Chaarat Gold Share Discussion Threads

[bhunt2] 13/5/2020 08:30

Chaarat’s (CHG) potential purchase of Lydian will drive its shareholders into abyss for several reasons:
1. It is a part of a fraudulent scheme that will be investigated in the near future and CHG shareholders must be aware of such huge risks.
2. Lydian’s market capital in early 2018 before the blockade of Amulsar mine was above 350 mil usd at gold prices near 1300 usd/oz, with the same level of debt and having Gordon Wylie as its Chairmen
3. Mine blockades, which started in May 2018, according to official statements of Prime minister and GOA officials were and are being paid by rival companies, with intention to harm Lydian’s financial standing and to drive its market capital down (statements have been made publicly and can be easily found while googling)
4. Despite this, GOA elected after the “revolution221; in May 2018 had done nothing to lift the blockades for TWO consecutive years and as a result, Lydian’s market capital has significantly suffered.
5. Lydian’s major shareholders/lenders chose not to extend forebeafance agreements in Dec 2019 and subsequently the company entered into restructuring process, being delisted from TSX(Company’s market capital went down near to zero - in Feb 2020 was 70k usd, currently 10mil).
6. Government of Armenia continue not to interfere with the mine blockaders, siting their constitutional rights to protest, at the same time clearly infringing with the rights of mine owner - Lydian and its investors.
7. No guarantees on reopening have been provided to Lydian by GOA until now. The Company has suffered losses exceeding 130 mil usd (see their official papers on monitor’s website) because of orchestrated blockades, not being able to attract financial support even at current gold prices to support its ongoing operations.
8. For the reasons known only to Lydian’s major shareholders they have not gone to arbitration and have not initiated sufficient measures to ensure the rights of all of its shareholders, but entered into negotiations to sell the company, which will put at harm first and foremost Lydian’s minor shareholders.
9. The top management of potential purchaser - Chaarat is represented by Gordon Wylie who has been the Chairman of both the Lydian and Chaarat at the same time. He has held meetings with GOA top officials (including PM) before and after the blockades, publicly last time in September 2018, but no content was realized. Wylie has also extensive ties with the President of Armenia - Armen Sarkissian, who together with Wylie has been in Lydian’s board in the past (sources are available publicly). It is unclear whether Wylie had conducted such negotiations as a high representative of Lydian or Chaarat, since he had both hats at the same time during those negotiations...
10. Under such circumstances Lydian and its major shareholders cannot drive the company into a sale agreement with Chaarat or any other company, because the facts point to fraudulent activities undertaken to intentionally harm minor shareholders.
The above also raises several questions regarding the sustainability of potential deal, guarantees provided exclusively to Chaarat by GOA, the faith of ongoing criminal investigation for concealing important data on environmental hazards by Lydian’s management (which can be reopened at any time in the future), potential new criminal investigations on the matter and simultaneously the resistance to reopen from the potentially suffered group - minor shareholders, which are several dozens of motivated persons.
To conclude, Lydian and Chaarat cannot make a deal that will benefit their open or concealed interests!

[casual47] 13/5/2020 06:52

A further sign that Tulkubash is being lined up for production, imo:

The Kyrgyz government has submitted draft amendments to the law to reassign part of the Sandalash nature reserve back to Chaarat's licence.



This was highlighted by Chaarat before: due to a technical error by the Kyrgyz government a good few years back (2011?) they mistakenly designated a part of Chaarat's licence area as protected nature reserve. I believe it was the bit at the very end of the exploration licence and I think it reduced the length of the licence by about 2km or so. I can't recall which RNS/doc so I'm writing this based on my memory of the details so DYOR.

Anywho. The detail of this doesn't really matter but personally I believe the timing of this finally getting sorted is another positive sign that the gears of government appear to be moving to facilitate Chaarat's project. I expect there to be further such facilitations by the Kyrgyz government soon - e.g. after the recently signed Tax Stabilisation Agreement I expect there to be an Investment Agreement.

[casual47] 13/5/2020 00:03

If Chaarat is looking to buy Amulsar and can:

1. get an agreement with the Armenian government that 100% secures and guarantees production

2. get a good price and terms with the lenders

3. ringfence the Amulsar mine and related debts into a separate subsidiary without parent guarantees, like they have done with Kapan (so that if all fails only the subsidiary goes bust)

then I say: GO FOR IT! You have my vote.

[casual47] 12/5/2020 23:02

Don't quite understand the above but it is really simple:

Lydian's debts are ~$400m

Nobody is crazy enough to pay that kind of money to buy Amulsar.

So if a sale happens the Lydian shareholders get zero: the shares would be worthless as there likely will not be enough money to pay the lenders. Creditors always are first in the queue, shareholders are always at the back of the queue.

A sale will only happen if the government 100% guarantees that the mine will open. That might include agreements to waive historic liabilities.

If the government can not guarantee that the mine can resume then the whole thing will collapse into bankruptcy and everyone loses - the lenders, the Lydian shareholders, the employees and Armenia loses because which foreign company will want to invest in Armenia?

[bhunt2] 12/5/2020 21:54

Chaarat’s potential purchase of Lydian has nothing to do about the rich and poor. That kind of argument would sound a little bit naive. However, history suggests that such cases are at certain points referred to prosecutors (could be international or local) who suddenly find out that the company management (Chairman Gordon Wylie in this case) had conflict of interests serving for both Chaarat and Lydian at the same time, negotiating with armenian PM and being a good friend of the head of State in Armenia, while at the same time deliberately leading Lydian to its current indebted status. While, at the same time concealing important information and refraining from taking necessary legal and procedural steps that had to be taken to ensure the protection of all shareholders.
Anyway, for the listed companies like Chaarat one thing is to deal only with blockades of environmentalists and locals in a country with political turmoil another thing is to break teeth on the rock of definite resistance built also from people fraudulently deprived of their savings (whole or a part) in their native country.
Then arguments about rich and poor, 10m market capital and debt won’t work, because people then won’t care about potential purchaser’s - Chaarat’s shareholders. And that will become truly a burden sharing with Lydian’s shareholders who had invested believing that both Lydian’s management and GOA are acting in good faith, refraining from corrupt activities... One shouldn’t overestimate its perceived knowledge and powers in times and places of numerous uncertainties...

[casual47] 12/5/2020 08:16

Lydian market cap is below $10m and the debt is nearly $400m. The minority shareholders need to get real - it's over.

[jc2706] 12/5/2020 08:02

Unfortunately history suggests that it is always the small investors who lose the most (relatively). The system is designed to protect the rich at the expense of the poor whilst providing a glimmer of hope that the poor can become rich (the odds are about the same as winning the lottery). This is the reason, for example, why Americans vote for a system that gives a large number of them very little healthcare cover.

[2pablo] 11/5/2020 08:23

Yerevan, admit to never having heard of it, looks very pleasant and relaxed

[casual47] 10/5/2020 14:26

Yes, it should be a reasonable expectation that Chaarat don't get involved unless they have a solid guarantee through e.g. GOA and local community agreements that production will happen.

Pics of the Armenian capital from last week following the lifting of big chunks of the lockdown.

[jc2706] 10/5/2020 10:04

I think Lydian shareholders will get nothing and, as harsh as it sounds, I don't see much reason why they should. It's the risk you take (I confess that I advocated letting the banks go to the wall in 2008).

The lenders will not want to go to arbitration. It will take an age and the result will be uncertain.

I actually see the other options as not dissimilar when you consider that there is only one suitor. The power is with the purchaser and at the moment the lenders are looking at a choice between money tied up with no end sight, a total loss and a haircut. The latter is surely the best option.

Even then, I would only want Chaarat to get involved if getting the mine to production is a done deal. I am sure that there are discussions ongoing behind the scenes to ensure that this is the case. One of those situations when you just have to rely on the company representatives.

[casual47] 09/5/2020 18:05

According to the docs on the Monitor's website there were two interested parties but one walked away. The other one is in advanced discussions with term sheets etc....as I understand it.

The lenders have these options AFAIK:

1. Arbitration - lengthy, costs more money - would require recruiting financing from one or more companies which specialise in that sort of recovery through arbitration (they basically take a punt on winning the case), uncertain outcome and uncertain recovery (it's one thing to be awarded damages it's another to recover it from Armenia)

2. A new operator steps in gets the mine in production so that debt can be serviced. Assuming all goes well this ought to be the most cents in the dollar option with even potential for profit

3. Recovery after collapse into administration - good luck with that

I didn't include as option "Lydian agrees with GOA to resume the mine" as I think it highly unlikely.

For sure, anyone stepping in as operator ought to get a substantial high risk discount, given what happened. And yes, everyone involved in the debacle from Lydian shareholders to lenders ought to take a hit, with shareholders losing most if not all.

[jc2706] 09/5/2020 15:50

They may well be looking to do better than that. If I was Chaarat I would be looking for the lenders to take some of the pain. After all, if not Chaarat then who? It's a poison chalice at the moment so the suitors are not actually queueing up.

[casual47] 09/5/2020 10:39

If Amulsar does go into production then they ought to be worth at least $600m for a 200k oz pa miner (260k pa in the first few years). EBITDA should be well above $150m pa at current gold prices so a Debt/EBITDA of less than 3...

The current debt sits around $400m. I think they need up to $50m to go into production.

I very much doubt that Lydian shareholders will see any cash. If Chaarat does get the deal as rumoured then at best they might get Chaarat shares, if anything at all, E.g. 10 Lydian for 1 Chaarat share priced at 50p? Which would be ~80m shares? On the OTC markets Lydian equity is valued at less than $10m at the moment so that would be a good premium for them (500% to OTC and 20% to what they were worth when they delisted). If this did happen then those shares could be listed on TSX, which should permit access to wider reach of money markets in future?

So potentially, Chaarat could take ownership of Lydian, with backing from its lenders, for a pittance and end up with a $600m asset on which $450m debt has been taken out, so $150m book value "profit" ($100m if you take into account a 80m share dilution)?

[casual47] 07/5/2020 09:29

Perhaps they will hold the operational results back for the AGM.

[jc2706] 06/5/2020 16:25

Libellous!! :-)

[juju44] 06/5/2020 15:41

Another shady deal then

[casual47] 06/5/2020 15:34

Having just come to power off a mass people movement the government could hardly be seen to quash a popular protest straight off the bat.

So what they did was actively "not decide". The commissioning of environmental reports and introducing new environmental regulation was all part of that "not deciding". Shuffling papers around on the desk to look busy, if you like.

They have exhausted all that shuffling. The additional environmental reports concluded to.....nothing. There was no finding that the Amulsar mine would be problematic.

[casual47] 06/5/2020 15:22

The protests got out of hand because they were allowed to in the period immediately following the "velvet revolution".

All revolutions create vacuums and the protests against Lydia used such a vacuum, combined with some residual people power spirit left over from the revolution.

But as with all revolutions at some point reality must reassert itself.

The reality is that

(1) Armenia cannot afford to cancel the Amulsar project, not just because they would lose out on future treasury earnings but also the very real prospect of losing an international arbitration (at a cost of billions) and all the foreign direct investment which will not be going to Armenia if they are shown to not uphold rule of law and protection of investments and property.

(2) there is no good reason to prevent the Amulsar mine from continuing unless you equally apply whatever new fantasy standard people may have to all the other mines already in operation, in which case all mines will need to close and with it the bulk of Armenia's takings from taxes.

[jc2706] 06/5/2020 15:08

In all seriousness, I would hate to think that Chaarat were in any way responsible for fomenting the unrest associated with the project.

[jc2706] 06/5/2020 15:07

The whole thing looks like a historic mess with it playing out like a daytime soap opera! As far as I can tell, government agencies were looking at doing another environmental assessment.

hxxps://eurasianet.org/following-outcry-armenian-government-steps-back-on-controversial-mine-project

"Pashinyan ordered the relevant government organs to produce “a comprehensive analysis and complete data for further probe into the project,”"

I love this bit from Lydian:

“When will the government of Armenia identify the rival mining companies conducting this campaign, how much has been paid to oppose the Amulsar Project and who has been paid?”

Nothing to see here..... move on!

[casual47] 06/5/2020 14:40

It seems to me that a decision around Amulsar is imminent. We shouldn't have to wait much longer imo.

[casual47] 06/5/2020 14:31

The local issues re. Amulsar are more bark than bite imo.

E.g. the Open Democracy article refers to a Bristish MP who spoke out against it.

That British MP was Lloyd Russell-Moyle. There is no person more suited to "more bark than bite" than that creature.

A lot of the protest around Amulsar boils down to communist rantings dressed up as environmental concerns. They hate the private enterprise element more than they care about the environment. The fact is that they have been unable to demonstrate any reason for their concerns - the environmental studies done for the Amulsar mine are sound and show that the mine can be operated safely.

With Armenia looking to a post-Covid world now is not the time to give those loonies any more of a platform.