Chaarat Gold Share Discussion Threads

[casual47] 27/2/2020 21:37

Looks like Chaarat will be in Toronto at the PDAC next week:

[juju44] 26/2/2020 17:03

Dusty was past his sell by and his failed promises lacked credibility

[2pablo] 26/2/2020 16:42

Shame to see Dusty pretty well shown the door but that's life, we move on and that's probably it Casual, a bigger and fuller team to take us forward.

Strange they needed two identical RNS's ?!?

[casual47] 26/2/2020 16:15

A key phrase which I missed upon first reading:

"Mr Shvetsov will bring with him a team of highly seasoned professionals who, together, will strengthen the mining and geology department at Chaarat."

In LinkedIn I saw he was working for a consultancy since leaving GV Gold (his current title as per Linkedin: Director General – Geo Inter Consulting Ltd). Perhaps he is doing something similar to what Artem did with ACG and either absorb the consultancy company into Chaarat or bring his current colleagues with him.

This may be the main reason behind him replacing Dusty: the need to have a team of geologists who can work across both Armenia and Kyrgyztsan and do the travel needed.

[casual47] 26/2/2020 15:58

The new, Russian, Dusty:



Good tache.

[casual47] 26/2/2020 13:08

From the 15th October RNS:

"Summer 2020: Continuation of drilling in Shir Canyon to add Resource and mine life and optimise project economics based on Q1 2020 Reserve update. Further drilling at Ishakuldy and Karator targets to add Resource. Additional field work following up on reconnaissance targets generated by previous work, including drilling where warranted."

From the September Webcast:

Area Drilling (as of Sep 27 2019)
Main Pit 1,008
S. Satellite Pits 1,203
N. Satellite to East Pit 5,612
Shir Canyon 8,651
Ishakuldy 565
Karator 334
Total (as of Sep 27) 17,039

So there's a huge amount of drilling done in Shir Canyon which will hopefully pay off later this year.

[casual47] 26/2/2020 11:52

The Russians are coming. I suppose this is why they held back on Mr. Pilipenko's hire.

Not sure whether Dusty was up for retirement or whether it is to do with the 2019 drilling season. The new hire must be about the same age or even older but he does appear to have the pedigree and has overseen some major prospecting, including Nordgold's Gross mine in Kazakhstan. Let's hope he can communicate as well as Dusty, though with a bit more coyness on targets and deadlines.

[2pablo] 26/2/2020 07:48

Yes, I imagine all good, Oli, except 'We love Dusty!' - maybe he is just retiring and can't face the Krygyz winters anymore.

I think the removal of his email address last week when I wrote to him and quick replacement with a new one, spoke volumes

[oli12] 26/2/2020 07:14

Management changes.

[casual47] 25/2/2020 15:40

New today: Artem's review of 2019



Notes:

Kyzyltash metallurgy testing this year to start feasibility process next year (casual: will take several years I imagine)

Kapan East Flank could be as big as the existing mine (casual: AFAIK the bottleneck here will be the tailings dam which needs (1) reinforcing and (2) permits to increase height in order to support tonnage beyond current mine plan)

Otherwise nothing new/of note.

[casual47] 24/2/2020 14:39

Chaarat has been kiboshed twice before right at the crucial moment:

Once shortly after IPO when the financial crisis hit and once in 2010 when the Kyrgyz decided to have a bloody revolution.

[casual47] 24/2/2020 14:35

I'm sceptical about all the glee some PIs holding gold miner shares have about corona.

Miners are not immune to the swirl of knock-on effects resulting from the corona virus or indeed from the corona virus itself.

For Chaarat what we absolutely do not want is for things to get so febrile that even just one of the syndicate lenders gets cold feet and decides to remain in cash for now. We really do not need any major shocks right now.

[casual47] 24/2/2020 14:21

Hopefully news of the $17m loan refinance this week could provide further reassurance.

[jc2706] 24/2/2020 14:19

I suspect that you are correct in assuming that the waiver is there to support this in the high thirties. However, there is always the possibility that the current strength in gold together with the safety net of the waiver may persuade some renewed buying into the forties.

[casual47] 24/2/2020 13:49

Return of the AT-attack, in 10k and 15k chunks.

[casual47] 24/2/2020 12:07

The waiver should keep this in the high thirties while we wait for the finance piece to play out.

I suppose the not getting 100% on the performance based incentive scheme relates to the delay in Tulkubash financing? From q4 to q1 to q2.

[casual47] 23/2/2020 19:08

Interestingly, there is precedent for Kyrgyzaltyn investing in projects:

A Google search led me to this:

"Norox is expected to invest US$41 million to extract gold from the Jerooy deposit. Kyrgyzaltyn will also invest US $ 15 million in the project, and the partners plan to raise an additional US$44 million through bank credits."

This is about what's needed for Tulkubash.

$15m would correspond to ~6% of the Kyrgyz assets and would make the share: 6% Kyrgyzaltyn, 12.5% Ciftay, 81.5% Chaarat. I would be very happy with that. Given the size of Kyrgyzaltyn and its dominance in the country it would seriously derisks things if they came on board, imo.

It would also mean that ~40% of the initial capex would be settled through equity so will seriously derisks the project in terms of reducing debt repayments and interest etc.

[casual47] 23/2/2020 14:11

Typical capitalisation structure:
■ EBRD investment 35%
■ Foreign sponsor equity 25%
■ Local sponsor equity 15%
■ Syndicated loan 15%
■ Other lenders 10%

Apply this to Tulkubash:

Required: $110m

Ciftay (I suppose this would be the foreign sponsor equity) $31.5m - equals 28.63% ✓ DONE

EBRD 35% would be $38.5m

Left: $40m

Local sponsor equity at 15% would be ~$16.5m

Syndicated loan plus other lenders at combined 25% would be $27.5m

I am not sure who the local sponsor could be, and I doubt that the EBRD would insist on such a high percentage for a country like Kyrgyzstan where there is almost no money sloshing around, but perhaps it might be the Kyrgyz state mining company Kyrgyzaltyn and all or part of the needed contribution could be paid "in kind" similar to the Ciftay arrangement? (Or e.g. offsetting royalty/tax)

Perhaps the local sponsor equity could be in the form of a JV at around half of what Ciftay got? E.g. 5-7.5% of Kyrgyz assets, making Kyrgyz assets owned e.g. 80% Chaarat and 20% Ciftay/Kyrgyzaltyn.

Imo, it could be hugely advantageous if Kyrgyzaltyn became a JV partner because it would help protect the company from civil unrest around "foreigners taking all our gold" type of stupid thinking and firmly align the state with our interests.

Imo dyor etc

[casual47] 22/2/2020 14:39

During the webcast Artem mentioned that they got the tax stabilisation in time as there were talks within Kyrgyzstan to change the tax system for miners.

This again highlights to me how the timing of the tax stabilisation deal seems possibly indicative of the Kyrgyz government being pushed to sign the deal by e.g. the EBRD as tax changes could easily blow up the economics or create uncertainty right at the moment when they might be trying to close the deal with the syndicate, imo dyor etc

There are now so many "clues" that the outline of them all but spell E B R D

[casual47] 22/2/2020 14:19

Where do the 33k oz reserves from Shir Canyon fit in:

Area Reserve
----- -----
Main 586
Mid 95
East 68
----- -----
Total 749

As far as I know the Shir Canyon is well past the East Zone area.

[casual47] 22/2/2020 13:54

So more than a third of the newly added reserves comes from Shir Canyon, which is surprising. This could mean about 70-100k oz of the resource comes from there too? Not sure how that adds up with the 195k oz difference between current reserves and stated resources. If the Shir Canyon resources are 100k then that doesn't leave much for the $1600/oz shell pit which is supposed to sit underneath and around the existing pits.

[jc2706] 22/2/2020 12:43

That makes sense (almost). Thanks 2pablo.

[2pablo] 22/2/2020 11:48

Got my reply from dusty late yesterday, I copy my email and his replies which he inserted in red, which I now put in inverted commas as his words :

Dusty

I enjoyed the conf call and presentation but the conf call does not appear to be available on our website for repeat listening.

Which brings me to my query on the Tulkubash Resource and Reserves. It's all getting a bit confusing to the layman I'm afraid with a Resource decrease and yet a Reserve increase.

You are declaring resources without including reserves and resource has gone down because some previous is not now included in the defined pits?



"The Resource number includes Reserve. In other words, the Reserve is a subset of the Resource. The Resource is the mineralisation that would be economic within a pit at a gold price of $1,600. This is to satisfy the requirement of “reasonable prospect of eventual economic extractability”;. This Resource comprises Measured plus Indicated plus Inferred Resource. that The Reserve is that portion of the Measured and Indicated Resource that falls within the defined pits at a $1,300 gold price.



So, the Resource excludes 640,000 ounces of gold that was in Resource last year but is excluded this year because it does not fall within the $1,600 pit shells. However, as I pointed out in my interview, a significant amount of this could come back into Resource, and possibly Reserve, if future drilling widens the mineralisation, which would allow for a wider pit that would bring in deeper mineralisation. I actually think this is very likely in the hanging wall zone of the Main Pit and in the northeast portion of the current resource footprint, between East Pit and Northeast Pit."


I note from Page 16 of the presentation the reserve has gone up dramatically to 749 koz in 2020 - what was the previous figure?



"The Reserve has increased by 14% to 749 koz compared to 658 koz in the published bankable feasibility study."


The 2019 drilling program added considerable 'mineralisation'. Is this one stage lower than being able to define as resource? Shir Canyon which is very promising won't contribute to resource until further drilling to define the resource. However, will this be added to resources if outside defined pits?



"Yes, much of the Shir Canyon mineralisation, which in my opinion has potential to be another 1 million ounce Main Pit though at possibly higher grade, needs more drilling to be classified as Resource. At present, we were able to classify some of the mineralisation as Resource and it is adding about 33,000 ounces to Reserve. I believe further drilling will enhance this number substantially. When that drilling is done, new pits will be designed for the updated Resource and Reserve estimates. Much of what I believe will be added at Shir Canyon will fall outside the currently designed pits, but will fall inside new pits."