Chaarat Gold Share Discussion Threads

[casual47] 29/4/2020 16:35

I don't doubt that there is a genuine movement against the exploitation of Amulsar. I do doubt that there is broad support among the populace. I think a possible scenario could be that the green crusties may have been 'useful idiots' in a concerted effort to bring down Lydian. That's what Lydian management believed . The non-action of government even though they were agreed that the blockades were illegal could point to the fact that they were not in a hurry to help out Lydian and perhaps were looking out for a more palatable partner?

[casual47] 29/4/2020 16:07

According to the article Chaarat are aware of the rumour as the Kapan office is quoted as saying "we'll get back to you on that".

If they are involved then I would expect an RNS like they did last time re. Kumtor.

[jc2706] 29/4/2020 15:46

Very interesting news. Of course, this has the potential for becoming a poison chalice but it is possible that the objections melt away (funny how that is sometimes the case!). Real support of the Armenian government is essential but, let's face it, given the situation that world government's face currently, it is likely that they will take every opportunity to gain access to additional revenue.

[casual47] 29/4/2020 14:36

Trades so far are going straight from O to AT.

[casual47] 29/4/2020 13:14

It wouldn't surprise me that the hiring of Mr Pilipenko, VP of security and government relations, i.e. a lobbyist, was done specifically for the purpose of trying to lobby for the Amulsar project, also on the ground with local community leaders.

I did wonder at the time the "why now" of his hire.

Here he is, on the left in between the MD of Chaarat Zaav and MD of Chaarat Kapan during the company's Kapan site visit end of last year:

[casual47] 29/4/2020 12:36

I very much doubt any buyer would pay the full pre-blocade market price for Amulsar....

This is now a distressed sale imo

[2pablo] 29/4/2020 12:35

Sounds good, bring on the debt though. However, Artem knows a good deal

[casual47] 29/4/2020 11:33

The Amulsar mine infrastructure was about three quarters finished. Lydian have been unable to access the property to winterise the plant so some damage has occurred e.g. the roof on one of the buildings has collapsed. Still, with full government backing this could be brought into production in short order, imo.

If this rumour is true and the deal goes ahead then Chaarat could be mining at the 200k oz pa Amulsar mine by mid next year?

[casual47] 29/4/2020 11:26

If true it's pretty much what I have been expecting. There is no way a sale will happen without the full-throated support of the Armenian government. So a three-way agreement makes a lot of sense. Perhaps the government could even retain a sizeable stake?

[casual47] 29/4/2020 11:23

On the website of Lydian's Monitor they released a court motion document yesterday to extend the stay against creditors until end of June - principally because they are working on a SISP (Sale and Investment Solicitation Package) transaction:

"BMO has worked with the Applicants to advance discussions with the SISP Party. BMO’s continued involvement will be critical to the successful completion of a transaction as part of the CCAA Proceedings that will maximize value for stakeholders."

[casual47] 29/4/2020 11:17

Rumours in local Armenian press that Chaarat is in talks to buy the Amulsar mine:



Has Amulsar been put up for sale? Lydian is not denied

These days, there are persistent rumors from various channels close to the government and business circles that a new deal is being prepared around the Amulsar mine. They have been in circulation since the beginning of the year, in January, and have now become more active. According to him, the government is considering transferring the mine to another owner, and before the declaration of the state of emergency, a tripartite agreement was ready, which was blocked by the coronavirus. It will be signed by the Armenian government, Lydian Armenia, a company licensed to operate the mine, and Chaarat Kapan CJSC, which currently operates the Shahumyan Gold and Polymetallic Mine, and the Kapan Mining and Processing Plant. The company bought the Kapan plant and the Shahumyan mine from Polymetal International for $ 55,000 and reportedly wants to become Amulsar's new operator.

The Prime Minister's Office denies the news. Pashinyan 's spokeswoman Mane Gevorgyan was surprised to hear this information. "It simply came to our notice then. As far as I know, there is no such thing. ”

However, Lydian Armenia spokeswoman Margarita Aproyan neither denied nor confirmed the news. "I can't comment at this time," he said. The information about the sale within the framework of Lydian Armenia is not considered sensational at all. "If you look at all the previous messages spread by the company, it said that one of the ways out of the current situation is to sell shares. "Either we have to go to arbitration or we have to sell," said our interlocutor. Indeed, Lydian Armenia 's official statements and public statements suggest that appealing to the International Court of Arbitration was seen as one way out of the situation, but other issues were also discussed, including the sale of the program. Thus, on January 20, answers to frequently asked questions were published on the company's official website. It is said that the illegal blockade and the inaction of the government led to the fact that "Lydian" could not find additional funding to cover the unforeseen expenses, and could not continue the program. To the question of what the shareholders will receive if "Lydian" sells the Amulsar project, the company's representatives answered: "It will depend on the selling price and the structure of the sales process. In any case, the sale price will be significantly affected by the blockade of the mine area, and the shareholders will probably suffer if the area is still under blockade at the time of the sale of the project. In addition, the remaining amount in case of sale will probably not be enough to pay the shareholders. "

From these explanations, it is already clear that the possibility of selling the program at Lydian Armenia has been discussed. We also contacted representatives of Chaarat Kapan. We were promised a response later.
And the residents of Jermuk continue to keep the roads leading to the mine closed. In emergency situations, the duty has become invisible. They may seem to have retreated, but activists say the coronavirus epidemic has simply taken a turn for the worse. Shirak Buniatyan, a resident of Jermuk, one of the environmentalists, told Hraparak about this. He is one of the most indomitable fighters for Amulsar. It has been closed since the first day.

"Since the third month of the struggle, we have heard from time to time that someone wants to sell the Amulsar project, but we have said from the beginning that we have no problem with the name of the company. It doesn't matter to us who wants to exploit the mine. There will be no mining industry in Jermuk. And if the government decides to sell, I will say that their move is an adventure. Those who try to open a mine here will waste their money. "Lydian" has the right to sell that program, the shares are his, but we, as citizens of the Republic of Armenia, have finally closed the page of the mining industry in Jermuk. And if anyone doubts that we are here, I suggest that they try their luck. We follow the rules of emergency, but we are ready to violate it at any moment, "said Shirak Buniatyan.

We were also informed that the tripartite agreement obliges the government to open the Amulsar road and ensure the uninterrupted operation of the mine.

[casual47] 27/4/2020 15:03

Quick Artem vid:

[casual47] 27/4/2020 14:36

This is my current expected fantasy scenario:

1. The Kapan loan and the $17m will be combined and replaced in a refinancing of about $40-$50m. This will probably still be a repayment loan but not as fast as the current one (so less than the current 60% cash sweep, maybe more like 25%/$5m pa). This should provide around $10m cash injection plus increase quarterly cash available to Chaarat by ~$1m. If over a 5 year term with $5m annual repayment that would leave $25m prinicpal to repay at maturity - perhaps with an option to convert?

2. Ciftay will imminently take up a share of the JV (so removing the liability from the balance sheet)

3. A new equity partner will come in for up to 5% of the Kyrgyz assets

[2pablo] 27/4/2020 14:00

Well, maybe something is about to happen. Can't remember how many times Artem has stressed 'great opportunity' in this crisis. Probably nothing for a few weeks at least with Covid-19 but Mr A buying on-market would be nice

[casual47] 27/4/2020 13:22

$12.5m is the equivalent of Kyrgyz reducing their shareholding in Centerra by about half a percent....

[casual47] 27/4/2020 13:16

If my thoughts on this are correct it would mean the puzzle pieces are further being put in place.

[casual47] 27/4/2020 13:15

Anyway, you can see why they may have wanted to get rid of having the $17m secured against the Kyrgyz assets. It would have been imo a risk for Ciftay, loan note holders etc to leave that hanging

Moving this loan against the Armenian assets is the cheapest and quickest way of dealing with this (only other option: pay it off via $19.4m placing....). The only issue was the $41m debt ceiling covenant. But that appears to have been taken care of now. Imo dyor etc

[casual47] 27/4/2020 13:12

Reminder of the typical EBRD project finance structure:

EBRD - 35%
Foreign equity sponsor - 25%
Local equity sponsor - 15%
Syndicated loan - 15%
Other lenders - 10%

The $31.5m Ciftay JV is 28.6% of $110.

This could imply another ~11.36% of "local equity sponsor" is needed.

11.36% corresponds to $12.5m of $110

If done on the same terms as Ciftay that would imply ~5% JV stake in Chaarat Zaav.

The most obvious candidate for this would be the Kyrgyz state through Kyrgyzaltyn.

(All the above is speculation, dyor, imo, WTFDIK)

[casual47] 27/4/2020 13:03

I wonder if an additional benefit to moving the $17m security would be to allow a second JV on the Kyrgyz assets?

[casual47] 27/4/2020 12:44

Moving of the loan to the Armenian assets could have been a condition or administrative requirement for the JV to be finalised: Ciftay have already done a lot of work but the cost for what they have done so far still sits on Chaarat's balance sheet under the liabilities. So perhaps once the $17m loan has been removed from the Kyrgyz assets we will see this liability taken off the balance sheet and turned into a portion of the 12.5% JV.

[casual47] 27/4/2020 12:36

Yes. Personally I think this latest raise was mainly to facilitate the moving of the $17m ($19.4m) loan from being secured against Chaarat Zaav to being secured against Kapan (with its $41m indebtedness maximum covenant - the raise helps to reduce the combined debt to or below this $41m, imo).

[2pablo] 27/4/2020 12:14

Well we can't have him getting all the action!

We didn't want too much equity dilution and Chris Egers said $13m - $14m would do nicely

[casual47] 27/4/2020 10:30

Curious that they reduced Mr A's subscription. Could have been $15.5m.

"In view of the level of interest in the Placing beyond the announced $12 million, Labro's participation in the Placing was reduced from US$10 million to US$8.3m and comprised a US$2 million cash subscription and a conversion to equity of US$6.3 million of indebtedness under the Labro Facility, reducing the outstanding principal amount and interest accrued under the Labro Facility to US$ Nil . US$6.5 million of the Labro Facility remains available for drawdown until 31 December 2020."

[casual47] 24/4/2020 11:22

I assumed that the $17m loan holder would participate in the placing but having re-read the loan extension agreement he actually can do this any time:

"Lender conversion rights - The Lender has the right to convert up to US$5 million of the Loan into Chaarat shares at the same price as any other Chaarat equity issuances for a period of 45 days or, if none, at 25p, after which this amount will decrease to US$2.5 million. A holding period of 12 months applies to any Chaarat shares arising on conversion of any part of the Loan."

The period of 45 days ends end of May. That's also the period during which Chaarat can pay down $5m on the principal to extend the loan further to end of March next year.

Assuming the Kapan loan still has a covenant that the maximum indebtedness must be $41m and that Chaarat is not getting a waiver for it, then between now and the interim Chaarat needs to pay down either or both the Kapan loan and the $17m (now $19.4m) for a total of about $10.4m....if my sums are right, imo etc.

This is why I am assuming that at some point between now and end of May:

1. Chaarat will pay down the $5m to extend the loan for another quarter to end of March 2021

2. The loan note holder will convert up to $5m

3. Chaarat will pay down the Kapan loan or the $17m ($19.4m) loan for whatever sticks above the $41m covenant threshold.

[oli12] 24/4/2020 11:20

When you look at the rise of CEY in the last few weeks + 70% you feel Chaarat is overdue a re rate - they are producing some gold. Still out but watching from the sidelines.