Chaarat (AIM:CGH), the AIM-quoted gold mining company with an operating mine in Armenia, and assets at various stages of development in the Kyrgyz Republic, is pleased to announce its audited full-year results for the 12 months ended 31 December 2021.
The Company will provide a live presentation relating to 2021 Annual Results via the Investor Meet Company platform today at 10:00am BST. If you wish to listen to the presentation, please register via
https://www.investormeetcompany.com/chaarat-gold-holdings-ltd/register-investor
Highlights
Group Financial Highlights
• US$92.4 million generated revenues from concentrate sales in 2021, US$72.8 million relates to own ore revenue (+4%) and US$19.6 million relates to third-party ore revenue (+221%) (2020: US$69.9 million and US$6.1 million) with increases driven by more favourable commodity prices and higher third-party ore throughput.
• The Group EBITDA³ was US$13.5 million, 45% higher compared to last year (2020: US$9.3 million).
• The Group loss after tax was US$3.6 million, an improvement of 84% from a loss after tax of US$22.4 million in 2020.
• Cash and cash equivalents increased from US$6.9 million to US$11.1 million year over year (+61%).
• The Group’s net debt⁴ decreased from US$77.2 million to US$39.6 million (-49%) due to a debt-to-equity conversion and equity raise in February 2021 as well as the ongoing repayment of the Kapan acquisition loan.
ESG Highlights
• Further development of a fully integrated health and safety system inclusive of all contractors
• Improved hazard identification, risk assessment and procedural controls across the operation
• Completed sections of buttressing of the tailings storage facility (“TSF”) as part of a multiyear improvement programme to improve seismic stability
• Updated the environmental and social impact assessment (“ESIA”) for the Tulkubash project
• Ongoing reviews assessing best available technologies for the project regarding environment control and energy savings
• Strengthened community relations in both countries further through personal and financial support in various activities and for various stakeholders.
Kapan Operating Highlights
• Finished the year with production of 63 thousand gold equivalent ounces (“koz”1) including 14 koz from third party ore production vs 2021 guidance of 57 koz (+10.5%).
• Exceeded processing target of 50 thousand tonnes (“kt”) for third-party ore by 95 kt (+189%) in 2021, contributing to exceeding the production guidance of 57 koz.
• Kapan sold 57,212 ounces of AuEq (2020: 48,387 ounces), including third-party sales, with a realised gold price per ounce of US$1,784 (2020: US$1,773).
• All-in-sustaining cost (“AISC”2) of USD 1,205/oz was higher than the USD 1,034/oz for 2020 (+16.5%) due to higher mining costs related to more selective mining, increases to energy costs and costs associated to processing a higher portion of third-party ore feed.
• A 17% increase in standalone EBITDA3 contribution to approximately US$22.7 million at Kapan level in 2021 (2020: US$19.4 million).
Tulkubash Construction Project
• Updated bankable feasibility study (“BFS”) released in May 2021 confirming robust project economics.
• Successfully completed a 4,835-metre drilling programme including infill drilling and initial exploration drilling on new target areas. JORC-compliant resource and reserve estimates are being updated to reflect the infill drill results.
• Advanced camp construction, main construction preparation work and the exploration programme with approximately US$8.5 million invested in 2021 despite the Kumtor events and the ongoing COVID-19 impact.
Kyzyltash Development Project
• Successfully completed a 3,508-metre drilling programme to obtain representative core of the Kyzyltash deposit ready for metallurgical testing. The core has been sent to SGS Lakefield in Canada for a full suite of metallurgical test work as part of assessing the preferred processing route for the project.
Corporate Activities
• Funding package of US$52.2 million closed in February 2021.
• Extension of the convertible loan notes by one year to 31st October 2022.
• Tulkubash debt financing delayed to 2022 due to ongoing market cautiousness related to the resolution of the Kumtor mine situation.
• Reduced Group net debt⁴ from US$77.2 million as at 31st December 2020 to US$39.6 million as at 31st December 2021 (-49%), primarily as a result of converting the Labro Term Loan into equity in February 2021 and reducing the Kapan acquisition loan from Kapan cash flows.
Post-year end
• Mike Fraser started as new Chief Executive Officer and member of the Board on 17th January and since then completed a comprehensive strategic and operational review. Key elements of the strategy will be implemented within 2022.
• The Kapan Mineral Resource Estimate (“MRE”) and Ore Reserves (“OR”) were updated in 2021 and signed off in April 2022. The 2022 MRE was developed on a constrained basis. The application of the constraining factors and a 2.0 g/t cut-off grade limits any direct comparison to the previously reported unconstrained resource in 2019.
o The overall contained koz in the Measured and Indicated Resource (“M&I”) is 579koz at 9.03 g/t AuEq applying a 2.0 g/t cut-off grade.
o Updated Ore Reserves comprise of 2.55 Mt of Proven and Probable ore at grades of 1.66g/t Au, 33.17g/t Ag, 0.34% Cu and 1.25% Zn with contained metal of 264koz at a cut-off of 2.0g/t AuEq.
• A resolution of the Kumtor mine situation was announced on the 4th of April 2022 and Chaarat is re-entering financing discussions on the Tulkubash project as planned.
Outlook for 2022
· Macro – The conflict in Ukraine and associated sanctions against Russia have the potential to impact the supply chain, costs, and commodity prices in our region and we are monitoring the developments closely. So far, the conflict has had no direct impact on our operations, and we do not expect a material impact in 2022.
· Kapan – Confirmed mine production guidance of 50-53 koz5 of own-ore production and additional 6-9 koz5 of third-party ore production based on 100 kt milled during the year.
· East Flank – Resource definition drilling ongoing as part of preparing an initial mineral resource estimate expected in 2023.
· Tulkubash – Updated mineral resource and reserve statements are expected to be released in H1 2022. Given the resolution of Centerra’s Kumtor situation, debt financing is expected to close in H2 2022. Ongoing project work will focus on engineering completion and appropriate construction activities to optimise full activities once debt financing is secured.
· Kyzyltash – Metallurgical test results expected from SGS Lakefield in Q3 2022 to enable the Company to perform an economic assessment on the best processing route in 2023.
· Corporate – Chaarat will continue to review its existing balance sheet structure with a view to further reducing its interest cost and improving the balance sheet structure.
1 Gold equivalent ounces for 2020 recalculated on 2021 budget prices with Au at USD1,700/oz and gold ratios of 68 for silver, 7,287 for copper and 21,862 for zinc. In last year’s FY 2020 operations update, 2020 oz were based on gold ratios of 83 for silver, 7,778 for copper and 20,968 for zinc leading to a lower AuEq number reported in that previous year. Includes third party ore production.
2 AISC on a gold oz produced basis exclude smelter TC/RC charges, others which add c. USD 148/oz. Sustaining capex of c. USD6 million p.a. is included in the AISC.
3 In reporting financial information, the Group presents EBITDA as an alternative performance measure, “APM”, which is not defined or specified under the requirements of IFRS. The Group believes that this measure provides stakeholders with additional useful information on the performance of the business and, within that, Kapan. EBITDA is calculated by adjusting profit/(loss) for depreciation and amortisation, net finance costs, unrealised foreign exchange gain/(loss), fair value gain on warrant and change in provisions. A reconciliation is provid ed in the Financial Review section below.
4 In reporting financial information, the Group presents Net debt as an alternative performance measure, “APM”, which is not defined or specified under the requirements of IFRS. The Group Net debt comprises convertible loan notes, other loans, contract liabilities, lease liabilities and warrant financial liabilities, net of cash and cash equivalents. Further detail is provided in the Financial Review section below.
5 Gold equivalent ounces for 2022 calculated based on Au at USD1,775/oz and gold ratios of 75 for silver, 6,597 for copper and 20,381 for zinc.
Martin Andersson, Executive Chairman of Chaarat, commented:
“I am pleased to report that we exceeded our 2021 production guidance at Kapan as well as achieved another set of strong financial results for the Company.
The difficulties of the COVID pandemic and global supply chain issues created an ongoing set of challenges for the Company, but the continued strong macro-economic environment and an excellent job by our team helped manage these conditions.
The year 2022 started with a good steady operational performance but we are seeing more and more inflationary pressure flowing through due to the strong price environment. As has been the case since taking over Kapan, the team will continue to look for improvements and new methods of operating to minimise these impacts on the business.
On 4th April 2022, Centerra and the Kyrgyz Government announced an agreement on the Kumtor mine had been reached. We were pleased to see this situation being resolved and are re-engaging with potential lenders on our Tulkubash financing efforts. We will update the market as soon as further progress has been made.”
Forward-looking Statements
This announcement contains certain forward-looking statements that are subject to the usual risk factors and uncertainties associated with the Company’s business. Whilst the Company believes the expectations reflected herein to be reasonable considering the information available to them at this time, the actual outcome may be materially different owing to factors beyond the Company’s control or within the Company’s control where, for example, the Company decides on a change of plan or strategy. Accordingly, no reliance may be placed on the figures contained in such forward-looking statements. The forward-looking statements contained in this document speak only as of the date of this announcement, and Biffa does not undertake to update any forward-looking statement to reflect events or circumstances after the date hereof or to reflect the occurrence of unanticipated events.
Publication of Annual Report
The Company will publish its Annual Report and Financial Statements 2021 on 22 April 2022. This document will be available to view on the Company’s website at www.chaarat.com/investors and will be posted to shareholders who have elected to receive hard copies on 22 April 2022.
Annual General Meeting
The Annual General Meeting (“AGM”) will be held on Tuesday, 17 May 2022 at 10am at the offices of Watson Farley & Williams LLP, 15 Appold Street, London EC2A 2HB, United Kingdom .
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 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/.
Enquiries
Chaarat Gold Holdings Limited
+44 (0)20 7499 2612
Michael Fraser (CEO)
