Chaarat Gold Share Discussion Threads

[casual47] 20/2/2020 20:10

Presumably the FY2019 being moved to April rather than the more typical June is all part of this process. This way they can have fully audited disclosure with the lenders.

[casual47] 20/2/2020 19:57

Pabs - re. Project finance: I think it's still under discussion but they did say most of it would be debt and most of the equity was sorted with the JV. Conceivably there may be a further equity element, either JV or placing, which I imagine would be at or above the previous arrangements, I.e. on the same valuation basis of $252m for Kyrgyz assets as the JV was or if it is a placing, the same or higher as the most recent placing which was 35p.

I suppose the reason this is still under discussion is because of the way it is being arranged: Chaarat is dealing directly only with one sole lender (EBRD?) who in its turn is dealing with a consortium of smaller outfits. If they can get everyone signed up it may be all debt. If they want to hedge themselves more risk wise then they might insist on some more equity release.

I imagine some of this may depend on the updated BFS - potentially the initial capex will be lower (or higher) than the $110m, though I can't imagine it to change much at all (e.g. I'd be surprised if it was more than $5m difference)

[casual47] 20/2/2020 19:36

Pabs, in terms of reserves, more *recoverable* reserves were added this year (96k oz) than the previous year (~94k oz), so in that sense they did better.

If the total resource including reserves is 1693k oz then they did really well on the resources considering that 640k oz were downgraded following the pit design decision (meaning that without the $1600/oz pit shell constraint the total resources would have been 2.3m oz which is in line with what Dusty said it would be)

If the total resource is 917k oz including reserves then I have no idea what is going on as I can't make head nor tail of it math-wise.

[2pablo] 20/2/2020 19:22

JC2706 - that's a pretty chaotic few changes of direction in the drilling objectives. They will say anything imo if it gives the right impression, think Artem is most keen on that. Think the reduction in resource sounded very reasonable but perhaps they haven't hit with the drill as big as they were hoping in 2019.

Main thing is get that funding done and dusted. was it stated in the conf call it would be all debt funding but that entailed some giving away of equity like the Ciftay deal? I'd listen to it again but seems to be unavailable. Not sure they've ever made a conf call available after the event but they state in the rns they will

[casual47] 20/2/2020 16:56

. (Ignore: Brain fart)

[jc2706] 20/2/2020 16:29

Indeed. I think that we know that it is at least 1693k oz based on the latest presentation (as this was update from a previous presentation which showed 1657k oz) with the 900 being that constrained within the pit wall. The question mark is over whether there is indeed more or whether the drilling was insufficient ultimately to define a resource.

I think priorities changed here.

In the 18th June RNS we were informed that "of the planned 20,000 metres of drilling this year, the large majority (c.16,000 metres) will comprise exploration and step-out drilling from the current resource boundary." and that one of the objectives was to "exceed 2 million ounces of gold in Measured and Indicated JORC Resource categories".

In the 28th August RNS they indicated that "the primary objective of this drilling programme is to identify shallow mineralisation within and near the current pit designs".

We then got nothing until the 15th October RNS informing us of the completion of the drilling and that since the 28th August RNS drilling "has focused on the prospective Shir Canyon area" but we have received little information about this as yet.

Another change appears to have been around the Karator and Ishakuldy targets which are further from the current pit shell. These areas were going to attract 3000 metres of drilling according to the 28th August RNS but ended up with only 1000 metres.

As such, I suspect that the potential and location of Shir Canyon persuaded them to change the focus of the drilling campaign. It would be good to get a better view of the results of this campaign though!

[casual47] 20/2/2020 16:08

It's fair to say that currently it is not clear whether the M&I resource is:

900-odd,
1600-odd or
2.2m odd (unconstrained)

So yes, a bit shoddy

[jc2706] 20/2/2020 16:06

Fair enough but you would have expected this to be included in the wider resources rather than having to speculate where the 640k is. Thinking about it and looking back at the RNSs, the drilling programme was a bit different this year. Last year we got far more information about the drilling than this year.

[casual47] 20/2/2020 15:58

JC, see this from about 5mins in



He was forecasting resource to grow to 2.2-2.25m oz

"Exceeding 2m is a very conservative expectation for this year"

[2pablo] 20/2/2020 15:48

"A recording of the conference call will subsequently be available on the Company's website."

Presentation yes, but can't find that recording yet

[casual47] 20/2/2020 15:42

Dusty estimated that the 2019 drilling season would add the same amount of M&I resources as the 2018 drilling season did (which added 653,000).

[casual47] 20/2/2020 15:29

The problem is....

917,545 plus 640,000 makes neither 1657k nor 1693k....

[jc2706] 20/2/2020 15:26

OK. Yes, I see. Talk about obfuscation! However, I have an alternative explanation. The resources have not really moved much at all, it is just that the resource they are focusing on is inside the revised pit shell i.e. the 640k oz are still there and were included in both the 1657k and 1693k resources. So the only bit we are not aware of is the additional 36k oz rather than having an unknown 640k oz along the strike.

I suspect that this is a more likely reading as the amount of drilling they did along the strike was pretty limited and unlikely to be sufficient to define much of a resource.

[casual47] 20/2/2020 15:18

On the other hand, the RNS says this:

"The Reserves tonnage nominally exceeds that of the Resources Measured and Indicated because of factoring in mining dilution as part of the Reserves calculation. This is not considered when calculating the Resource."

Which would imply that the RNS stated resource is inclusive of reserves?

[casual47] 20/2/2020 15:10

JC, it is not clear. Look at e.g. the new slides, page 6.

Tulkubash
Commodities Au
Stage In construction
Target LOM Avg.
Production 94 koz Au
Target LOM Avg.
EBITDA (3) USD54m
Reserves(2,3) 749koz
Resources(1,3) 1,693koz

[jc2706] 20/2/2020 15:08

My mind must be fading. Looking at the resource statement from yesterday all I can see for M&I resources is that constrained by the pit shell i.e. 917,545oz. Where do you get 1,693k oz from?

[casual47] 20/2/2020 13:25

Logically it seems that, most of the 640k oz which was written of must have come from the main pit as that is the pit which has 77% of the reserve and has been "locked down" pit design wise.

Which would imply the ~640k oz resource which was added must have mostly come from further along the strike.

[casual47] 20/2/2020 12:53

The previous total resources (M&I,I) were 1,657k oz. (Inclusive of reserve)

The current total is 1,693k oz (Inclusive of reserve).

They said the shell constraint on resources reduced the total by 640,000oz.

The implication must be that a huge amount of new oz, of the order of 640k oz, was found outside of the Main Zone pit during the 2020 drilling season? It's a shame they didn't detail where all these new oz were found.

(1657 + 640 equals 2,297 which is about the total resource we were expecting)

[casual47] 20/2/2020 11:22

Richgit, you're not helping.

[richgit] 20/2/2020 11:20

Whilst Charaat motors on to achieve its goals,my own agenda is to buy my Final 100k
when the stock price is holding a break above 50p,all assuming in that event that
virtually all my Gold picks have moved.

Everything is obviously relative to the price of Gold so what we know so far
is that all Media is deliberately downlaying the Coronavirus to avoid any Panic


Even if they have a proper vaccine in the next couple of months World Trade will take a long time to recover from just the current disruptions,so maybe when the Fed is forced to acknolwedge that- with ever more Monopoly Paper currency printing- all Central Banks will further follow suit.


China may only have 1 choice soon as they surely cannot survive economically with another Months` virtual total shutdown.That may be a decision to force people back to work and be damned with the consequences of letting the Coronavirus do its worst.

The Fed and all Central Banks are now printing like crazy,and that is before they
are forced to acknowledge the trade damage already done- yet Gawd only knows how much printing of IoU`s they will do if they have to face the Coronavirus spreading
at compounding rates.


I daresay in the Months to come all that printing will force more into Gold and Silver and no doubt the days when this BB has scores of posters instead of a few
Bunji Jumping Spreadbetters -50p will be in sight


Meanwhile some are catching on to the fact that many Majors are making a lot of money at $1500 Gold..and a lot more in the days when Gold truly breaks out.

[2pablo] 20/2/2020 06:59

"It's a good sign - time to hand the homework in. No point trying to further impress the teacher by doing more research on the topic - we know we have the grade to pass and can now move on to the next task."

like that !

[crapshoot2] 19/2/2020 22:27

Kaplan so far looks to have been a really good buy. Good price, aggressively financed and now they are showing they know how to run it.
I never understand the stock market treatment of this company, particularly as we now learn that financing should be wrapped up end of Q2 and the first pour date for Tulkubash of Q4 2021 is still on schedule. With the gold price at 1,600 what more do they want?

[casual47] 19/2/2020 17:46

From the RNS you can see that they have locked down on the various contracts also:

"The mining and refining costs have been updated from the 2019 feasibility study (FS) based on the finalization of each respective contract. All other operating costs are the same as those applied in the 2019 FS."

All this is, imo, pointing toward everything being finalised so that funding can be arranged. The lenders need to know that all the Ts are crossed and all the Is dotted.

It's a good sign - time to hand the homework in. No point trying to further impress the teacher by doing more research on the topic - we know we have the grade to pass and can now move on to the next task.

[casual47] 19/2/2020 17:28

JC - I am not sure how feasible it is to make different price assumptions further down the line with production due to start end of next year. They have limited scope to tinker with the pit designs and it looks like they have locked down the design on the Main Zone pit. I think they will only look at extending the pit design for the main pit whenever they are in production and are getting real data from real mining i.e. in the course of normal production-based exploration drilling.

This is how I understand it:

The gold sits in deep veins within the mountain slope. So the gold is situated in an angle. This puts certain technical restrictions on how deep they go as the deeper they go the wider the "mouth" of the pit needs to be in order to support simple open pit mining (e.g. for wall stability reasons).

The reason they have effectively written off resources is because following the 2019 drill season they have now all but decided on pit design - I.e. they have locked down the width and depth (the shell if you like). This means all the resources that sit deeper can, for now, not be accessed as that would involve stripping more waste to widen the pit and this wouldn't be economical under current assumptions.

The main pit design, which contains 77% of the reserve, has been, as I understand it from the RNS, 100% fully locked down.

The pits further in the East are open to more definition (drilling) before they lock down on the design - I imagine these will be locked down this time next year or so. They will attempt to get positive data from drill holes designed to widen those pits as far as possible so they can go as deep as possible.

[jc2706] 19/2/2020 17:04

But an easy way of improving the reserves would be to use a higher gold price. Given the current price and the fact that they are using this in the resource statement it wold hardly be a shock if they started stating reserves based on the higher price as well.