Chaarat Gold Holdings Ltd : Update on the Development Strategy
(Thomson Reuters ONE) -
Chaarat Gold Holdings Limited
("Chaarat" or "the Company")
Update on the development strategy for the Tulkubash Project
Road Town, Tortola, British Virgin Islands (16 April 2012)
Chaarat (AIM-CGH), the gold exploration and development company operating in the
Kyrgyz Republic, announces an update on, and a change in strategy of, the
development of the Tulkubash Project, which is part of the Chaarat project area
in the north west of the Kyrgyz Republic.
Highlights
* Design and engineering of the Tulkubash Project completed confirming
sufficiency of funds
* Infrastructure development and construction recommenced after winter
closure
* Development strategy reviewed in light of direct negotiations with the
Kyrgyz Government to conclude an Investment Agreement which includes a
"stabilisation clause"
Chaarat has completed the design and engineering of its Tulkubash Project and is
in the process of completing the infrastructure elements. The Company is
satisfied that the original budget, as presented when the funds were raised in
March 2011, remains adequate. The possibility of building a larger capacity
operation than planned (increasing expected capacity from 1,000-1,200 tonnes per
day to possibly double that or more) within the original budget framework, has
been established as viable and is under consideration.
The Company has been examining the strategic choices available to it in the
light of the worldwide changes to fiscal regimes under which mining companies
operate, changes that have been brought on in part by a more challenging
economic climate. Chaarat's Board is likewise aware that the fiscal regime
governing mining companies in the Kyrgyz Republic is currently under review by
the newly formed Government and, in the Board's opinion, is likely to change.
In order to mitigate any uncertainty concerning the possible impact on the
phased development of the Chaarat Project, the Company has decided to enter into
direct negotiations with the Government. The aim of these is to secure long
term stability for the Chaarat Project by the development of a mutually agreed
Investment Agreement, containing a "stabilisation clause", protecting the
Company from changes to taxation, ownership structure and royalties. Such a
commitment embodied within the Agreement would require that it is ratified by
the Kyrgyz Parliament. The Government has confirmed its support of this
approach which the Board believes is the most responsible way to ensure economic
predictability.
In light of this decision, and pending negotiations with the Government, further
capital investment activities (other than the infrastructure projects relating
to power and roads which have already commenced) will be suspended until
agreement is reached. Drilling aimed at increasing the free milling open
pittable reserve base of the Tulkubash Project will continue. The Company
believes that, subject to no unforeseen delays in the negotiation process, the
implementation of the Tulkubash Project will take place only a few months later
than originally planned and that gold production will still be achieved in 2013.
The permitting process outlined in the Tulkubash Project update of 7 December
2011 is unchanged and the Company will have the necessary documents ready to be
reviewed as planned. Negotiations with the Government will not interrupt the
preparation of documents for the permitting process.
Based on recent encouraging drilling results (reported on 20 September and 22
November 2011) Chaarat will, during the suspension period, seek to increase its
Tulkubash mostly free milling open pittable reserve base by further drilling
and, if the results of the drilling are as expected, develop a Definitive
Feasibility Study underpinning a significantly higher production rate. The
processing plant has already been designed to be capable of expansion to
accommodate a larger production rate with minimal disruption.
The strategy of the Company was to reach production with the funds raised during
2011, which will be achieved at the lower production rate. Additional
investment will be required to achieve both an increased production rate and
access a lower cost source of power, both of which are expected to further
improve the Project's NPV. The Board will consider the options available to it
when the results of the Definitive Feasibility Study are known. A number of
alternative financing options are available to the Company, should the Board
decide to pursue the upgraded Project, and an equity fundraising will only be
considered if it is at least equal to the March 2011 fundraising price of 50p.
Dekel Golan CEO comments:
"Many countries have recently changed their mining fiscal regime and others are
likely to follow. This situation creates uncertainty which makes financial
planning harder, especially for junior companies.
"The Board of Chaarat is taking a proactive approach and is entering into
negotiations with the Kyrgyz Government with a view to establishing an agreement
in law that is both satisfactory for the Government and provides greater
certainty over the financial planning horizon for the Company.
"The Chaarat Project is significant in scale and requires long term planning. It
is a Project which will bring enormous benefits to the Kyrgyz Republic, to the
communities neighbouring the Project and to Chaarat shareholders. A large-scale
Project of this nature must be based on firm foundations, which will have to be
ratified by the Kyrgyz Parliament, in order to ensure its undisputed long
tenure.
"The Board of directors of Chaarat has decided that prudence requires the
temporary suspension of further capital investment while the negotiations with
the Government about the long term agreement are undertaken. We have confidence
that these discussions will yield a positive long term benefit for shareholders.
"We are pleased that the completion of engineering and design work has verified
the reliability of the original estimated costs of the Project. During the
period of negotiations with the Government, our team will continue adding value
to the Project."
The Chaarat Project
Chaarat is a large gold province within which the Company has, to date,
delineated 5.59 Million ounces of gold (as announced on 6 March 2012). The Pre
Feasibility Study (as announced on 30 June 2011) established the economic
viability of the Project and its ability to produce over 200,000 ounces of gold
per annum. The deposit has two principal sections; the Tulkubash mostly free
milling ore zone and the Kiziltash refractory ore zones, both of which are
economically viable and with significant additional upside.
Current efforts are focused on developing a modest size production unit fed from
the mostly free milling open pit section of the Tulkubash mineralised zone.
The Tulkubash Project
The Tulkubash Project is the development phase in which the mostly free milling,
open pittable section of the Chaarat Project will be developed. It was
originally considered to be comparatively limited but drilling in the 2011
season established that the Tulkubash mineralisation is more extensive than
previously believed. The potential of this mostly free milling open pittable
section of the deposit is much larger than originally estimated.
Chaarat believes that the potential exists to significantly increase production
from this section at a marginal incremental investment. During the early part
of the 2012 season, a 6,500 metre drilling campaign will demonstrate whether
production can be increased. If so, a Definitive Feasibility Study will be
prepared to demonstrate the revised IRR and NPV of the additional investment.
The delivery of the Project as originally planned is not conditional on the
success of this drilling programme and any additional investment will only be
undertaken if there is a strong economic argument to do so.
Enquiries:
Chaarat Gold Holdings Limited +44 (0) 20 7499 2612
c/o Central Asia Services Limited
Dekel Golan CEO dekel(at)chaarat.com
Linda Naylor FD linda.naylor(at)chaarat.com
Numis Securities Limited +44 (0) 20 7260 1000
Alastair Stratton, Stuart Skinner (NOMAD)
James Black (Broker)
Bankside Consultants +44 (0) 20 7367 8888
Simon Rothschild simon.rothschild(at)bankside.com
Smith's Corporate Advisory +44 (0) 20 7601 6100
Dominic Palmer- Tomkinson tomkinson(at)smiths-ca.com
About Chaarat Gold
Chaarat Gold is an exploration and development company operating in the Kyrgyz
Republic. The Company's main activity is the development of the Chaarat Gold
Project situated within the Middle Tien Shan Mountains, which form part of the
Tien Shan gold belt. The Company has delineated a JORC compliant mineral
resource of 5.590Moz at a grade of 4.08g/t gold. Chaarat's key objective is to
become a low cost gold producer; with initial production from the Tulkubash
project, targeting increased combined annual production of over 200,000 ounces
as the full project comes on stream.
Further information is available at www.chaarat.com
Disclaimer
This press release includes forward-looking statements. Such forward-looking
statements involve known and unknown risks, uncertainties and other important
factors beyond Chaarat's control that would cause the actual results,
performance or achievements of Chaarat to be materially different from future
results, performance or achievements expressed or implied by such forward-
looking statements. Such forward-looking statements are based on numerous
assumptions regarding Chaarat's present and future business strategies and the
environment in which Chaarat will operate in the future. Any forward-looking
statements speak only as at the date of this document. Chaarat expressly
disclaims any obligation or undertaking to disseminate any updates or revisions
to any forward-looking statements contained in this document to reflect any
change in Chaarat's expectations with regard to these or any change in events,
conditions or circumstances on which any such statements are based. As a result
of these factors, the events described in the forward-looking statements in this
press release may not occur either partially or at all.
This announcement is distributed by Thomson Reuters on behalf of
Thomson Reuters clients. The owner of this announcement warrants that:
(i) the releases contained herein are protected by copyright and
other applicable laws; and
(ii) they are solely responsible for the content, accuracy and
originality of the information contained therein.
Source: Chaarat Gold Holdings Ltd via Thomson Reuters ONE
[HUG#1602543]
Unternehmensinformation / Kurzprofil:
Datum: 16.04.2012 - 08:01 Uhr
Sprache: Deutsch
News-ID 135029
Anzahl Zeichen: 12655
contact information:
Town:
British Virgin Islands
Kategorie:
Business News
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