Chaarat exceeds 2021 guidance at Kapan Mine

(Sharecast News) - Armenia and Kyrgyz Republic-focussed gold miner Chaarat said on Wednesday that it exceeded its 2021 production guidance at the Kapan Mine in Armenia.
The AIM-traded firm said that was offset by the impact on the development of the Tulkubash project by events around Centerra Gold's Kumtor mine, and the ongoing Covid-19 pandemic in the Kyrgyz Republic.

At Kapan, it said it finished the year with production of 63,000 gold equivalent ounces, including 14,000 ounces from third-party ore production, compared to 2021 guidance for 57,000 ounces.

It exceeded its processing target of 50,000 tonnes of third-party ore by 95,000 tonnes in 2021.

The company said its all-in-sustaining cost of $1,205 per ounce was higher than the $1,034 per ounce for 2020, due to higher mining costs related to more selective mining, and costs associated to processing a higher portion of third-party ore feed.

A 19.5% increase in unaudited preliminary standalone EBITDA of $22.7m at was recorded for 2021, before group accounting adjustments and non-cash items, up from $19m year-on-year.

At the Tulkubash Development Project, Chaarat released its updated bankable feasibility study in May, and successfully completed a 4,835-metre drilling programme.

JORC-compliant resource and reserve estimates were being updated to reflect the drill results.

Advanced camp construction, main construction preparation work and the exploration programme took place, with the firm investing about $8.5m in 202, despite the Kumtor events and the ongoing pandemic impact.

At the Kyzyltash Development Project, the company completed a 3,508-metre drilling programme to obtain a representative core of the deposit, ready for metallurgical testing.

The core was being sent to SGS Lakefield in Canada for a full suite of metallurgical test work, as part of assessing the preferred processing route for the project.

On the corporate front, Chaarat closed a funding package of $52.2m in February, and extended its convertible loan notes by one year to 31 October 2022.

Tulkubash debt financing was delayed to 2022 due to ongoing market cautiousness pending a resolution of the Kumtor mine situation, the board said.

It reduced its interest-bearing debt to $38.7m at year-end on 31 December, from $70.5m at the end of 2020, which it put down to the conversion of investor and Labro loans into equity in February and the reduction of the Kapan acquisition loan by $9m from Kapan cash flows.

Looking at 2022, Chaarat said mine production guidance at Kapan was for 50,000 to 53,000 ounces of own-ore production, and an additional 6,000 to 9,000 of third-party ore production, based on 100,000 milled tonnes during the year.

Resource definition drilling was ongoing at the East Flank as part of preparing an initial mineral resource estimate expected towards the end of 2022.

At Tulkubash, the board said subject to a resolution of Centerra's Kumtor situation, debt financing was expected to close in the second half of 2022.

Ongoing project work would focus on engineering completion and appropriate construction activities to optimise full activities once debt financing is secured.

Finally, at Kyzyltash, the company said metallurgical test results expected from SGS Lakefields late in the second quarter, which would enable it to perform an economic assessment on the best processing route in the beginning of 2023.

"Chaarat will continue placing significant importance on sustainable development and social investment programmes in the countries in which we operate," said executive chairman Martin Andersson.

"We genuinely believe that respectful and open dialogue and partnership with local stakeholders is essential for the long-term success of our operations."

At 1154 GMT, shares in Chaarat Gold Holdings were up 2.19% at 18.7p.