Chaarat Gold Share Discussion Threads

[fishhead1] 26/4/2018 13:09

All great points. It is a game changer for our company for sure.

[casual47] 26/4/2018 12:56

I wouldn't be surprised if the recent M&A element of CGH's new strategy came about because they realised they would be unable to get funding for just Chaarat.

Adding cash generating mines into the mix changes the risk profile.

There are no big multi-asset players in the region so there is plenty of scope for someone to take up that space. All they need to do is show they have the talent to fill the boots of such, which with the BOD and senior management additions in the last year or so they appear to have done.

The flip side is that if Chaarat cannot realise its M&A strategy this year that we are possibly looking at another year (or more) of drilling to shore up the LOM and the proven and probable reserves so that Chaarat as a single asset becomes attractive.

Perhaps in that scenario our CEO will decide to put the for sale sign up again....

[casual47] 26/4/2018 12:48

Within 5 years the Chaarat mines could be much more valuable than Kumtor.

[casual47] 26/4/2018 12:39

Don't forget that the current market cap of Chaarat is reflective of being a heavily discounted UNFUNDED non-producer.

If Chaarat is able to move to a funded PRODUCER the market cap will be much, much higher, even before the first spade hits the ground.

Also take into account the value of Chaarat as part of a portfolio vs. just being a single mine. The reduced risk of a portfolio should bring a premium to the whole.

[casual47] 26/4/2018 12:36

The free cash flow of Kumtor will be enough to service a very large debt AND fund bringing Tulkubash into production (100 oz pa).

By 2020-2022 the free cash flow will have grown enough to fund bringing into production the larger refractory ore assets (400oz pa)

[casual47] 26/4/2018 12:27

There are different ways to do this.

There is no need for dilution of Chaarat shareholders.

There could be an CGH shares for "new CGH" shares deal where current Chaarat shareholders would get new shares in the new company.

The new investors could get a share of the new company plus as the Free Cash Flow of Kumtor is HUGE (160 million per annum) there could easily be a large debt financing package (many hundreds of million dollars).

If this deal goes ahead we will be guaranteed a multi-bag.

[fishhead1] 26/4/2018 12:18

I take your point re dilution, but remember MA holds around 40% of the company and this will only be going ahead if he believes this will be accretive to the value of the shares.

It should also unlock financing for the development Tulkabash deposit.

All depends on what they will pay for kumtor.

[kibes] 26/4/2018 12:11

The amount of money required is so large compared to Chaarat's market capitalisation that existing shareholders could be diluted almost out of existence. The company would be controlled by the new financial backers. Since a large quantity of new shares would have to be issued, the question is at what price? It could very well be at a big discount to the last price of 24p hitting existing shareholders hard. And would we even get a vote on it?

[fishhead1] 26/4/2018 10:58

You could be correct. Been thinking about this a lot over the past couple of days and keep coming back to the thought why would Chaarat do this now if they weren't sure they could pull it off?

[casual47] 26/4/2018 10:07

I wouldn't be surprised if one of the international financial institutions backing the deal is Blackrock. They recently built up a 12% stake in Centerra and used to be major shareholders in Chaarat. Together with Kyrgyzaltyn's 26% shareholding they could have enough to get this deal done.

[casual47] 26/4/2018 09:59

The problems are political, dating back to alleged (?) corruption / shady deal between Centerra and the president at the time when Centerra took over Kumtor. There is widespread belief by the people the asset was stolen from them. There also were environmental disasters.

Chaarat have an impeccable relationship politically and with local people and a clean slate, as it were. Also, they are committed to reinvesting into Kyrgyz where Centerra is using Kumtor to invest in e.g. North America.

FCF is $160m from Kumtor alone.

Chaarat needs to raise cash for its own assets, it makes sense to do this as part of a larger and more derisked portfolio.

[kibes] 26/4/2018 09:52

casual47 - Its still $500 million required? And why would we want to buy a mine that has been a constant drag on Centerra shareprice?

[casual47] 26/4/2018 09:48

The proposed deal should also not be seen as a standalone thing. The fact is that CGH have a huge resource themselves and if they can get Kumtor then their half of the free cash flow will be enough to fund the going into production of Chaarat. So for institutional investors this makes the whole package very attractive.

[juju44] 26/4/2018 09:44

So where is the promised BFS now . You could cook up a conspiracy

[casual47] 26/4/2018 09:44

Note that Kyrgyzaltyn have directors on the board of Centerra who have voted against the BOD on several occasions.

Also, the Kumtar mine has been a constant drag on the shareprice for the last few years through the many issues that keep popping up.

There could be a lot of support from other institutional shareholders for getting this monkey of their back at a decent enough price so that they can reinvest elsewhere.

[casual47] 26/4/2018 09:41

Your maths is wrong.

Kyrgyzaltyn owns 26.6% of Centerra, which would correspond to about 50% of the value of Kumtor.

The proposal is that Kyrgyzaltyn return their shares back to Centerra and CGH makes up the other 50% through a mix of debt and equity.

All we know is that the deputy CEO of Kyrgyzaltyn has said he hasn't seen the deal. Doesn't mean it wasn't approved of higher up, e.g. president of Kyrgyzstan.

[kibes] 26/4/2018 09:33

1. Current market capitalisation of CGH = $120 million
2. Value of Kumtor = $1 billion.
3. Centerra not interested in selling the mine
4. Kyrgyzaltyn have not seen the deal but say they are not interested

Are they mad or what? But existing shareholders could be royally shafted if CGH really think they can raise $1 billion to buy Kumtor.

[retirement_fund] 25/4/2018 17:14

And yes, timing of statement points to good relations with president/party. After all, no one seems to have seen the media speculation.

[retirement_fund] 25/4/2018 16:55

Seems we have an interesting game of chess unfolding before our eyes. As long as it's not just an elaborate ploy to distract us from the delayed BFS ;-) The new Board are very impressive so I'm sure they have a few tricks up their sleeves and the 600m future investment statement will appeal to the govt.

[retirement_fund] 25/4/2018 16:23

I still can't get my head around yesterday's announcement given Centerra had rejected the offer. And furthermore, why call for an immediate suspension in trading when we are far (to say the least) from agreeing the terms of a deal. Surely there will not be any meaningful admission document so I would expect the suspension to be lifted very soon (days).

[fishhead1] 25/4/2018 13:35

? sorry can't help you with that question.

[oli12] 25/4/2018 13:35

Who knows - these things take as long as they take. One thing is for sure, it won’t be straight forward as clearly Centerra have no interest in selling. One hopes it does not become a distraction from all the other good work going on at Chaarat. I think that Highland Golds Unkurtash deposit will also be on our shopping list in time.

[casual47] 25/4/2018 13:29

So what happens now?

Will CGH still be publishing the AIM doc re. reverse takeover even though neither Centerra or Kyrgyzaltyn have committed to it?

How long would it take and how long can we expect to remain suspended, if so?

[fishhead1] 25/4/2018 13:17

A bigger share of profits, coupled with the fact Chaarat are pointing out that their share will be reinvested in other assets within country.