Chaarat Gold Hlgs Ld (AIM:CGH) FY 2022 Production, Operational & Financial Update

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 production and operational results for the full year ended 31 December 2022 (the “Year”, “2022” or the “Period”).

Kapan Mine

· The Company finished the year 2022 exceeding its production guidance at its Kapan Mine (“Kapan”) in Armenia.

· Kapan produced 63 thousand gold equivalent ounces (“koz”1) vs its 2022 production guidance of 56-62 koz.

· Production consists of 50 koz from own ore and 13 koz from third-party ore production vs 2022 guidance of 50-53 koz from own ore and 6-9 koz from third-party ore.

· All-in-sustaining cash cost for own ore production (“AISC”2) of USD 1,376/oz was higher than the USD 1,205/oz for 2021 (+14%). This increase is mainly due to the adverse impacts from the United States Dollar and Armenian Dram foreign exchange rate (“USD/AMD FX rate”). Cost reduction initiatives, implemented during 2022, have decreased AISC in H2 2022 (USD 1,334/oz) compared to H1 2022 (USD 1,420/oz, -6%).

· A decrease in unaudited preliminary standalone EBITDA4 contribution of 41% to USD 13.3 million from Kapan in 2022, before group accounting adjustments and non-cash items (2021: USD 22.7 million). The USD 9.4 million decrease in EBITDA was mainly due to the above-mentioned adverse impact of USD/AMD FX rate. Q4 2022 EBITDA from Kapan was USD 4.2 million, above Q2 and Q3 2022, driven by improved commodity prices and cost savings.

· The updated ore reserve statement for Kapan based on the previously announced 25% increase in measured and indicated resources is currently being finalised and will be released later this quarter.

Tulkubash & Kyzyltash Projects

· The Tulkubash project remains ready for final investment decision (“FID”) once project financing is finalised. Financing discussions continue with various financial and strategic parties.

· The SGS metallurgical test work programme on the Kyzyltash project was completed. Results showed strong recoveries for all three of the technologies tested. The programme included testing milling indices, flotation, oxidation and then leaching using Carbon In Leach (“CIL”). Pressure Oxidation (“POX”) and Albion™ had comparable results, with bio-oxidation (“BIOX”) returning the best overall recoveries. Further details can be obtained from the 19 October Announcement and the full mineralogical and metallurgical report on the Company’s website.

Outlook 2023

· Kapan Production – Mine production guidance of 50-553 koz of own-ore production and additional 5-10 koz of third-party ore production.

· Kapan East Flank – resource definition drilling is continuing, and results will be published during 2023 with updates on the East Flank development.

· Kapan Costs – the Company is continuing to take steps to mitigate the adverse foreign exchange rate impact and is expecting a stabilisation of costs in 2023.

· Tulkubash & Kyzyltash – the Company will continue to work on all financing options and will update the market as and when appropriate.

· Corporate – Chaarat will continue to review its existing balance sheet structure with a view to further reducing its interest cost and improving the structure of the balance sheet.

Corporate Finance Update

· During 2022 Chaarat focused on carefully managing its liquidity position and balance sheet.

· Chaarat successfully extended the maturity of its USD 19.7 million plus accrued interest of USD 9.0 million secured convertible loan notes from 31 October 2022 to 31 July 2023 with strong noteholder support.

· In 2022, Chaarat reduced the principal outstanding for the Kapan acquisition loan by a further USD 9.5 million to USD 9.5 million principal outstanding. Chaarat also drew down USD6.0 million from a new working capital facility supplied by Ameriabank.

· As at 31 December 2022 unaudited Net Debt5 at Group level was USD 51.9 million (USD 48.1 million as at 30 September 2022).

1 Gold equivalent ounces for 2021 recalculated on 2022 budget prices with Au at USD1,775/oz and gold ratios of 75 for silver,6,9597 for copper and 20,381 for zinc. Includes third-party ore production.

2 AISC on a gold oz produced basis exclude smelter TC/RC charges, others which add c. USD140/oz. Sustaining capex of c. USD6.5 million p.a. is included in the AISC.

3 Gold equivalent ounces for 2023 guidance calculated on 2023 budget prices with Au at USD1,850/oz and gold ratios of 84 for silver, 6,998 for copper and 19,826 for zinc. Includes third-party ore production.

4 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, income tax charges and any finance related transactions. The amount reported is unaudited and preliminary in nature given it may be subject to adjustments in the audit process.

5 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 .

Update on the Amulsar Transaction

· On 24 October Chaarat confirmed it was in discussions regarding the potential acquisition of Lydian Armenia CJSJ (the “Acquisition”). The proposed Acquisition would constitute a Reverse Takeover as defined under the AIM rules, due to the size of the Acquisition, and therefore the shares were suspended from trading on AIM pending the publication of the required AIM Admission Document or an announcement that the potential Acquisition is not proceeding.

· Discussions on the proposed Acquisition are ongoing and the Company will provide an update when appropriate. There is no certainty at this stage that the proposed Acquisition will be completed.

Notice of audited Full Year Results

Any numbers mentioned in this press release are subject to year-end closing process and audit. The Company plans to announce its audited full-year results for the period ended 31 December 2022 on 15 June 2023.

Mike Fraser, Chief Executive Officer, commented:

“I am pleased to report that we exceeded our 2022 production guidance at Kapan. We are confident of achieving a similar production level in 2023 and continue to demonstrate reliable operating performance at Kapan.

Whilst Kapan benefited from improvement in the commodity basket in 2022, EBITDA was impacted by the 20% strengthening of the Armenian Dram compared to the US Dollar during the year and higher commodity and energy costs due to the war in Europe. This had a consequential impact on AISC in US Dollar terms. The increase was partially offset by real local currency efficiency and productivity improvements.

Chaarat continues to focus on its internal development options in the Kyrgyz republic as well as non-organic growth options, which include the Amulsar target. Further updates will be provided on the growth opportunities as these options progress. ”


Chaarat Gold Holdings Limited

+44 (0)20 7499 2612

Mike Fraser, Chief Executive Officer

[email protected]

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