Chaarat Gold Share Discussion Threads

[fishhead1] 05/9/2018 13:08

Yes I think the 30,000 metre drill target will be very much dependent on the onset of winter. Seems far fetched to think they will achieve this on current schedule.

[casual47] 05/9/2018 12:50

As to be expected nothing 'new new' in the interview but what I noted:

-8 rigs on site, 9th arrived yesterday and three more to come next two weeks (this is about a three week delay on what he said in the mid-august interview)

-over 11km drilled to date (I think the extra meters will make it into the reserve update)

-Feasibility study for refractory ore in Kyzyltan to be optimised over next year or two

-quote "I'm optimistic we will at least give 30,000 meters a good scare even if we don't quite attain it" - looks like they are a little behind schedule there

(It's funny how he seems to have a habit of slurping his tea/coffee mid-sentence, did same in previous interview)

[fishhead1] 05/9/2018 12:25

Another new interview on proactive. This was with Dusty re the resource update.

[casual47] 05/9/2018 09:43

Interesting:

Assuming the "up to $100m" fundraise completes then Chaarat will be on track of their April 2018 feasibility study:

The feasibility study had as total initial capital expenditure: 132m USD (prior to first gold pour)

There is a graph in the latest Investor Briefing Materials of Cumulative Cashflow and you can gauge the following total yearly cash burn for Tulkubash from it :

2018: -40 million ==> this is what is being raised solely for Tulkubash with the 2021 notes
2019: ca. -70 million (cumulative: ca. -110m)
2020: ca. -20 million (cumulative: -132m) -- FIRST GOLD POUR!
2021: ca. +60 million (cumulative: ca. -75m)

End of 2021: Payback! (no coincidence this coincides with the loan notes maturity date!)

As the numbers and economics of the Tulkubash project keep improving we might be able to consider the April 2018 Feasibility study as the "bad weather" version.

[2pablo] 04/9/2018 17:17

gorsuch - it seems to be a problem but I don't think our Aim resumption will actually be one. It will be fantastic if we can re-rate up towards 30p and beyond on resumption and no doubt that's everyone's plan. Very strange long drawn out non-talking takeover talks - lol

[gorsuch] 04/9/2018 16:24

It states that the longstop is pushed back to Nov 2nd, but that is (For now anyway) the last date by which it should be completed by, therefor there is nothing stopping it from being completed long before that, it's going before parliament in September so mid October is possibly still feasible.

Although as far as I can see it's the government that is pushing the date back every time and not Centerra, so that means the government still has to come up with a new viable plan for Kumtor, then get Centerra to agree to it, all of which I can't see happening within our 7 week window up to October 23rd.

[casual47] 04/9/2018 15:36

I don't think we should necessarily fixate on the longstop date. 2nd Nov is basically the equivalent of pushing it into the long grass (before they pushed it back by a month or so each time).

There's a lot going on in Kyrgyzstan at the moment and politically things always seem on knife-edge, a sneeze away from another coup. The previous president appears to be seething and there are rumours he is trying to arrange a coup. The economy is not doing so well, mainly because of lower output at Kumtor (mining hit lower grades but should pick up again next year). There doesnt appear to be consensus around Kumtor, with some factions even arguing for nationalisation of Kumtor. So with all this going on you can see why all the dithering.

A local Kyrgyz article mentioned some time ago that the PM would present a proposed solution for Kumtor to parliament this month.

I believe we should know more very soon.

[2pablo] 04/9/2018 15:17

The current longstop is Nov 2nd - too late. So, what else can we do but fudge something? No reason to give up just because of some silly rules. If we have to we'll temporarily de-list rather than have to state 'it's Dead' imo

[casual47] 04/9/2018 15:10

I should think so, Pabs.

The reason for the suspension and documentation is to remove speculation and allow for orderly trading.

Until they address Kumtor the speculation will remain.

Remember, acquiring Kumtor would instantly catapult us in big boy's league. There is no way they can leave a question mark open on that.

[2pablo] 04/9/2018 15:00

Casual - why include in 2) above the bit about Kumtor giving up on? Can't see that. Obviously either need an Aim Admission Doc for something or give up on both transactions to remove suspension. Not sure why we'd need to give up on Kumtor.

When Aim itself issued the Temporary Suspension notice on July 24th they said :
"At the request of the Company trading on AIM for the under-mentioned securities has been temporarily suspended from 24/04/2018 9:27am, pending an announcement and publication of an admission document."

So, we make an announcement and publish an Aim Admission Document - not sure we'd have to announce specifically about Kumtor, neither, of course, are we taking over Centerra, so can't see what difference it makes to just keep that one bubbling under.

Maybe I'm wrong, not worried either way. Bob assured me they are aware of avoiding delisting so will obviously try to do that.

[jc2706] 04/9/2018 14:52

Well, I confess at this stage pretty much any producing deal is transformational by definition!

[casual47] 04/9/2018 14:45

JC -- that makes sense. Forgot the M&A info bit also had the word "transformational" in it.

In that sense the polymetal would be "bolt-on" in that it adds cash flow and changes CGH's status to a producer.

[jc2706] 04/9/2018 14:33

casual47,

Regarding 'bolt on' acquisitions as opposed to transformational, I read this as purely a difference in size when compared to the envisaged Tulkubash operation. A 'transformational' deal will likely be 200k+ oz pa (Kumtor clearly qualifies) whereas a 'bolt on' deal will likely be of the order of 50k oz or so. I suspect that they will not be looking at much less than 50k oz as this will have diminishing returns for them unless it really is next door to something they already own and can utilise the same infrastructure.

[casual47] 04/9/2018 13:35

If they were to do one for Kumtor also then it should have info such as placing price of any equity, debt arrangements etc. So I can't see that happening unless there is a term sheet agreed etc, in other words, with Centerra's agreement.

But yes, to lift suspension either:
1. Publicly state there are no RTOs being considered
2. Publish the AIM admission doc for polymetal asset and publicly state that they give up on Kumtor
3. Publish AIM admission doc for both polymetal asset and Kumtor

[casual47] 04/9/2018 13:30

Fyi, this is the info that should be in the AIM admission document:

(a) particulars of the transaction, including the name of any other relevant parties;
(b) a description of the assets which are the subject of the transaction, or the business carried on by, or using, the assets;
(c) the profits (or if applicable, losses) attributable to those assets;
(d) the value of those assets if different from the consideration;
(e) the full consideration and how it is being satisfied;
(f) the effect on the AIM company;
(g) details of the service contracts of any proposed directors;
(h) in the case of a disposal, the application of the sale proceeds;
(i) in the case of a disposal, if shares or other securities are to form part of the consideration received, a statement whether such securities are to be sold or retained; and
(j) any other information necessary to enable investors to evaluate the effect of the transaction upon the AIM company.

[2pablo] 04/9/2018 13:25

Forget Kumtor with regards Aim re-admission, the new document will now just refer to the new acquisition which is also an RTO

Yep, you've cleared it up in my mind. Get AN Aim Admission document out and, hey presto, suspension lifted - but get it done by Oct 24.

[casual47] 04/9/2018 12:20

If Kumtor is still being contemplated then I am not sure whether they can unilaterally put together an AIM admission document if Centerra is still not talking to them, that doesn't really make sense to me, but I am not 100% on this.

[casual47] 04/9/2018 12:15

Yep, see snippet from earlier RNS:

trading in Chaarat's ordinary shares was suspended on 24 April 2018 and, in accordance with AIM Rule 14 and as previously announced, will remain suspended pending the publication of the required AIM Admission Document (or an announcement being made by Chaarat that the Acquisition is no longer in contemplation by Chaarat).

[2pablo] 04/9/2018 12:08

Casual, so that is the legal rule is it, publish the Aim Admission document and one has satisfied the regulations to enable re-list?

The Aug 28th "It is currently anticipated that the AIM Admission Document will be posted to shareholders in mid-October 2018." will be just in the nick of time then.

[casual47] 04/9/2018 11:46

Artem has already said as much that Kumtor is not active anymore by stating that Centerra are not engaging and he's waiting to see sign from Kyrgyz state.

My own opinion is that the Kumtor offer suspension was perhaps "convenient" to stabilise the shareprice and prepare groundwork for first M&A and get buy-in from investors for their ambitious M&A vision. So now that the first M&A is being finalised they may no longer require this "convenience"?

[casual47] 04/9/2018 11:42

Once the AIM admission document has been published the suspension can be lifted.

The question is whether they consider the Kumtor offer as still active.
-If not then no problem: publish AIM admission for the Polymetal asset mid-october and lift suspension
-if Kumtor is still "active" then either publish AIM admission for both Polymetal and Kumtor and lift suspension, or.....request exception to remain suspended and listed?

[2pablo] 04/9/2018 11:28

Bob Benbow got back to me on Aug 29 on what would happen if we don't re-list before 6 months are up :

"We are aware of the de-listing rule and have no intention of letting that happen. We will have an update to the market prior to this becoming an issue."

Still see this may be a problem though. The last RNS on the new acquisition said : "The proposed Acquisition is categorised as a reverse takeover under the AIM Rules and will be subject to shareholder approval at a General Meeting, which is due to take place in early November 2018 ("Shareholder Approval"), following the publication of an AIM Admission Document.

It is currently anticipated that the AIM Admission Document will be posted to shareholders in mid-October 2018."

On October 24th we will have been suspended for 6 months. Surely can't apply for another 6-month extension on a different RTO, so might we have to temporarily de-list?

[casual47] 04/9/2018 11:10

JC - the M&A info in the recent presentations introduced the wording of "bolt-on" opportunities. Any thoughts on what those might be?

My reading would be that this would be assets close enough to be absorbed into an existing operation? (E.g. close enough to transport ore for processing at the same plant or provide an ability to share infrastructure that would otherwise have to be duplicated? )

Now, the only asset they have is Chaarat at the moment so I guess they are talking about neighbouring Kyrgyz plots?

As Tulkubash is already big enough to get on with by itself I wonder what kind of bolt-on they are looking at?

[jc2706] 04/9/2018 10:50

The latest resource update may well be indicative of achieving sufficient reserves to establish a 7+ year LOM, which is an unofficial minimum for any mine to attract funding. It would not be surprising if the decision to publish this was based on achieving that LOM and it marries up nicely with the funding round. Also consider that Kyzyltash (sulphide) goes hand in hand with Tulkubash (oxide). Putting a similar multiplier on the sulphide results gives close to 10m ounces overall. That is for half the strike in the mining licence and an eighth of the entire strike.

It looks pretty big which is why they are now talking about district scale.

[fishhead1] 04/9/2018 09:18

I am nearly always bullish on price of gold, but it could be carving out a perfect right shoulder of a head and shoulder bottom. If so, price target will be around £1650 in short time if true.

COT structure is also the most bullish it has been since 2001.