CGH.L Regulatory News (CGH)

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This press release does not constitute an offer to sell, or a solicitation of an offer to buy, securities in the United States or any other jurisdiction. Any securities described in this press release have not been, and will not be, registered under the US Securities Act of 1933, as amended, and may not be offered or sold in the United States absent registration except in transactions exempt from, or not subject to, registration under the US Securities Act and applicable US state securities laws. There is no public offering of the securities in the United States expected.

05 February 2021

Chaarat Gold Holdings Limited - (AIM:CGH)

("Chaarat" or the "Company")

Fundraise and Planned Debt Reduction

Chaarat (AIM:CGH), the AIM-quoted gold mining company with assets in the Kyrgyz Republic and Armenia is pleased to announce that it is launching a fundraise for approximately US$ 25 million (the "Fundraise") through the issue of new ordinary shares of US$ 0.01 each nominal value in the Company (the "New Ordinary Shares") at 26 pence per New Ordinary Share (the "Issue Price").

The Company has received commitments for US$ 23.5 million through legally binding subscriptions (the "Initial Subscription") representing 65,908,088 New Ordinary Shares (the "Initial Subscription Shares") and US$ 1.4 million in the form of non-binding commitments.

Chaarat has closed the Initial Subscription element of the Fundraise but will keep the balance of the Fundraise open until Tuesday 9 February 2021 at 4.30pm GMT to allow completion of the above mentioned non-binding commitments and any additional demand.

Alongside the Fundraise, the Company's largest shareholder, Labro Investments Ltd. ("Labro"), has indicated to the Company its willingness to convert the entirety of the outstanding term loan of US$ 22 million plus accrued interest (the "Labro Term Loan") into equity in the Company at the Issue Price. The conversion is subject to approval by the independent directors of the Company and would be satisfied through signing a subscription agreement between the Company and Labro to issue approximately 62.4 million new ordinary shares at the Issue Price (the "Labro Subscription Shares"). If approved by the Chaarat Board, this would reduce the Chaarat debt position to US$ 46.5 million, a reduction of 33% from the currently outstanding US$ 68.5 million.

Highlights

The Company received strong demand for the Fundraise in the form of binding and non-binding commitments for a total US$ 24.9 million from new institutional investors and family offices as well as existing shareholders.

With the progress made in 2019 and 2020 on the Tulkubash project construction, it is expected that the funds received from the binding and non-binding commitments would represent the remainder of the upfront equity portion to fund the Tulkubash project in the Kyrgyz Republic and fulfils one of the key criteria in order to draw on any debt project finance facility that is arranged. The Company has ongoing discussions on debt financing of approximately US$ 80 million and anticipates having this completed during H1 2021 in order to fully fund the project construction capital of approximately US$ 110 million.

Funds in excess of those required for Tulkubash will be used for growth activities at both the Company's Kyzyltash project and the East Flank development at the Kapan operation.

Fundraise

- Chaarat signed subscription agreements with several new institutional investors and family offices which have committed to a total of US$ 19.9 million, of which US$ 19.5 million are binding commitments and have been signed.

- The Company has received further support from its existing shareholders of US$ 5.0 million, of which US$ 4.0 million are binding commitments and have been signed.

- The Company has decided to keep the Fundraise open until Tuesday 9 February 2021 at 4.30pm GMT to allow non-binding commitments to close and provide an opportunity for further demand to participate.

- Furthermore, the Company has also received notice from Labro that it is willing to convert US$ 22 million of outstanding debt from the Labro Loan Facility to equity through subscribing for approximately 62.4 million new ordinary shares. It is expected the Company and Labro will enter into legally binding documentation, which is anticipated to be confirmed later today, subject to approval by the independent directors of the Company.

- The Fundraise allows Chaarat to proceed on several critical-path items including:

o Ongoing construction activities at the Tulkubash project in order to maintain Chaarat's targeted timeline for first gold pour in Q4 2022

o Metallurgical test work on the Kyzyltash project

o Initial development of the East Flank extension at our Kapan operation

o Efforts to advance potential M&A opportunities

Completion of the Initial Subscription is subject to admission of the Initial Subscription Shares to trading on the AIM market of the London Stock Exchange plc ("Admission"). Application has been for the Initial Subscription Shares to be admitted to trading on 10 February 2021.

Following Admission of the Initial Subscription Shares, the Company's enlarged issued share capital will comprise 605,970,298 ordinary shares of US$0.01 each. This figure may be used by shareholders of the Company as the denominator for the calculations by which they will determine whether they are required to notify their interest in, or a change to their interest in, the Company under the Financial Conduct Authority's Disclosure Guidance and Transparency Rules Sourcebook.

The Company will make separate applications to trading for the Labro Subscriptions Shares (once issued) and any further shares issued pursuant to the Fundraise.

Debt outstanding

Following Labro's proposal for a debt-to-equity conversion of approximately US$ 22 million plus accrued interest and approval by the independent directors of the Company, the Labro Term Loan would be extinguished, saving the Company US$ 2.1 million in interest payments per year from 2021 to 2024.

The Company reduced its outstanding Kapan acquisition loan by another US$ 2 million as of 01 January to US$ 26 million. A further US$ 2.5 million payment is scheduled for April 2021.

In total the debt position would be reduced from currently US$ 68.5 million to US$ 46.5 million after the Labro debt-to-equity conversion, a reduction of 33%.

Listing considerations

As part of the Company's ongoing considerations to further enhance liquidity and broaden Chaarat's investor base, Chaarat has initiated the process for a secondary listing on the Moscow Stock Exchange ("MOEX") given indications of strong demand from investors in the former Soviet Union. Chaarat also remains focused on a move to the London Stock Exchange ("LSE") main market at the appropriate juncture as the Company advances its strategic initiatives or completes a transformative transaction.

Artem Volynets, Chief Executive Officer of Chaarat, said:

"We are delighted by the strong demand of new investors and our existing shareholders to support the Company to fund the required remaining equity portion for the Tulkubash project financing. Furthermore, it allows us to progress our strategic activities on the Kyzyltash asset and the East Flank development at Kapan. Moreover, we are grateful for the continued support from our major shareholder Labro to optimise the Company's balance sheet further.

The Fundraise will achieve a critical milestone in the execution of our strategy to build one of the leading gold companies in the former Soviet Union by providing the equity funding required to arrange the project debt finance and start full scale construction of our fully licensed and permitted Tulkubash project in Kyrgyz Republic.

The next key step will be to complete the project financing for the Tulkubash project, which we are well advanced on to complete in H1 of this year."

Enquiries

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 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/.