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Chaarat Gold Hlgs Ld (CGH)


Friday 27 March, 2020

Chaarat Gold Hlgs Ld

COVID-19 response update

RNS Number : 7968H
Chaarat Gold Holdings Ltd
27 March 2020

27 March 2020

Chaarat Gold Holdings Limited

("Chaarat" or the "Company")

Chaarat Gold COVID-19 response update


As COVID-19 spreads globally, Chaarat Gold (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 prioritizing the safety and health of its people and ensuring the resilience of the Company's operations.


People first


We put the health and safety of our people first. We are monitoring the situation daily in all our countries of operation. We have appropriate plans in place and have proactively taken precautionary measures to prevent and reduce the spread of COVID-19. There are no confirmed cases at any of Chaarat's operations to date.


We have restricted all travel by our employees, and limited visitors to our facilities. Our staff are working from home where possible, and additional measures to protect our employees have been implemented for those still working at our operating sites. Our locations span four countries, with top management spread across each to preserve maximum flexibility for the Company.


Supporting the communities in these difficult times is equally important to us. Chaarat is implementing various community support programmes. 10,000 COVID-19 testing kits are being procured for distribution among communities in Kapan (Armenia) and the Chatkal region (Kyrgyz Republic). We will also donate funds for procurement of the equipment for a new laboratory for COVID-19 testing in the Kyrgyz Republic in cooperation with other mining companies.


In the Kyrgyz Republic we are supporting communities located in the Chatkal region with delivery of essential goods. We are supplying 10 tonnes of flour and one tonne of sanitiser.  In Kapan (Armenia) we are working with local companies to supply the regional hospital with masks, sanitiser and goggles.


Stability of the business


While the impact of coronavirus on the global economy is significant, demand for our products has remained relatively healthy. In addition, we are seeing positive trends in cost reduction in both of our jurisdictions due to the declining price of fuel and the depreciation of local currencies versus the US Dollar.


As we continue our efforts to build a resilient business with a strong balance sheet, during this uncertain period, we are taking actions to further reduce costs and streamline processes to ensure the effectiveness and stability of the Company. We will also continue to evaluate every opportunity for the Company to grow during this period.


In this very dynamic situation, we are continuously monitoring the situation and have business continuity plans in place to protect our people, sustain our operations and monitor supply chains on a daily basis.


Kapan (Armenia)


Kapan continues to carry out operations at normal levels. Currently we are experiencing minimal disruptions to supply chains and shipment of our products, as the quarantine movement restrictions do not apply to commercial transport and goods. We have made adjustments to our normal working conditions to reduce contact and proximity of workers whilst working and during break periods. 


We see potential benefits for our operations derived from the oil price drop and the local currency (AMD) devaluation versus the US Dollar for goods and services paid in local currency. These account for up to 84% of our operating costs in Kapan.


Tulkubash (Kyrgyz Republic)


As the Kyrgyz Republic government has declared a state of emergency, we have started to experience a slowdown in construction speed at the Tulkubash project. Following the country restrictions imposed, all local employees have been sent home. Our main contractor "Pamir Mining" continues limited works related to Haul Road and construction of other site roads. Fuel and food supplies remain steady and uninterrupted.


The significant global restrictions on the movement of people will impact our workforce mobilization for the summer construction period at our Tulkubash Project. This delay will likely cause the first gold pour to be moved by six months from late 2021 to Q3 2022. We are working on the revised timetable for the project and will update the market accordingly. The delay in first gold pour will have negligible impact on the total capital cost of construction at the Tulkubash Project as the works are being prolonged solely due to the current situation. 


The oil price drop and depreciation of the Kyrgyz SOM is likely to have a favourable economic impact on the Tulkubash Project. We will provide an update once normal business resumes.


Funding update


The Company is in advanced discussions with the holder of a US$17,000,000 loan which matures on 31 March 2020. An appropriate update will be published when a final agreement is reached.


The Company continues with its efforts to advance project financing for the Tulkubash Project. However, in the current environment each funding institution is assessing the situation and implications for their own businesses. The efforts to optimise the funding structure, as well as the project financing discussions for the construction of the Tulkubash gold project in the Kyrgyz Republic are ongoing with interest from multiple parties albeit the timeline on those discussions is likely to be impacted by the pandemic. Chaarat is aiming to finalise project financing in H2 2020.


The Company does not foresee a requirement for any additional fund raising at the current time and will reconsider this position when the COVID-19 pandemic subsides. The working capital facility from Chaarat's largest supporting shareholder, Labro Investments Limited, provides a further US$8 million of additional liquidity.


We will continue to prioritise keeping our employees safe and healthy. We will provide regular updates on our actions to our stakeholders.


Chaarat plans to announce its annual results for 2019 in mid-April 2020.


Artem Volynets, Chief Executive Officer, commented:


"The health and safety of our employees and communities is our main priority now. We are working tirelessly to keep our staff operating safely through this uncertain period and have continuity plans in place to ensure our operations continue to run smoothly. We are grateful to our main shareholder for continuing to support the financial stability of the Company. We are also pleased to be able to help the communities in which we operate to overcome these difficult times together. While we mitigate the impact of the COVID-19, we will continue to explore opportunities to grow our business further".





Chaarat Gold Holdings Limited

+44 (0)20 7499 2612

Artem Volynets (CEO)

[email protected]

Numis Securities Limited

+44 (0) 20 7260 1000

John Prior, Paul Gillam (NOMAD)

James Black (Corporate Broking)

SP Angel Corporate Finance LLP

+ 44 (0) 20 3470 0470

Ewan Leggat (Joint Broker)

finnCap Limited

+44 (0)20 7220 0500

Scott Mathieson (Joint Broker)

Camille Gochez (Joint Broker)


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 Central Asia and 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 .

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