closely with our communities to provide
support and assistance via medical supplies and infrastructure
to help with preventive measures. These measures are not
limited to but include the following
o Kapan/Armenia
-- Donated beds and equipment to the medical
centre of Kapan
-- Provided diagnostic test kits and masks to
the Kapan regional hospital
-- Provided computers to help school children
attend remote classes
-- Sent gifts to the nurses of Kapan for their
contribution during this pandemic
o Tulkubash - Chatkal/Kyrgyz Republic
-- Delivered flour, masks, and disinfectant to
communities in the Chatkal region
-- Donated masks and hand sanitisers to hospitals
-- Donated PCR thermocycler and PCR tests for
COVID-19 to the Kyrgyz Ministry of Health
o Chaarat is continuing to follow best practice
to prevent our employees from contracting COVID-19
and supporting the communities on an ongoing basis.
o In mid-July, Chaarat provided oxygen concentrators
to the local hospitals in Chatkal, Kyrgyz Republic.
H1 Kapan Update
H1 H ighlights
-- H1 2020 had a total recordable injury case rate (per one
million hours worked) of 0.7. The Company had one Lost
Time Injury ('LTI') in Q1 2020 at its Kapan Operation.
There were no recordable injuries in Q2 2020.
-- Gold equivalent production of 26,960 ounces ("oz") including
543 ounces produced from third-party ore - compared to
29,607 oz produced in H1 2019 (- 9%) but slightly up from
26,906 in H2 2019 - consisting of:
o 13,179 ounces of gold;
o 261,551 ounces of silver;
o 960 tonnes of copper; and
o 3,997 tonnes of zinc.
-- Realised gold price increased by 25.5% compared to previous
period but is offset by comparable decreases in copper
and zinc prices. The mine achieved an average gold price
for the Period of USD1,665 /oz versus USD1,327 /oz in
H1 2019 in line with the average gold price for the six
months to end June. However, base metals saw significant
declines in prices in Q1, before improving in late Q2:
o Realised gold price of USD 1,665/oz vs USD 1,327/oz
in H1 2019 (+ 25.5%)
o Realised silver price of USD 16.4/oz vs USD 15.2/oz
in H1 2019 (+ 7.9%)
o Realised copper price of USD 5,400/t vs USD 6,123/t
in H1 2019 (- 11.8%)
o Realised zinc price of USD 1,959/t vs USD 2,568/t
in H1 2019 (- 23.7%)
-- Total tonnes mined in H1 2020 was 360,957t showing a trend
of increasing output from the mine from H1 2019 with 326,278t
(+ 10.6%) and H2 2019 with 352,104t (+ 2.5%).
-- Gold equivalent grades mined in H1 2020 were 2.87 g/t
versus 3.02 g/t in H1 2019 (- 5%) and 2.84 g/t in H2 2019
(+ 1%). The grades in H1 2020 were still impacted by mining
in lower-grade areas and we are now in the process of
developing towards higher-grade areas.
-- Grades are expected to improve in the next quarters as
a result of the targeted development work carried out
year to date and the ongoing review of the mine by the
new geology team focusing on identifying high grade that
requires minimal development mining.
-- Copper and zinc recoveries increased year on year (by
1% and 2% respectively), but gold to Cu concentrate was
down as a result of the lower gold head grade in ore.
Third-party ore recovery is tracked separately due to
it being of a completely different nature to our own polymetallic
ore.
-- Unit costs improved quarter on quarter with efficiency
gains throughout the operation. This has not as yet materialised
in the all-in-sustaining cost ("AISC" (2) ) due to lower
production of gold in H1 2020 and mining in the lower-grade
areas. AISC were at USD1,076 /oz compared to H2 2019 (USD1,108
/oz) but higher compared to H1 2019 (USD972/oz).
-- Underground development of 11,216 metres for the half
year is comparable to both H1 and H2 2019.
-- Two new cyclone clusters were installed in late Q2 to
replace old inefficient units and are showing improved
results thus far. More improvements are expected in H2
2020.
-- Chaarat was able to sign two new contracts with third-party
ore providers in Q2 2020 and started to receive continuous
feed from June 2020. These additional feeds will help
increase economics in the mill and support Chaarat in
achieving its annual targets.
-- The Chaarat technical team has identified a mineralised
area with excellent exploration potential ("East Flank")
adjacent to the existing Kapan mine. This target is based
on an historic drilling database of 62 drill holes comprising
22 km of drilling. The East Flank Exploration Target,
indicates a potential 5-6 million tonnes with Au grades
of 2.25 - 2.75 g/t. Resource definition drilling will
be required, and evaluation, followed by access development
in order to increase throughput in the mill currently
expected by H2 2022.
Outlook
-- Chaarat remains on track to deliver on its AuEq 55koz
guidance for the year, as previously set out in the FY
2019 Production, Operational and Financial Update release
on 19 February 2020.
-- A portion of the copper concentrate and third-party concentrate
produced in June was not financially recognised in H1
2020 due to late shipment. This led to lower AuEq sold
in H1 2020 but will contribute positively to results in
July 2020. Further, a stronger H2 is expected with improved
economic performance as new higher-grade zones are mined
from development in H1 2020.
-- Chaarat's focus is on access to more "value adding" areas
of the mine for the rest of 2020. The technical team is
making good progress on updating the mining plan for H2
2020 and the years to come.
-- New mine equipment will provide immediate operational
improvements along with mill circuit upgrades This, with
third-party ore will increase operational efficiency in
H2 2020.
-- Chaarat's 2020 half-year results will be published in
September 2020.
(1) Gold equivalent ounces based on gold price of USD 1,500/oz
and gold ratios of 83 for silver (Au/Ag), 7,778 for copper (Au/Cu)
and 20,968 for zinc (Au/Zn).
(2) AISC on a gold oz produced basis exclude smelter TC/RC
charges, others which add c. USD 234/oz. Sustaining capex of c. USD
2.3 million in H1 2020 is included in the AISC.
Tulkubash Construction Update
Chaarat is continuing with detailed engineering, and current
works are being completed on time despite precautionary measures
taken in response to the COVID-19 situation. Design on the Heap
Leach Facility (HLF) and Adsorption-Desorption Recovery Facilities
(ADR) is almost complete, and work on the crushing circuit and
final equipment selection is ongoing. Further equipment
mobilisation is on hold, as previously announced, due to the
ongoing international travel and border restrictions .
General Corporate Update
The Company is continuing its discussions with several parties
and is working to finalise the project financing by the end of
2020. Interest from newly contacted banks has led to a thorough
review of additional proposals to further optimise the financing
structure for the Tulkubash asset.
As announced on 27 April, the Company completed an equity
capital raise of USD13.8m reducing its working capital facility to
zero and the overall debt outstanding.
Since then Chaarat has further reduced the Kapan acquisition
financing by USD2 million with USD30 million now outstanding and
the consolidated corporate debt reduced to USD69 million.
Artem Volynets, Chief Executive Officer, commented:
"Before discussing our operational performance, I would like to
talk first about the ongoing COVID-19 pandemic. I am very proud of
the team and their proactive approach to managing the safety of our
employees as well as actively contributing to community efforts
during this difficult period. Through these efforts the impact on
our business was minimal in H1. Unfortunately, in July we have had
our first cases at our Tulkubash site. This outbreak was
effectively managed and brought under control quickly with minimal
disruption to ongoing works or plans. The overall situation in the
Kyrgyz Republic worsened significantly in July which impacted the
extended families of several employees. Our heartfelt condolences
go out to them and their loved ones.
At Kapan, we are pleased to report that we are still on track
for our operational guidance of 55koz for 2020, despite some
challenges. The continuous improvements in the AISC and the
benefits of higher utilisation and the new equipment have already
shown improvements in June which bodes well for a strong second
half of the year.
At Tulkubash the current works are being completed in accordance
with the schedule and budget. The restrictions on people and
equipment mobilisation, as well as precautionary measures
undertaken for contractors and employees at this time, will delay
first gold pour until the end of 2022, as previously announced.
However, the time will be used wisely as it allows us to optimise
critical aspects of this first stage of our existing Kyrgyz
operations."
Enquiries
Chaarat Gold Holdings Limited +44 (0)20 7499 2612
Artem Volynets (CEO) info@chaarat.com
Numis Securities Limited
Paul Gillam (NOMAD) +44 (0) 20 7260 1000
SP Angel Corporate Finance
LLP + 44 (0) 20 3470 0470
Ewan Leggat (Joint Broker)
finnCap Limited +44 (0)20 7220 0500
Christopher Raggett (Joint
Broker)
Camille Gochez (Joint Broker)
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/ .
H1 2020 PRODUCTION & OPERATIONAL SUMMARY
H1 2020 H1 2019
Tonnes ore mined (Kapan) 360,957 326,922
AuEq Grade mined (Kapan) 2.84 3.02
Tonnes ore milled (Kapan) 355,523 381,313*
AuEq Grade milled (g/t) 2.89 2.97
Tonnes ore milled (3(rd)
Party Ore) 10,127 0
Au Grade (g/t) (3(rd) Party
Ore) 3.43 0
AuEq Recovery (%) 79.2 81.3
Gold equivalent production
(oz)** 26,960 29,607
Gold production (oz) 13,179 17,706
Silver production (oz) 261,551 275,302
Copper production (t) 960 896
Zinc production (t) 3,997 3,191
Realised gold price (USD/oz) 1,665 1,327
AuEq sold 20,882 28,882
AISC (USD/oz)*** 1,076 972
* Higher throughput due to stockpile
** Including 543oz of Au production from 3(rd) Party Ore
*** AISC on a gold oz produced basis exclude smelter TC/RC
charges and others which add c. USD 234/oz. Sustaining capex of c.
USD 2.3 million for H1 2020 is included in the AISC.
ENDS
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END
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