CGH.L Regulatory News (CGH)

11 September 2019

Chaarat Gold Holdings Limited

("Chaarat" or the "Company")

Funding Update

·; Extension of loan to 31 March 2020

·; Receipt of US$9.5m in cash from upsizing of loan by US$7m and drawdown of US$2.5m from existing working capital facility

·; Closing of previously announced convertible notes offering with a total of US$19,680,000 of 2021 notes issued over the course of the year

·; Project Financing discussions progressing well for construction of Tulkubash gold project, Kyrgyz Republic

Chaarat (AIM:CGH), the AIM-quoted gold mining company with assets in the Kyrgyz Republic and Armenia is pleased to announce the receipt of US$9,500,000 in cash as well as an update on its financing discussions for the construction of its Tulkubash gold project ("Tulkubash").

Further to the announcement of 14 August 2019, the Company announces it has agreed a new maturity date of 31 March 2020 for the US$10,000,000 loan agreement (the "Loan"), announced on 15 November 2018. In addition, the Company is pleased to announce the Loan has been increased by US$7,000,000 to a total size of US$17,000,000.

All the terms of the Loan remain unchanged, including the interest charge of 13% per annum.

As part of the new agreement, Labro Investments Ltd ("Labro"), a Substantial Shareholder of the Company, has provided a guarantee directly to the lender for the full amount of the Loan. Under the terms of this guarantee, Chaarat will pay Labro a fee of 2% of the US$17,000,000, payable within 30 days of this date either in cash or in shares at the then prevailing market share price at the Company's election.

In addition, Chaarat has drawn a further US$2,500,000 from Labro under the existing working capital facility.

The Company would like to announce that it has closed the previously announced 2021 Convertible Bond raise to new subscriptions. Following the most recent subscription of US$500,000 in July 2019, and the agreement with Polymetal to exchange USD 10 million of notes for equity, the total value of the 2021 notes in issue is US$19,680,000.

The secured convertible notes 2021 ("2021 Notes") have a conversion price of £0.37 / share and a 10% interest rate per year which increases to 12% per year for the last 18 months. A single interest payment is due on the final repayment date (31 October 2021) provided that no conversion has occurred. The notes can be repaid early in cash upon 10 business days' notice provided that the minimum accrued interest payable on early repayment is 5% of the nominal amount.

The new arrangements with Labro to guarantee the Loan constitute a related party transaction under AIM Rule 13 of the AIM Rules for Companies (the "AIM Rules") as Labro is a Substantial Shareholder of the Company and Martin Andersson (the executive chairman of Chaarat) is indirectly beneficially interested in the majority of the shares in Labro. The independent directors of the Company (all of the Company's Directors save Martin Andersson), having consulted with its nominated adviser, consider that the terms of the transaction are fair and reasonable insofar as the Company's shareholders are concerned.

Tulkubash Project Financing

Following the publication of an updated and optimised Feasibility Study in June 2019 for the Tulkubash project, the Company commenced project financing discussions with international groups. As announced on 18 March 2019, Chaarat entered into a Joint Venture with Çiftay under which Çiftay would invest US$31.5 million with Chaarat seeking the balance of the US$110m capex requirement for Tulkubash from project finance providers.

The Company has received positive interest in the form of a preliminary term sheet to provide debt funding on acceptable and market terms and is working to finalise the project financing by the end of 2019 or early 2020. The term sheet indicates sufficient funds to finance, alongside the Ciftay investment, the US$110m capital requirement to construct the Tulkubash project.

Artem Volynets, Chief Executive Officer of Chaarat, said: 

"We are pleased to announce the receipt of US$9.5m of additional cash today, together with a new maturity date for the Loan into 2020. This additional headroom allows the Company to continue to proactively manage our balance sheet while we focus on the funding of Tulkubash which is progressing well with good interest from multiple parties. The Company is grateful for the continued support shown by both Labro and the lender."

This announcement contains inside information for the purposes of Article 7 of Regulation (EU) 596/2014

Enquiries

About Chaarat Gold

Chaarat Gold 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.