Aim-listed Chaarat Gold's Kapan gold mine, in Armenia, has exceeded its production guidance for 2020 and made good progress on the development of the business despite the Covid-19 pandemic, as well as earlier cross-border hostilities in Armenia and protests in the Kyrgyz Republic.

The Kapan mine produced 58 178 oz of gold for the full-year − 6% higher than the 55 000 oz guided.

The higher output was, in part, owing to the processing of 67 800 t of third-party ore, compared with the guided 50 000 t.

All-in-sustaining cost (AISC) of $1 034/oz was in line with the AISC of $1 040/oz for 2019.

DEVELOPMENT PROJECTS

Meanwhile, Chaarat has advanced the construction preparation work and detailed engineering at its Tulkubash project, in Kyrgyzstan, with close to $10-million invested in 2020 despite the Covid-19 restrictions and political unrest in the fourth quarter.

The company successfully completed a 2 000 m confirmatory drilling programme which is being included in an updated Joint Ore Reserves Committee-compliant resources and reserve statement.

The bankable feasibility study (BFS) and environmental- and social-impact assessment (ESIA) updates for the project are now expected to be completed in the first quarter of 2021.

Project finance discussions have been further advanced with several banks awaiting the BFS and ESIA updates before proceeding to documentation stage.

Further, at the Kyzyltash project, also in Kyrgyzstan, a comprehensive internal review has been completed and external expert opinions were received in June 2020 for the next stages and overall timeline to production, confirming the current preliminary timeline to 2026.

An independent assessment on metallurgy was completed to help define the ideal processing route.

CORPORATE ACTIVITIES

Chaarat strengthened its balance sheet in 2020 through a capital raise, the extension of liabilities, decreased interest costs and a reduction in debt.

The company raised $13.8-million of equity in April in the midst of the first Covid-19 pandemic, it acclaims.

There was continued strong support from major shareholder Labro Investments through participation in the equity raise and the refinancing of the investor loan into a new $22-million facility maturing on December 31, 2024.

Chaarat decreased its average interest cost from 10.9% to 9.7% as a result of refinancing and a reduction in debt going forward.

It also diversified the shareholder base with further high-net-worth-individuals and retail shareholders.

The company reduced its total debt from $76.2-million as at December 31, 2019, to $70.5-million as at period end, primarily as result of reducing the Kapan acquisition loan by $8-million from cash flows generated by the mine.

2021 OUTLOOK

The Kapan mine is expected to produce 57 000 oz of gold this year, with 50 000 t of third-party ore expected to be treated again this year.

For Tulkubash, subject to further Covid-19 delays, project financing is expected to close in the first half of this year.

At Kyzyltash, a drilling programme with metallurgical test work will be undertaken for the optimal processing route decision by the end of the year.

Chaarat says it will continue to appraise merger and acquisition opportunities matching the target criteria and review its existing balance sheet structure with a view to further reducing its interest costs and improving the balance sheet structure.

Chaarat will be announcing its audited full-year results for 2020 in April.