(Alliance News) - Chaarat Gold Holdings Ltd on Friday said it had made progress towards securing funding to deliver first production at the Tulkubash gold mine in Kyrgyzstan.
Shares in Chaarat Gold Holdings soared 43% to 4.00 pence each in London on Friday afternoon.
Chaarat Gold, a mining explorer and developer, said it has entered into a non-binding term sheet with Xiwang International Co Ltd relating to a USD150 million funding package.
In return for its USD150 million investment, XWIC would receive a 60% economic interest in Tulkubash and Chaarat would retain 40%.
XWIC is an investment company incorporated in the British Virgin Islands and an affiliate of Touchstone Capital Partners. As part of its long-term strategic investment plan, XWIC is looking to create a significant portfolio of mining assets and resources on a global basis.
Chaarat noted this further advanced discussions between the parties and outlines an action plan towards a successful transaction.
If completed, the agreement would provide full financing for the further development and commencement of production at the Tulkubash gold project.
It would enable the restructuring of Chaarat's existing commitments and provide the basis for future potential joint ventures in the gold mining sector.
Chaarat said talks also continue with other parties for potential funding and that it also expects to enter discussions with convertible bond holders regarding the outstanding convertible bonds which are due for repayment at the end of July.
Tulkubash has an initial mine life of six years, Chaarat said. However, there remains significant development upside from additional prospects including Karator and Ishakuldy, and the company is targeting a total mine life exceeding 15 years.
By Jeremy Cutler, Alliance News reporter
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Chaarat Gold (CGH)