Chaarat Gold Share Discussion Threads

[casual47] 03/5/2018 15:14

Dastan retweeted Chaarat's latest RNS on the offer and said "interesting offer"

Check out @bekeshev’s Tweet:

[casual47] 03/5/2018 15:05

The article quotes two politicians:

Dastan Bekeshev, a parliamentary deputy with the ruling Social Democrat party

Almambet Shykmamatov, leader of the Ata Meken faction, the only parliamentary opposition political party in Kyrgyzstan

If the deal has support from all sides of the political spectrum then it has a good chance of going through and not get attacked later on should the political balance shift.

[fishhead1] 03/5/2018 15:05

Nice find.

It actually makes the case quite well. Covers many of the potential plus points for the government that have been made here over the past few days.

[casual47] 03/5/2018 14:47

Vesti.kg is the site that I believe published the original leak. It wouldn't be surprising if these articles are placed by CGH folks. I can only read the garbled Google translate English but it does seem they are skirting over the facts a little to embellish the Chaarat case.

Still, if it gets the ball rolling for folk to study the deal and the options so much the better.

The user comments to this article and the original one aren't automatically visible on Google translate but having copied and pasted them manually into Google translate I can say there appears to be quite a bit of scepticism about the offer and cynicism about their government officials, as you might expect.

[casual47] 03/5/2018 14:38

Conditions of Centerra become dangerous for Kyrgyzstan
Wednesday, 02 May 2018 19:40
Read 6764 times
Experts and deputies believe that the authorities should nevertheless consider the option with the "Chaarat"

[casual47] 03/5/2018 12:56

E.g. they could ask for 50% of profits from the Chaarat mines, once CGH has recouped its capex investment. That seems fair to me and would keep the people on board.

[casual47] 03/5/2018 12:35

The Kyrgyz government is in a good position to demand more for turning over their 26% of Centerra and giving their backing. But I doubt they wouldn't see the bigger picture and see the deal collapse just for the sake of holding out for top dollar. Other governments have given away far more by way of subsidies etc just to get people employed and state coffers filled.

[casual47] 02/5/2018 16:20

Not sure why Chaarat's proposal should be laughable. Surprising, sure, but if they have the backers to pull it off then why not?

The Kyrgyz people have long been unsatisfied with the Centerra arrangement and Chaarat's proposal does seem to resolve a lot of problems and could be a chance to right historic wrongs.

The original leak mentioned a range of US$800-900m so the final offer could be much closer to the actual value.

[jc2706] 02/5/2018 15:39

Ironically Jack Gabb used to work for BMO Capital Markets.

[fishhead1] 02/5/2018 15:01

It's all speculations. There is nothing in that article that we didn't already know.

No further comment in the article from Centerra.

Only negative comments come from Jack Gabb, but he will have no influence whatsoever with any of the 3 parties involved.

[jc2706] 02/5/2018 11:35

Not entirely sure why he is bothering. It's not exactly humming over there, I doubt any of us think that we have much influence with the BoDs and the share is suspended anyway. No shareholder in their right mind is going to vote against the deal (assuming that the terms are not ludicrously poor). So what can really be achieved.

[sparkyboy1] 02/5/2018 09:30

beware there is a mole from Centerra doing the rounds on LSE TRYING TO TALK DOWN THE PROPOSED DEAL.

[casual47] 01/5/2018 18:05

Realistically, who would pay top dollar for a mine like Kumtor in a country like Kyrgyzstan?

No way anyone would want to pay 1.3 billion USD for it....

[casual47] 01/5/2018 18:04

Giving more money to Centerra is not going to help Kyrgyz gov as they can only benefit from it through a shareprice uplift in whatever shares they have left in Centerra, so will be spread out across all their holders.

[casual47] 01/5/2018 17:54

His arguments re. Kyrgyz losing out on the deal are flawed. What CGH is proposing is actual preferential share ownership of Kumtor itself plus guaranteed 50% of all the dividends. This means they can't be diluted and come before any creditors or indeed non-preferential shareholders.

What they have now is a share in Centerra where they can (and will) get diluted and have no ownership of Kumtor itself.

And of course Centerra has been funnelling money out of the country rather than investing beyond the minimum to keep Kumtor going. That and the legacy issues re. corruption allegations and environmental disasters. And the huge negative sentiment among the locals.

[casual47] 01/5/2018 17:37

First time poster shakhtar over on LSE appears to have an agenda (in favour of Centerra). Always a good sign.

[fishhead1] 01/5/2018 16:54

Or something akin to a carlin type deposit

[fishhead1] 01/5/2018 16:53

Whispers that the Chaarat deposits will turn out to be a carlin-like deposit (I think management suspect this, hence the optimistic outlook and statements re extended mine life). I.e the number of oz in ground is a lot bigger than currently measured.

[casual47] 01/5/2018 16:39

Another way to look at things is how easy would the Kumtor deal be replicable with someone else (so not CGH).

E.g. could the state company and HGM instead of CGH make the same proposal to Centerra?

This could help in revealing the added value of what CGH brings to each of the parties and the value proposition.

Just a few thoughts on that top of my head:

CGH has a good story to tell:

They have built up a good relationship with locals and government (10+ years Kyrgyz presence, having spent 100+ million dollars in country since). - possibly also true of HGM to some extent

They already have a great asset that they are keen to develop (so inward investment) - also true of HGM but are still only at scoping stage for their Kyrgyz asset. Risk being that HGM's focus is on Russia. CGH's asset is much bigger than HGM's.

They are not overtly associated with the Chinese or Russians - clear advantage

Stellar management - also true of HGM

Anything else?

[fishhead1] 01/5/2018 15:41

Considering all the above - if deal goes through, does a $700m market cap seem out of the question?

I don't think it does. If anything I think this is on the low side of a valuation.

Point is, no one knows about dilation for existing shareholders until it goes through or further derails announced.

[casual47] 01/5/2018 15:22

JC, seeing as with Kumtor this is a sure bet for the new investors, do you think they really would demand a high% increase (as you put it)?

It seems to me that even at 30% uplift this is a golden chance to get cheap and derisked exposure to the Central Asian precious metals sector.

[jc2706] 01/5/2018 15:04

casual47,

When you say 60:40 old:new, I take it that you are saying that the raise would amount to 40% of the new number of shares? If that is the case and there are currently 400m ish shares (for ease), then the new number of shares would be 667m so you would issue 267m shares. At C$1, this would raise $207m. For a market capitalisation of US$700m that would imply US$1.05 (C$1.35) which would be a 35% increase for the new investors and a 250% increase for existing investors.

In terms of raising money for Tulkubash and other acquisitions, I don't think that taking on debt to do this is the optimal approach. You tend to arrange an agreement/line of credit with a bank which is drawn down as required.

[casual47] 01/5/2018 15:00

JC, yes, i wanted to write 'reserve' but was too lazy to research it so played safe :)

For sure I saw the 2m oz indicated somewhere