Chaarat Gold Regulatory News (CGH)

5 December 2023

Chaarat Gold Holdings Limited

("Chaarat" or the "Company")

£1.8 million equity issue to support the conclusion of project financing

Chaarat Gold (AIM: CGH), the AIM-quoted gold mining company, with development projects in the Kyrgyz Republic, is pleased to announce an equity issue package consisting of a placing that has raised, in aggregate, gross proceeds of £1.1 million (the "Placing"), and a £0.7 million part conversion of the Labro Investments Limited ("Labro") working capital facility.

The Placing involved the issue of, in aggregate, 21,054,761 new ordinary shares of US$0.01 each in the capital of the Company ("Ordinary Shares") (the "Placing Shares") at a price of 5.25p per Ordinary Share (the "Issue Price") raising gross proceeds of £1,105,375, of which £100,000 was attributable to a single subscription direct with the Company. The Placing was led by the Company's joint broker, Axis Capital Markets Ltd ("Axis").

As part of the Placing, Labro, the Company's largest shareholder, agreed to convert £0.7 million of its existing US$5 million working capital facility1 (the "Facility"), of which US$2 million is drawn, into new Ordinary Shares at the Issue Price. Accordingly, 13,333,333 new Ordinary Shares were issued (the "Conversion Shares").

Overview

· The Placing from new and existing investors will enable the Company to; fund the necessary costs required to be incurred as to complete the financing of the Tulkubash Gold Project, with such completion targeted for end Q1 2024, and provide general working capital in the interim period.

o  Tulkubash contains JORC-compliant contained gold ounces in Ore Reserves of 647,000oz Au and total resources of 1,011,000oz Au;

o  Open pit, oxide operation utilising heap leach processing within construction CAPEX of US$104 million;

o  Initial mine life of six years with potential to extend to 10-15 years;

o  Targeting average life of mine production of 95,000oz/pa.

· The increased exposure the Placing creates to a wider investment community is expected to increase the liquidity of the Chaarat shares traded on AIM, which is expected to support the Company in the longer term in its public market activities.

David Mackenzie, Chief Financial Officer of Chaarat, said:

"Chaarat is at a pivotal stage in its evolution, as we approach a Final Investment Decision in the coming months of the Tulkubash project. We believe a low capex, as previously reported, of $104 million and a relatively short 18-month time horizon to first production is a compelling opportunity for investors.

Tulkubash represents the first dimension of our production story, which could provide significant cash flow from a 95,000oz per annum gold operation from 2025 onwards. Tulkubash provides a solid foundation for growth as we expand our production profile from both Tulkubash to the larger Kyzyltash development opportunity, which has unconstrained resources of ~5,377,000oz Au (M&I and Inferred). This interim raising mobilises us on our path to securing funding for construction at Tulkubash, ensuring full construction readiness for H1 2024, following the appointment of key EPC contractors in November 2023.

I would like to welcome the new entrants to our shareholder register, and also thank the existing shareholders for their participation in this raise. 

1 From RNS on 12th October 2023, "Working Capital Facility"

Related Party Transaction

The issue of the Conversion Shares requires an amendment to the Facility. Such amendment, and the consequent issue of the Conversion Shares, constitutes a related party transaction under AIM Rule 13 of the AIM Rules for Companies as Labro is a substantial shareholder of the Company and Martin Andersson (the executive chair of Chaarat) is indirectly beneficially interested in the majority of the shares in Labro.

The independent directors of the Company for the purposes of this transaction (being all of the Company's Directors save Martin Andersson) consider, having consulted with the Company's Nominated Adviser, that the terms of the amendment of the Facility, and the consequent issue of the Conversion Shares, are fair and reasonable insofar as the Company's shareholders are concerned.

Articles of Association - Regulation 19 Waiver

There is a provision in the Company's articles of association ("Regulation 19") which states that the Board has the right to require any holder of more than 20% of the Ordinary Shares to make a mandatory offer to all the Company's shareholders to acquire their Ordinary Shares if such holder acquires an additional interest in any Ordinary Shares.

Prior to the issue of the Conversion Shares, Labro holds:

· 312,750,537 Ordinary Shares representing approximately 45.09 per cent of Chaarat's issued share capital; and 

· a loan note for US$1,746,825 (the "Loan Note") convertible into 4,342,454 Ordinary Shares assuming full conversion of principal and interest to maturity on 31 July 2024.

Mr Andersson is personally beneficially interested in 6,969,592 Ordinary Shares representing 1.00% of Chaarat's issued share capital. In addition, Mr Andersson also holds options to acquire 16,300,639 Ordinary Shares under the Company's 2019 management incentive plan.

Following the issue of the Conversion Shares, Labro's and Mr Andersson's combined shareholdings in the Company will be as follows:

*Undiluted: assumes issue of 13,333,333 Conversion Shares and no other issue of new Ordinary Shares, including on exercise of existing options or on conversion of any existing convertible loan notes.

*Diluted for Loan Notes: assumes issue of 13,333,333 Conversion Shares and full conversion by Labro of the Loan Note principal and interest to maturity, no options to subscribe for Ordinary Shares exercised, no other convertible loan notes converted, and no other Ordinary Shares issued.

* Fully diluted: assumes issue of 13,333,333 Conversion Shares and full conversion by Labro of the Loan Note principal and interest to maturity, no other convertible loan notes converted, the exercise in full by Mr Andersson of his existing share options, no other options to subscribe for Ordinary Shares exercised, and no other Ordinary Shares issued

On 4 December 2023, the Board (excluding Martin Andersson) exercised its discretion to waive the requirement for a mandatory offer under Regulation 19 of the Company's articles of association in respect of the issue of the Conversion Shares to Labro, not withstanding that the impact the overall equity raise was dilutive to Labro.

Admission and TVR

An application has been made to the London Stock Exchange for the Placing Shares and the Conversion Shares to be admitted to trading on AIM, and it is expected that admission will become effective at or around 8:00am (London time) on 21st December 2023.

Following admission of the Placing Shares and the Conversion Shares ("Admission"), the Company will have 728,056,182 Ordinary Shares in issue, each with one voting right. There are no shares held in treasury. Therefore, the Company's total number of ordinary shares in issue and voting rights will be 728,056,182 and this figure may be used by shareholders from Admission as the denominator for the calculations by which they will determine if they are required to notify their interest in, or a change to their interest in, the Company under the FCA's Disclosure Guidance and Transparency Rules.

This announcement contains inside information for the purposes of Article 7 of the Market Abuse Regulation (EU) 596/2014 as it forms part of UK domestic law by virtue of the European Union (Withdrawal) Act 2018.

About Chaarat

Chaarat is an exploration and development company which owns the Tulkubash and Kyzyltash Gold Projects in the Kyrgyz Republic. The Company has a clear strategy to build a leading emerging markets gold company through organic growth and selective M&A.

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.