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Chaarat Gold Holdings Ltd building a portfolio of Central Asian assets


What Chaarat Gold Holdings does:

Chaarat Gold Holdings Ltd (LON:CGH) is rapidly emerging as a key mid-tier player in Central Asia’s gold space.

The company is actively seeking to consolidate the disparate Central Asian gold market through judicious acquisitions of projects.


What Chaarat Gold Holdings owns:

Chaarat Gold was built around the Tulkubash project in Kyrgyzstan. The company is currently drilling Tulkubash with a view to pushing the resource up towards the two million ounce mark.

A recent feasibility study envisioned mining an average of 94,000 ounces per year at Tulkubash, at all-in sustain costs of US$819 per ounce.

The project is estimated to require US$110mln to get it up and running and has an internal rate of return of 20%. Total undiscounted cash flow is likely to be US$114mln.

First gold production is on track for late 2021.

The company also owns significant exploration acreage around Tulkubash and recent drilling has demonstrated the likelihood of adding to the resource soon.

It also acquired the Kapan mine in Armenia. This mine boasts a measured and indicated resource of 1.6mln gold equivalent ounces, with a mine life of seven years, with gold equivalent production averaging 60,000 per year.


How it’s doing


Chaarat raised US$25mln in February 2020 through the issue of 65.9mln new shares priced at 26p each.

At the same time, Labro Investments Ltd, Chaarat’s largest shareholder, converted the entirety of a US$22mln loan plus accrued interest into shares, at the same price as the equity raise.

Chaarat’s debt position was cut by 33% to US$46.5mln.

The group said the cash proceeds from the equity raise are expected to meet the remainder of upfront funds for the Tulkubash project in the Kyrgyz Republic, and, brings closer project financing.

Chaarat noted that it is in ongoing talks over a US$80mln debt financing which the company expects to complete in the first half of 2021. That would leave the company fully funded for the US$100mln project construction. Excess funds are earmarked for growth activities at the Kyzyltash and Kapan projects.

The funding came shortly after the company said it had produced 58,200 ounces of gold equivalent from Kapan in 2020, exceeding guidance of 55,000 ounces

What the boss says: chief executive Artem Volynets

“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,” said Artem Volynets, Chaarat chief executive in a statement.

“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.”

“We continue to make progress towards achieving our goal of becoming a leading emerging markets gold company with a focus on Central Asia and the Former Soviet Union.”


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Broker view – SP Angel

“Tulkubash funding is expected to be finalised later this year with the $110m project capex to be covered by the $31.5m Ciftay project equity earn-in and debt while strong gold prices enhance project economics and increase its potential debt capacity. The project is guided to come online in Q4/22 adding 110kozpa in gold production to the Group.

“The broker has a target price of 57p (from 58p) highlighting Chaarat’s upside potential driven by a diversified portfolio of assets with ~9moz AuEq in resources (>85% contained gold), a strong growth profile and a supportive shareholder base.”


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