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Chaarat Gold Hlgs Ld (CGH)


Tuesday 25 May, 2021

Chaarat Gold Hlgs Ld

Tulkubash Feasibility Study Update

RNS Number : 6552Z
Chaarat Gold Holdings Ltd
25 May 2021

25 May 2021

Chaarat Gold Holdings Limited

("Chaarat" or "the Company")

Tulkubash Feasibility Study 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 provide an updated JORC compliant bankable feasibility study (the "2021 BFS") for its Tulkubash Oxide Gold Project ("Tulkubash") independently prepared by LogiProc (Pty) Ltd in South Africa. The 2021 BFS is based on the 2019 BFS which was also prepared by LogiProc (Pty) Ltd and includes updates on all sections.

The 2021 BFS confirms robust economics for the development of an open-pit mining heap leach operation. A more conservative model was used to develop the latest Mineral Resource estimate as part of this update. Despite a 25% increase in the overall Mineral Resource, the approach to the updated model has resulted in a slight reduction in ounces contained in the Measured and Indicated categories, with this mineralisation now classified as Inferred. Infill drilling is planned, as part of the 2021 exploration programme, to focus on converting Inferred resources into Measured and Indicated. This conversion could also improve the current 5-year life of mine ("LOM").

Chaarat is in the process of commencing exploration works for the 2021 season and is in continued discussions to complete the financing package which the Company expects could be affected by the current events in the mining sector in the country. Resumption of full construction activity will be dependent on the timing to complete project financing. Delays due to the longer than expected COVID-19 movement restrictions and political situation during 2020 and early 2021 as well as the expected timeline on project financing have resulted in expected first gold from Tulkubash being now targeted for H2 2023.

A webcast and conference call to discuss the 2021 BFS update results will be held tomorrow, 26 May 2021, at 9:00 am BST. Participants can access the presentation by registering here: .

The full 2021 BFS study will be available on the Chaarat website and can be accessed here:  



Project Highlights


-  Conventional open pit mining followed by standard heap leach processing

-  Gold reserves of 571,100 ounces ("oz") and silver reserves of 845,700 oz mined over a current five-year Life of Mine ("LOM")

-  Average annual gold production of 95,190 oz and average annual silver production of 140,940 oz

-  Heap leach facility processing an annual capacity of 5 million tonnes

-  Average head grade of gold at 0.85 g/t and silver at 1.26 g/t at a gold cut-off grade of 0.23 g/t based on $1,450 gold price

-  Recovery of 73.4%

-  LOM does not include the potential additional JORC compliant Inferred material or any potential future exploration success.


Financial Highlights



2021 BFS

Au @ USD 1,450/oz

Ag @ USD 17.50/oz


Au @ USD 1,800/oz

Ag @ USD 27.00/oz

Pre-Production Capital Cost

115 million

LOM All In Sustaining Cost ("AISC")

866/oz produced

LOM Operating Cash Flow



Average Operating Cash Flow p.a.



LOM Operating Cash Flow margin



Post-tax NPV5%








Update from June 2019 BFS


-  The 2019 BFS has been updated to account for the following changes, including but not limited to:

A more robust and reliable resource and reserve estimate

Improved project cost estimate accuracy (from +/-15% certainty to +/-10% certainty)

Incorporation of latest engineering studies and assessment to the heap leach design

Additional work carried out regarding environmental assessments, management controls and the latest social impact studies

Revised project economics based on the above points and to reflect the latest long term commodity price expectations


-  Chaarat has also undergone an independent third-party review of the 2021 BFS and ESIA with SLR Consulting Ltd. (formerly RPA Inc., "SLR"), a leading international mining, environmental and social consultancy.


-  The key changes are summarised in the table below and explained in more detail later in this section.


2019 BFS

2021 BFS

Gold price

$ 1,300/oz

$ 1,450/oz


Silver price

$ 16.00/oz

$ 17.50/oz


Ore Reserves

658 koz

571 koz


Strip ratio




Mine life

5.3 y

4.8 y


Gold grade




Gold recovery




Post-tax NPV5%

$ 70m

$ 85m








Resource and Reserves


The updated resource model was developed using tighter drill spacing for classification purposes. This change reflects the decisions by management to ensure a more robust and conservative approach to resource modelling than had been previously applied. These changes also incorporate recommendations based on previous reviews by SLR, and WAI who assisted Chaarat with the updated resource model.


The Mineral Resource estimate increased to 49.9Mt grading 0.73g/t gold containing 1,177koz of gold from 24.3Mt grading 1.21g/t gold containing 944 thousand ounces of gold ("koz"), an increase of 24.7% in contained gold.


The Tulkubash Mineral Resource is not constrained to one single pit area but comprises the main, mid and east pit areas as well as some early exploration satellites along strike. In the previous 2019 BFS the reserve estimate included ore from main, mid and east pits. Subsequently and in tandem with guidance received from SLR and WAI the more conservative 2021 BFS reclassified the east pit and some deeper mineralisation in the main pit from Indicated to Inferred and Inferred to unclassified material. These have not been converted to Mineral Reserves in the 2021 BFS.


As a result of the gold price change, cut-off grade was adjusted to 0.23g/t in the latest resource. The decrease in Ore Reserves and grade is partially offset by the increase in gold recoveries in the updated mine model achieved through additional metallurgical testing performed by ALS Steward in 2019.


The following table shows the changes from the Mineral Resources defined in the 2019 BFS by category:


Tulkubash Constrained Resource table




Grade Au

Contained Au

Change from 2019 - Tonnes (Mt)

Tonnes (%)

Change from 2019 Metal (koz)

Metal (%)














Measured and Indicated

























The impact of the reduction in Measured and Indicated Resources has resulted in the Tulkubash Reserve decreasing from 22.2Mt of ore at 0.92g/t Au in the previous estimate to 20.9Mt of ore at 0.85g/t Au. Contained gold ounces dropped from 658koz to 571koz for the 2021 Reserve. Grade reduction is the result of lower cut off and the reclassification of higher-grade materials from the Mid and East pit areas.


The following table shows the changes in reserves by category and by pit area. Maps illustrating the various areas will be presented in the Webcast presentation tomorrow and are shown in the full 2021 BFS study in section 9 Exploration and section 16 Mining Methods.


Tulkubash Reserve changes by Category and area








Change from 2019 - Tonnes (Mt)

Tonnes (%)

Change from 2019 Metal (koz)

Metal (%)
























Mining Area

Ore (Mt)

Ore (%)

Metal (koz)

Metal (%)

Main Zone





Mid Zone





East Zone












Capex and Opex


Initial Capital Expenditures ("CAPEX") prior to first gold have increased from USD 110 million to USD 115 million. The change is mainly due to a change in the sequencing of the heap leach facility ("HLF") construction which has brought forward spending previously allocated to deferred CAPEX (USD 3 million change). This is a shift in timing of the costs and does not increase the overall LOM CAPEX of the project. The additional USD 2 million increase is related to upgrades identified to being necessary to the camp and mobile fleet equipment workshop.


The site based OPEX has also undergone a review and as a result, the unit cost for mining, processing and owners cost was optimised and is about USD 0.55/t ore lower (-4%). This is mainly the result of design work to optimize the mine haulage scheme.




The post-tax NPV based on a real discount rate of 5% has increased from USD 70 million to USD 85 million based on 2021 BFS adjustments and revised long term gold pricing. The IRR has increased from 20% in the 2019 BFS to 25% in the 2021 BFS. The increase in project economics is mainly driven by an increase in the underlying commodity price assumptions which reflect the long-term consensus estimate as at April 2021.



2021 Tulkubash Exploration programme


A key focus of the 2021 exploration and drill programme will be to target the areas of the deposit recently reclassified in the 2020 resource model. Approximately 1,800 meters of infill drilling are planned in 14 locations will target areas of known high probability mineralization in the areas previously referred to as mid and east pit.


In addition, the 2021 exploration programme also will focus on areas to the north east of the current resources that indicate good potential for further increasing the reserve base over the next few years. Exploration will utilize a mix of drilling and trenching, Exploration of the broader license area using drone based geophysical techniques will be carried out to allow Chaarat to enhance its understanding of the potential of the remaining license area yet to be explored.



Construction Update


Delays due to the longer than expected COVID-19 movement restrictions and political situation during 2020 and early 2021 together with delays on anticipated timing of the project financing has resulted in the Company now expecting first gold production in H2 2023.


The Tulkubash project requires two full construction seasons to finalise all construction activities. This timing is impacted by the winter weather conditions in the Chatkal region, affecting concrete works and access to larger construction vehicles in the winter months.


Work has started to clear snow and repair roads. Mobilisation of personnel for exploration work will commence end of May. Full stage construction activities will commence once project financing is complete.



Project Financing Update


The Company completed an equity fundraise in February 2021 including USD 30m of new capital of which the majority will be allocated to the construction of the Tulkubash project.


Chaarat is progressing to secure a project finance facility that, together with the cash on hand, will fully fund the USD 115 million required for the construction of Tulkubash. It is envisioned that the debt facility would comprise standard project finance conditions, including the requirement that equity is spent before debt drawdowns. This means that the first drawdown of the debt is envisaged to be required in 2022 with the equity portion used for the 2021 work.


While all workstreams on the debt financing have continued to progress and the Company has been targeting completion in H1 2021, the recent events in the mining sector in the Kyrgyz Republic may defer the closing of such facility.


Chaarat is in advanced discussions with financing counterparties who are completing their due diligence requirements and financing documentation. While Chaarat is exploring traditional project financing for a standalone project finance solution for Tulkubash, the Company is also considering a comprehensive refinancing of its current debt outstanding and financing of the Tulkubash project through a fixed income debt instrument. This may result in Chaarat initiating a series of fixed income investor meetings to explore the viability of such an instrument. The proceeds from this potential financing would be used for refinancing of existing debt and to finance the project costs related to the Tulkubash gold project.



Political situation in Kyrgyz Republic

The current disagreement between the government of the Kyrgyz Republic and Centerra Gold Inc. has not affected the general business climate in country. As advised by various government spokespersons, the issue is specific to the details around the long-standing agreement to operate the Kumtor mine and is in no way reflective of the relationship of other businesses operating in the country.

All such discussions have no impact on any of Chaarat's operations or activities in country. Chaarat maintains strong relations with its communities and government representatives and has received positive feedback on its operations in country from the new government during the latest visits and meetings.

However, the extensive media coverage of the discussions between Centerra and the Kyrgyz Republic is expected to be negatively perceived by potential future debt or equity investors and possibly result in a delay in the project financing.



Artem Volynets, Chief Executive Officer, commented:

"The 2021 BFS provides a robust and conservative resource and reserve estimate for Tulkubash and incorporates the latest updated cost and macro estimates. In accordance with the study, construction will require a further two seasons to complete, meaning first gold is now expected in H2 2023.Our key milestone is to secure the project debt financing for a fully funded project and execute on the construction plan with full speed. Given the recent events in the Kyrgyz Republic, we are cautious on closing the debt financing within the next month as financiers will assess the country situation further and may want to hold until the situation is clearer.

I am proud of the team and the continuous work on the environmental and social aspects of the project over the past years. The baseline studies, thorough assessment of data and the social engagements over the past years were well structured and executed to international best practise standards.

Despite the adjustment in reserves and the unfortunate delay in the project schedule, the Tulkubash project shows strong project economics, with further upside at current price levels, and confirms that there is significant upside potential in LOM extensions. We will be targeting high potential areas classified as Inferred Resources early in the 2021 exploration programme. "



Tulkubash Mineral Resource Statement




Grade Au

Contained Metal Au






Measured and Indicated









1. Numbers are rounded in accordance with disclosure guidelines and may not sum accurately;

2. The Mineral Resource has been estimated using 5.0 m x 5.0 m x 5.0 m (x, y, z) blocks;

3. The estimate was constrained to the mineralised zone using wireframe solid models;

4. The wireframes were sub-domained to isolate the strongly mineralised main zone from the gold mineralisation in the main structural corridor;

5. Grade estimates were based on 1.5 m composited assay data;

6. The Mineral Resource estimate has been reported to 0.21 g/t cut-off grade; and

7. The Mineral Resource estimate is based on 100% of the Project. Çiftay, the Company's construction and equity partner, may earn into the project over time.



Tulkubash Ore Reserve Estimate








Proven Ore Reserve

Probable Ore Reserve




Combined Ore Reserve





1. Any apparent computational errors are due to rounding and are not considered significant.

2. Ore Reserves are reported with appropriate modifying factors of mining dilution (8%) and mining recovery (97.5%);

3. The Ore Reserve is defined using a 0.17 g/t recovered Au cutoff, the equivalent of a 0.23 g/t marginal cutoff.

4. Ore Reserves are reported at the head grade delivered to the leach pad;

5. The Ore Reserves are stated at a price of USD1,450/tr oz as at 2020 EOY;

6. Although stated separately, the Mineral Resources are inclusive of Ore Reserves;

7. No Inferred Mineral Resources have been included in the Ore Reserve estimate; and

8. The Mineral Resource estimate is based on 100% of the Project. Çiftay, the Company's construction and equity partner, may earn into the project over time.


Chaarat Gold Holdings Limited

+44 (0)20 7499 2612

Artem Volynets (CEO)

[email protected]

Canaccord Genuity Limited (NOMAD and Joint Broker)

+ 44 (0)20 7523 8000

Henry Fitzgerald-O'Connor

James Asensio

finnCap Limited (Joint Broker)

+44 (0)20 7220 0500

Christopher Raggett

Panmure Gordon (UK) Limited (Joint Broker)

+44 (0)20 7886 2500

John Prior

Hugh Rich



Competent Person Statement





Overall project management; mineral processing and metallurgical testing; recovery methods; project infrastructure; capital cost estimate, economic analysis, operating cost estimate, project execution plan.

Viktor Usenko

Evgeny Fomichev

Geological block model and associated data integrity.

Peter Carter

Mining method review; and ore reserve statement. Competent person for ore reserves and Mining Engineering.


Environmental studies, permitting, and social or community impact; geochemistry; hydrology; hydrogeology.


Heap leach facility design.


The 2020 Mineral Resource Estimate was produced by Victor Usenko, Principal Geologist, MAIG, Director of the Department of Solid Metals at the Institute of Geotechnologies Moscow ("IGT") who has more than 13 years of experience in resource geology and Evgeny Fomichev, Principal Geologist, MAIG, head of the geological department at IGT who has more than 10 years of experience in resource geology. Both are competent persons as defined by the JORC code.

The statement of Ore Reserves has been reported in accordance with the classification criteria of the JORC Code, 2012 and is 100% attributable to Chaarat and prepared by Mr Peter C Carter, an independent consulting mining engineer, based on a review of work performed by Chaarat Gold technical staff. Mr Carter is a member of the Association of Professional Engineers and Geoscientists of British Columbia and is qualified as a Competent Person under the JORC Code, 2012. Mr. Carter has over 30 years' experience in mine engineering, operations, and management. He has completed assignments in North America, Asia, and Africa with a focus on open pit mining and significant exposure to heap leach operations.

The competent persons consent to the inclusion in this announcement of the matters based on this information in the form and context in which it appears.

About Chaarat

Chaarat is a gold mining company which owns the Kapan operating mine in Armenia as well as the 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 former Soviet Union 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 .


Appendix - JORC Table


Section 3. Estimation and Reporting of Mineral Resources


JORC Code explanation


Database integrity

· Measures taken to ensure that data has not been corrupted by, for example, transcription or keying errors, between its initial collection and its use for Mineral Resource estimation purposes.

· Data validation procedures used.

· Databases are compiled directly by the operator on site. All drilling data is securely stored in Excel spreadsheets. The database is backed up by Chaarat off- and on site.

· Assay data was cut and pasted into the database from electronic versions of the laboratory reports.

· The drill hole database used for Mineral Resource estimation has been internally validated and externally audited, by Gustavson and Associates (2014), by GeoSystems International (GSI, 2018) and by Sound Mining (2019).

· The databases have been additional checked for logic errors using Micromine inbuilt routines.

· All drilling data is securely stored in Excel spreadsheets. The database is backed up by Chaarat off- and on site.

Site visits

· Comment on any site visits undertaken by the Competent Person and the outcome of those visits.

· If no site visits have been undertaken indicate why this is the case.

· The Competent Person visited Chaarat from August 25th through August 28th, 2014, again from August 30th through September 3rd, 2017, and again from August 7th through August 13th, 2018.

Geological interpretation

· Confidence in (or conversely, the uncertainty of) the geological interpretation of the mineral deposit.

· Nature of the data used and of any assumptions made.

· The effect, if any, of alternative interpretations on Mineral Resource estimation.

· The use of geology in guiding and controlling Mineral Resource estimation.

· The factors affecting continuity both of grade and geology.

· Mineralization and associated hydrothermal alteration at Chaarat are genetically associated with igneous intrusive rocks along a system of regional-scale, dextral, oblique-slip faults. 

· At this stage of knowledge, the geological interpretation of the mineralized zones is deemed to be reliable.

· The interpretation was based only on the actual data for drill holes, underground adits, trenches and roads.

· Conclusions on geological/structural environment of the deposit based on previous works carried out within Tulkubash and observations made in 2018 by IGT Chief Geologist Andrey Chitalin. Structural control of mineralization is the main factor for the Tulkubash deposit. All other factors were checked (lithology, alteration etc.) in an initial IGT report (2018). Pre- or syn-mineralization stage predefined the shape of the deposit within the right strike-slip fault conditions with extension (transtension). Sinistral strike-slip fault is the post-mineralization stage. This structural assumption predefined the style of interpretation of the deposit as linear extended mineralized zones. 

· Overall, there is good level of confidence in the geological continuity although small scale variation in grade means that high confidence in grade continuity is limited to those areas drilled at a closer spacing ( 20m). 

· Based on visual and statistical analysis of gold grade distribution, high-grade and low-grade domains were identified. Mineralized zones (high grade domains) were interpreted on cross-section using 0.7 g/t cut-off grade. Interpretation was carrying out as mineralized zones so internal dilution included where appropriate to get better thickness variability. Low-grade domain was interpreted using 0.2 g/t gold grade which is close to tailings grades. Low-grade domain interpretation was carrying out according to the high-grade domain interpretation and in a view of structural model of the deposit.

· No alternative interpretation is considered or assumed at this stage.


· The extent and variability of the Mineral Resource expressed as length (along strike or otherwise), plan width, and depth below surface to the upper and lower limits of the Mineral Resource.

· The Mineral Resource extends 4,800 m along strike, maximum plan width of 500 m and a maximum depth below surface of 300 m.

Estimation and modelling techniques

· The nature and appropriateness of the estimation technique(s) applied and key assumptions, including treatment of extreme grade values, domaining, interpolation parameters and maximum distance of extrapolation from data points. If a computer assisted estimation method was chosen include a description of computer software and parameters used.

· The availability of check estimates, previous estimates and/or mine production records and whether the Mineral Resource estimate takes appropriate account of such data.

· The assumptions made regarding recovery of by-products.

· Estimation of deleterious elements or other non-grade variables of economic significance (e.g., sulphur for acid mine drainage characterisation).

· In the case of block model interpolation, the block size in relation to the average sample spacing and the search employed.

· Any assumptions behind modelling of selective mining units.

· Any assumptions about correlation between variables.

· Description of how the geological interpretation was used to control the resource estimates.

· Discussion of basis for using or not using grade cutting or capping.

· The process of validation, the checking process used, the comparison of model data to drill hole data, and use of reconciliation data if available.

· The Mineral Resource was estimated into a block model using ordinary kriging for Au. Ag were also estimated but not reported as Resource.

· The block model is prepared in Micromine software.

· Block model with parent block size of 5 x 5 x 5 m were generated within the wireframe domains models as it is considered to best reflect gold distribution and similar to the considered SMU. Minimum subcelling was 1m. IGT subsequently checked how block size affects resource estimation including comparison with a 10 m SMU block model. 

· Grade estimates were based on 1.5 m composited assay data.

· Ellipse based on geostatistics initially. Meanwhile, dynamic anisotropy was used during the interpolation. Some subdomains were determined, and different ellipse orientation applied. Constant parameters for Ellipse were 40.6 x 18.5 x 27.1 m, 4 sectors.

· The block model was generated in 6 runs using the different interpolation parameters (min drill holes, min points, max points/sector, radius factor).

· Block model was checked visually from section to section, on plan and grade distribution in block model match assays results.

· No assumptions have been made regarding the recovery of any by-products.

· No estimation of deleterious components was carried out.

· Domains were generated following visual and statistical analysis of gold mineralisation/distribution. Consequently, a low- and high-grade domain was generated based on a 0.2 and 0.7 g/t Au cut-off. 

· Log probability plots were analysed for each domain (and sub-domain) to review and support the requirement of top cuts.  Top cuts were then applied on a domain basis. 

· Comparison to previous estimates is not considered relevant due to an increase in the available data and amendments to the interpretation and mineralised domains, as well as technical and economic parameters applied.  The previous mineral resource is summarised in the main body of the report.  The current mineral resource is considered to be more robust and better reflect the mineral resources of the Tulkubash deposit. 


· Whether the tonnages are estimated on a dry basis or with natural moisture, and the method of determination of the moisture content.

· All Mineral Resource tonnages are estimated and reported on a dry basis.

Cut-off parameters

· The basis of the adopted cut-off grade(s) or quality parameters applied.

· Mineral Resources have been reported at cut-off grade of 0.21 g/t Au . Cut-off grade determined using appropriate economic and technical parameters for open pit mining operations.

Mining factors or assumptions

· Assumptions made regarding possible mining methods, minimum mining dimensions and internal (or, if applicable, external) mining dilution. It is always necessary as part of the process of determining reasonable prospects for eventual economic extraction to consider potential mining methods, but the assumptions made regarding mining methods and parameters when estimating Mineral Resources may not always be rigorous. Where this is the case, this should be reported with an explanation of the basis of the mining assumptions made.

· Mining would be through conventional open pit methods.

· The Company believes there are no mining factors which affect the assumption that deposit has reasonable prospects for eventual economic mining.

· In order to adhere to the guidelines of the JORC Code (2012) that a Mineral Resource should display reasonable prospects for eventual economic assessment IGT has constrained the Mineral Resource to that portion of the deposit which falls within a conceptual open pit which is based on reasonably assumed economic and mining parameters. 

· The key parameters used in the pit optimisation are shown in the below:


 Au price of US$ 1,800/oz

 Au recovery of 73.3%

 Mining of US$ 1.89/t mined

 Extra Ore Mining of US$ 0.84/t ore

 Processing of US$ 4.25/t ore

 Stacking of US$ 0.54/t ore

 Owner's Mining Cost of US$ 0.34/t ore

 G&A cost of US$ 1.27/t ore

 Discount Rate of 5.0%


Metallurgical factors or assumptions

· The basis for assumptions or predictions regarding metallurgical amenability. It is always necessary as part of the process of determining reasonable prospects for eventual economic extraction to consider potential metallurgical methods, but the assumptions regarding metallurgical treatment processes and parameters made when reporting Mineral Resources may not always be rigorous. Where this is the case, this should be reported with an explanation of the basis of the metallurgical assumptions made.

· Metallurgical parameters have been taken from the metallurgical tests and metallurgical test work results support the recovery.

Environmental factors or assumptions

· Assumptions made regarding possible waste and process residue disposal options. It is always necessary as part of the process of determining reasonable prospects for eventual economic extraction to consider the potential environmental impacts of the mining and processing operation. While at this stage the determination of potential environmental impacts, particularly for a greenfields project, may not always be well advanced, the status of early consideration of these potential environmental impacts should be reported. Where these aspects have not been considered this should be reported with an explanation of the environmental assumptions made.

· There are not considered to be any environmental factors likely to affect the assumption that the deposit has reasonable prospects for eventual economic extraction.

Bulk density

· Whether assumed or determined. If assumed, the basis for the assumptions. If determined, the method used, whether wet or dry, the frequency of the measurements, the nature, size, and representativeness of the samples.

· The bulk density for bulk material must have been measured by methods that adequately account for void spaces (vugs, porosity, etc), moisture and differences between rock and alteration zones within the deposit.

· Discuss assumptions for bulk density estimates used in the evaluation process of the different materials.

· Dry bulk density is measured using a paraffin-coated immersion (Archimedes) method to evaluate the specific gravity (SG).

· Density (SG) values have been estimated and included in the block model.

· The density estimate was based upon 1,420 dry specific gravity determinations, completed by Chaarat.



· The basis for the classification of the Mineral Resources into varying confidence categories.

· Whether appropriate account has been taken of all relevant factors (i.e., relative confidence in tonnage/grade estimations, reliability of input data, confidence in continuity of geology and metal values, quality, quantity, and distribution of the data).

· Whether the result appropriately reflects the Competent Person's view of the deposit.

· Classification of Mineral Resources is based upon a review of geological continuity and complexity, quality of supporting data, spatial grade continuity and quality of block model.

· Mineral resource classification was made manually from section to section.

· Following criteria have been took in account during resource classification:

§ Variography results (40m is the regular distance along strike for Indicated resources).

§ Grade/thickness variability and continuity.

§ Drill hole spacing.

§ Confirmation of grades on surface (trenches/roads).

§ Total depth of mineral resource classification was defined (for Inferred resources up to 80m along strike and along dip).

· The model has been classified into the categories of Indicated and Inferred. IGT assumes that measured mineral resources could not be classified for Tulkubash deposit due to a lot of exploration issues within the main zone of the deposit.

· The results of the validation of the block model shows acceptable correlation of the input data to the estimated grades.

· The Competent Person is confident that all relevant factors have been considered and the results reflect his views.

Audits or reviews

· The results of any audits or reviews of Mineral Resource estimates.

· External reviews of Mineral Resource were performed by Wardell Armstrong International (WAI) and by Roscoe Postle Associates Inc. (RPA).

· An external peer reviews by independent third parties revealed no material concerns.

Discussion of relative accuracy/ confidence

· Where appropriate a statement of the relative accuracy and confidence level in the Mineral Resource estimate using an approach or procedure deemed appropriate by the Competent Person. For example, the application of statistical or geostatistical procedures to quantify the relative accuracy of the resource within stated confidence limits, or, if such an approach is not deemed appropriate, a qualitative discussion of the factors that could affect the relative accuracy and confidence of the estimate.

· The statement should specify whether it relates to global or local estimates, and, if local, state the relevant tonnages, which should be relevant to technical and economic evaluation. Documentation should include assumptions made and the procedures used.

· These statements of relative accuracy and confidence of the estimate should be compared with production data, where available.

· The Mineral Resource estimate is appropriate for the style of mineralization and available data.  IGT considers that the current drill hole spacing is sufficient to demonstrate geological continuity of the main geological structures hosting the mineralization. 

· Accuracy of the Mineral Resource estimate is represented in the model classification.

· The Mineral Resource relates to global estimates.

· The application of top-cuts and compositing in the Mineral Resource estimation are considered appropriate at this stage of development.  Any additional sampling works, however, may necessitate a revision of the top-cuts used.

· The Mineral Resource estimation methodology used is deemed appropriate based upon validation of the model using visual, statistical, and graphical checks.  The use of alternative methods is likely to yield only minor changes to the global Mineral Resource estimate.

· The mineralization domains have been adhered to through the geostatistical and grade estimation works, and the spatial distribution of grade in the final Mineral Resource model is representative of the sample data.


Section 4


JORC Code explanation


Site Visits

· Comment on any site visit undertaken by the Competent Person and the outcome of those visits

· Peter C. Carter is qualified as a CP under JORC code (2012)

· As a previous member of Chaarat staff, Mr. Carter has visited the site on numerous occasions in 2018 and 2019

· There have been no material changes to the project site with respect to Ore Reserves since Mr. Carter's last site visit

Study Status

· The type and level of study undertaken to enable the Mineral Resource to be converted to Ore Reserves

· The code requires that a study, at least to Pre-feasibility Study level has been undertaken to convert Mineral Resources to Ore Reserves.  Such studies will have been carried out and will have determined a mine plan that is technically achievable and economically viable, and that material Modifying Factors have been considered.

· The basis for the conversion of the Mineral Resource to an Ore Reserve is the 2019 Updated Feasibility Study completed by LogiProc PLC and Sound Mining Inc. of Johannesburg.

· The study represents a Class 3 estimate of the project value with an accuracy of -10% to +15%.

· The study determined the project to be both technically and economically viable.

· Modifying Factors have been considered in the conversion of the Mineral Resource to an Ore Reserve 

Cutoff Grade

· Nature of cutoff grade

· A cutoff grade for recovered Au was employed due to the variable recovery in the geo-metallurgical model.

· The cutoff grade parameters are based on those from the 2019 FS with mining and refining costs updated

· Recovered Au cutoff = 0.17 g/t Au

· True marginal cutoff = 0.24 g/t Au at 74% recovery

· Parameters used to calculate cutoff grade

· Owner's Mining = 0.34 $/t ore

· Ore Haul = 0.72 $/t ore

· Process = 4.80 $/t ore

· G&A = 1.25 $/t ore

· Refining = 9.78 $/oz

· Gold Price = 1,450 $/oz Au

· Royalty = 12%

Mining Factors or Assumptions

· The methods and assumptions used as reported in the PFS or FS to convert the Mineral Resource to an Ore Reserve.



· Mineral Resource model used a parent block size of 5 m x 5 m x 5 m which respects the selective mining unit

· Pit optimization conducted with Whittle 4X

· Mining costs were $2.55/t ore and $1.83/t waste

· Other parameters as per cutoff grade calculation and recommended pit slopes

· Shells optimized for $1,000-$1800/oz Au

· $1,450/oz shell selected as basis for pit design

· Manual design process using GEMS software used to generate minable pit design

· Ore Reserve inside manual design within 5% of the minable resource within optimized shell

· Use of Inferred Mineral Resources

· Inferred Mineral Resources were not permitted to influence the pit optimization and were treated as waste during mine design and reserve calculation

· Dilution and Mining Recovery

· 0.5 m "dilution skin" modelled around ore

· Average dilution 8.6% at < 0.18 g/t Au

· Dilution grade high due to presence of Inferred resources adjacent to ore zones

· Mining losses estimated at 2.5% resulting in 97.5% ore recovery

· Geotechnical

· Pit slopes based on slope design study by WAI in 2017

· IRAs of 51o and 58o

· Overall slopes of 40-50o

· 5 m benches; 8 m berms; 20 m highwalls

· Design criteria extrapolated to Mid Zone as those areas host only 8% of the reserve

· Adjusted Reserve

· 19.7 Mt ore grading 0.86 g/t Au containing 546 Koz Au

· 52.7 Mt associated waste

· 2.7:1 strip ratio

· 72.4 Mt total material

· Open Pit Description

· 3 pits arranged along 2 km of strike

· Main Zone (MZ) Pit; 1 large pit; contains 94% of the reserve

· Mid Zone; 2 small pits; 6% of reserve

Mining Plan

· Mining Approach


· Contract mining

· Contracting reduces capital costs and training burden

· Contractor experienced in western-style open pit gold mining

· Contractor has similar culture and language as local workforce

· Mining Method

· Conventional drill-blast, truck-shovel open pit mining method

· Small equipment able to provide production capacity, selectivity, and flexibility in restricted working areas

· Mine Production Plan

· 5.4 years of mining including 1.1 years of pre-stripping

· 350 days of operation per year

· Average mining rate, 40,000 tpd over LOM

· Peak mining rate, 55,000 tpd, 2023-2024

· Average strip ratio during operating period, 2.2:1

· Ore Control

· Blasthole cuttings tested for g/t Au, % Total Sulphur, CN solubility

· Geologists log cuttings for degree of oxidation

· Ore and waste blocks flagged by surveyors for excavation

· Mine Water Management


· Groundwater inflows of 4-6 m3/hr anticipated

· Inflows to be collected in sumps and pumped to a holding pond

· Runoff will be diverted around the open pits by ditches

· Collected water used for dust suppression or treated and released

· Slope Stability

· Pre-shear and buffer blasting to protect pit walls

· Walls to be cleaned with by excavators with hydraulic hammers

· Visual inspections and survey employed to monitor movement

· Mapping of structural features to optimize design safety

· Mining Equipment

· 5 x 5 m3 excavator + 1 x 5 m3 FEL

· 6 x crawler-type, 125 mm, blasthole drills

· 55 x highway-type, 30t haul trucks

· Peak truck requirements, 80 units in 2023

· 40-50 t bulldozers and 200 HP graders in support

Mine Infrastructure

· Dumps & Stockpiles

· Main waste dump < 1 km from MZ Pit with 70 Mt capacity

· 4 Mt of waste used to backfill pits in 2026

· Ore SP 500 kt capacity located near Sandalash River bridge

· All stockpiled ore processed by end of LOM

· Mine Roads

· Dual access to MZ Pit

· 6.5 Km Ore Haul Road from Sandalash River bridge to ROM Pad

· All haul roads 15 m wide for 2-way traffic; maximum grade 10%

· Mine Facilities

· Maintenance Workshop

· Magazine

· AN Storage

· Fuel Farm

· Offices & communications

Metallurgical Factors or assumptions

· Proposed metallurgical process and flowsheet

· Heap leach (HL) processing selected

· 3-stage crushing of ore to P100 12 mm

· Crushed ore stacked by trucks in 7 m lifts on valley-fill leach pad

· Au adsorbed onto activated carbon from PLS in CIC circuit

· Loaded carbon stripped in AARL-type elution circuit

· Electrowinning and smelting on site produce dore for shipment

· Appropriateness of process to the style of mineralization

· About 70% of the Au is readily CN soluble

· Host rock fractures easily to produce 12 mm crush

· No agglomeration at crush sizes > 6 mm

· Lowest capital and operating costs for treating low grade, oxidized ore

· Is the metallurgical process well-tested or novel in nature?

· Process is robust and widely used

· Practical for cold-weather conditions

· Heap leaching proven globally over last 40 years

· Nature of metallurgical test work

· Process scoping test work conducted by Mintek, SGS, RDI, BGRIMM, and Hazen

· HL test programs by WAI (2017), MLI (2018), SAEL (2019)

· HL testing included bottle roll (BR), column leach (CL), load-permeability, and agglomeration test work 

· Amount and representativeness of metallurgical test work


· 93 composite samples tested in all three programs

· 78 BR and 11 CL tests produced results representing potential leach feed

· 75% of samples from Main Zone, 25% from Mid Zone and potential East Zone

· Results indicate BR good proxy HL recovery

· Nature of metallurgical domaining

· Sulphide and oxide domains defined

· Three oxidation states established

· BR and CL results matched to each ox state

· IDW2 used to estimate recovery for individual blocks in oxide domain 

· Metallurgical recovery factors applied

· Recoveries derived from geo-metallurgical model

· Overall recovery for the Ore Reserve 74%

· Average recovery in Main Zone 73%, Mid Zone 78%

· Assumptions or allowances for deleterious elements

· Ore is associated with arsenic and antimony

· Neither element is present in amounts which affect the selected process or create environmental issues

· Existence of bulk sample or pilot scale test work and the degree to which such samples are considered representative

· No bulk samples or pilot scale test work has been conducted

· The samples tested are representative of the variability of leach feed across the entire known deposit

· For minerals that are defined by specification, has the ore reserve estimate been based on the appropriate mineralogy to meet the specification?

· The Ore Reserve is not defined by a specification


· The status of studies of potential environmental impacts of the mining and processing operations.

· ESIA completed by WAI in 2018

· Kyrgyz EIA (OVOS) completed in 2015

· OVOS being updated in support of project permitting

· Details of waste rock characterization

· NAG testing in 2020 on 110 samples distributed throughout deposit

· Average NAG pH 5-6 indicating little or no acid generating potential

· Complimentary ABA testing underway 

· Consideration of potential sites and status of design options considered

· Project site terrain is extremely rugged and constrained

· Only location able to accommodate the heap leach pad and process facility was the selected Dry Valley site

· Dry Valley enables a valley-fill leach pad design suited for cold weather operation

· Detailed engineering is in progress

· Status of approvals for process residue storage and waste dumps

· Dry Valley location for the heap leach pad is approved

· MZ waste dump in the Irisai Valley is approved

· Permitting process for various aspects of the process facility is ongoing


· Existence of appropriate infrastructure

· New site access road completed

· Exploration/Pioneer camps established

· Permanent camp under construction

· All other infrastructure to be provided during construction

· Availability of land for development

· Chaarat has been granted surface rights for the land required to develop the project

· Power

· A 4.5 MW diesel-fired power plant will supply the site with electricity

· Water

· Process water and raw water will be sourced from boreholes located near the plant and camp respectively

· Raw water at the camp and ADR plant will be treated to generate potable water

· Transportation

· All personnel, goods, and materials will be transported to and from site via road

· Bulk materials and equipment will arrive by rail in Bishkek, 750 km from site, finishing the journey by truck

· Labour

· The project workforce is estimated at 720

· On a 15-15 continuous shift schedule, half the workforce will be on site at any given time

· 80% of the workforce is expected to be national with a target of 30% coming from local villages

· Accommodation

· The workforce will be housed on site in a 360-man permanent camp

· Ease with which infrastructure can be provided

· All infrastructure will be installed during the construction period

· The construction period 18-months but some works are seasonally dependent


· Derivation and assumptions regarding capital costs

· Capital costs adjusted from 2019 FS Update LOM estimate to $125 M

· Initial capital = $109 M

· Deferred and Closure costs = $16 M

· Contingency was applied at 10%

· The estimate has an accuracy of -10% to +15% under the AACE cost classification system

· Methodology used to estimate operating costs

· Mining cost from quote by the Contractor based on the detailed mine plan

· Process, Owner Mining, and G&A were developed from first principles based on detailed operating plans

· All other are based on the 2019 FS Update

· Allowances made for deleterious elements

· Project does not incur any added cost due to deleterious elements

· Source of exchange rates used in the study

· Exchange rates for Roubles, Som, and Euros to USD were as per prevailing rates in H1 2019

· Derivation of transportation charges

· Transportation costs were included in the price of all goods and materials

· Cost of shipping was based on estimates a specialist logistics service provider in the region

· Basis for forecasting refining charges

· Refining charges were based on advice from the Kyrgyz gold refinery at Kara-Balta

· Allowances for royalties, both government and private

· Kyrgyzstan has a sliding scale royalty system pegged to gold price

· At a gold price of $1,450/oz Au the royalty payable is 12%

· No private royalty payable on the project

· Royalties are applied in lieu of corporate tax in Kyrgyzstan

Revenue Factors

· Head grade and recovery

· Average head grade 0.86 g/t Au from the block model

· Average Au recovery 74% from geo-metallurgical model

· Metal price

· Average gold price $1,450/oz Au over LOM

· Forecast from BoA/Merrill Lynch

· Conservative compared to World Bank Q2 2020 forecast

· By-product silver priced at $17.50/oz

· Exchange rates

· Exchange rates are based on actuals from H1 2019

· Transportation and treatment charges

· Refining and transport costs from Kyrgyz national gold refinery at Kara-Balta and a bonded carrier respectively

· Refining penalties

· No penalties payable on Tulkubash dore

· Net Smelter Returns

· Dore, 45% Au and 55% Ag, payable 99.5% and 85% respectively

Market Assessment

· The demand, supply, and stock situation for the commodity, consumption trends and factors likely to affect supply and demand in the future


· All producers of precious metals in Kyrgyzstan are obliged to offer their output for sale to the National Bank of the Kyrgyz Republic (NBKR) at world spot prices

· If NBKR declines to purchase metals offered, the producer is free to directly sell on world markets

· A customer/competitor analysis along with identification of likely market windows for the product

· Not applicable

· Price and volume forecasts and the basis of these forecasts

· The forecast gold price averages $1,450/oz over LOM

· The project will produce approximately 96 Koz annually over 4 years of full operation

· For industrial minerals, the customer specification, testing, and acceptance requirements prior to a supply contract

· Not applicable


· Production Plan

· Operations will mine 19.7 Mt ore grading 0.86 g/t Au and 52.7 Mt associated waste over 5.4-year period

· Project will recover 401 Koz primary Au and 515 Koz by-product Ag over a 4.9-year LOM

· LOM includes 6 months of residual production while rinsing the heap

· Capital Costs

· 2019 FS LOM capital of $127 M adjusted to $125 M

· Initial CAPEX decreased $2 M for 2019 sunk costs

· Operating Costs

· Mining, Contract = $2.07/t mined

· Mining, Owner = $0.34/t ore

· Process = $4.77/t ore

· G&A = $1.25/t ore

· All costs applicable to the 4.3-year full production period

· Some LOM production costs occur prior to First Gold and therefore are accounted for in CAPEX

· Financial Considerations

· Royalty applied at 12% in lieu of tax

· Base Case discount rate = 5%

· Project value calculated from Jan 1, 2020

· Model is unleveraged, assumes 100% equity

· Cost Exclusions

· Inflation

· Engineering

· Permitting

· Exploration

· Interest and financing charges

· Economic Performance

· After-tax NPV discounted at 5% = $85 M

· After-tax IRR = 27%

· Simple Payback = 2.6 years

· Comparison to 2019 FS

· 21% increase in NPV at $1,450/oz Au

· 13% decrease in NPV at $1,300/oz Au

· Sensitivity Analysis

· Project NPV declines to $69 M and $55 M at discount rates of 7.5% and 10% respectively

· Changes of 1% in CAPEX and OPEX result in $1 M and $2 M changes in NPV, respectively

· 1% changes in gold price result in $3-$4 M changes in NPV

· Project is breakeven is at a gold price of about $1,090/oz Au



· Status of agreements with key stakeholders and matters leading to social license to operate

· Chaarat has a standing agreement to fund annual "social package" for Chatkal as per Kyrgyz legislation

· Chaarat has committed to hiring quotas from local villages

· Chaarat has promoted the development of local business, education, and social events

· Chaarat maintains a program of engagement with the local government and population


· Naturally Occurring Risks

· The project is subject to risks from geohazards, seismicity, and extreme weather

· The project design has been developed to mitigate, control, or manage these risks

· Legal Agreements

· Chaarat has partnered with its Mining Contractor, Ç iftay Insaat

· Ç iftay has taken a 12% stake in the project worth $31 M

· Ç iftay will perform construction earthworks, mining, ore stacking, and operate the Permanent Camp under a variety of separate contracts

· Chaarat has identified Aggreko to potentially supply power under a rental agreement

· Aggreko will install and operate the power plant at an estimated cost of $0.197/kwHr

· Chaarat will conclude long-term contracts to ensure an adequate supply of fuel and sodium cyanide

· Permitting

· Chaarat holds a mining license for the operating area, 700 ha, and an exploration license for the surrounding 6,770 ha

· Surface rights have been secured for all land required to develop the project

· Permitting process is actively working to acquire all permits and approvals required for construction and operation

· Resolution of the dispute regarding the Besh-Aral protected area is in progress

Ore Reserve Classification

· Basis for classifying the ore reserve into various confidence categories

· Drillhole data density

· Search for Probable reserves 40 m

· Grade/thickness variability

· Continuity along strike

· Do the results reflect the CP's view of the deposit?

· Yes.  The absence of Measured resources precludes declaring Proven reserves

· The Probable reserves are based on accepted standards for similar deposits and appropriately reflect the quality of the geologic, technical, and economic factors used to define them

· What proportion of Probable Ore Reserves have been derived from Measured Mineral Resources?

· None, there are no Measured resources

Audits or Reviews

· Results of any audits or reviews of the Ore Reserve estimate

· No external audits or reviews have been completed on the new Ore Reserve

· External reviews of the underlying resource have been conducted by SLR Consulting and WAI

Discussion of relative accuracy /confidence

· Qualitative discussion of the factors that would affect the accuracy and confidence of the estimate

· State whether the accuracy/confidence refers to the global or a local Ore Reserve estimate

· Mineral Resource Estimate based on an additional 20,000 m of drilling

· More rigorous resource classification criteria make the Ore Reserve estimate more conservative than previous estimates

· Mineral Resource Estimate reviewed by external parties with no fatal flaws found

· Accuracy and confidence refer to the  global Ore Reserve estimate

· Project design is flexible enough to accommodate local variations in presentation of tonnage and grade

· Modifying Factors which may affect the accuracy/confidence of the Ore Reserve estimate

· The mining plan employs a conventional approach with reasonable mining rates.

· Some geotechnical and hydrogeological factors need further definition, however, this will not affect the accuracy of the Ore Reserve estimate

· The process technology is proven based on a comprehensive recovery estimate

· CAPEX and OPEX estimates are FS-level

· The project can manage variations in metal and commodity prices of 10-20%

· The project is subject to political and regulatory risks whose management is consistent with the accuracy of the Ore Reserve estimate

· Natural risks such as geohazards and seismicity have been considered in the project design




Glossary of Technical Terms


"Ag"  chemical symbol for silver








chemical symbol for gold


the value of a tonne of mineralised material calculated by summing the value of each contained payable metal and expressing it as an equivalent gold content at a given set of metals prices


"cut off"

the lowest grade value that is included in a Resource statement. It must comply with JORC requirement 19: "reasonable prospects for eventual economic extraction" the lowest grade, or quality, of mineralised material that qualifies as economically mineable and available in a given deposit. It may be defined on the basis of economic evaluation, or on physical or chemical attributes that define an acceptable product specification



Environmental & Social Impact Assessment


grammes per tonne, equivalent to parts per million


"Inferred Resource"

that part of a Mineral Resource for which tonnage, grade and mineral content can be estimated with a low level of confidence. It is inferred from geological evidence and assumed but not verified geological and/or grade continuity. It is based on information gathered through appropriate techniques from locations such as outcrops, trenches, pits, workings, and drill holes which may be limited or of uncertain quality and reliability


"Indicated Resource"

that part of a Mineral Resource for which tonnage, densities, shape, physical characteristics, grade, and mineral content can be estimated with a reasonable level of confidence. It is based on exploration, sampling and testing information gathered through appropriate techniques from locations such as outcrops, trenches, pits, workings, and drill holes. The locations are too widely or inappropriately spaced to confirm geological and/or grade continuity but are spaced closely enough for continuity to be assumed



The Australasian Joint Ore Reserves Committee Code for Reporting of Exploration Results, Mineral Resources and Ore Reserves 2012 (the "JORC Code" or "the Code"). The Code sets out minimum standards, recommendations and guidelines for Public Reporting in Australasia of Exploration Results, Mineral Resources and Ore Reserves



thousand troy ounces of gold


"Measured Resource"

that part of a Mineral Resource for which tonnage, densities, shape, physical characteristics, grade, and mineral content can be estimated with a high level of confidence. It is based on detailed and reliable exploration, sampling and testing information gathered through appropriate techniques from locations such as outcrops, trenches, pits, workings, and drill holes. The locations are spaced closely enough to confirm geological and grade continuity


"Mineral Resource"

a concentration or occurrence of material of intrinsic economic interest in or on the Earth's crust in such form, quality, and quantity that there are reasonable prospects for eventual economic extraction. The location, quantity, grade, geological characteristics, and continuity of a Mineral Resource are known, estimated, or interpreted from specific geological evidence and knowledge. Mineral Resources are sub-divided, in order of increasing geological confidence, into Inferred, Indicated and Measured categories when reporting under JORC



million tonnes




"Probable Reserve"



"Proven Reserve"

troy ounce (= 31.103477 grammes)


the part of Indicated and in some cases Measured Resource that can be mined at a profit.  It includes diluting materials and allowances for losses that may occur during mining.


the part of Indicated Measured Resource that can be mined at a profit.  It includes diluting materials and allowances for losses that may occur during mining.



the part of a Measured and/or Indicated Mineral Resource that can be mined at a profit.  Reserves are subdivided in order of increasing confidence into Probable and Proven categories when reporting under JORC.



tonne (= 1 million grammes)


Wardell Armstrong International




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