Chaarat Gold Share Discussion Threads

[crapshoot2] 14/8/2020 15:17

I must say I am developing a bit of sympathy with Juju. What kind of a share is it that only seems to rise when the chairman is buying. Gold at $2,000 or thereabouts and unlike a good many miners Charaat seems completely stuck and has completely failed so far to develop any speculative momentum. $43 seems a million miles away. In fact if it gets to $39 I suspect lots of fed up holders will unload. I t think that with Tulkubash a minimum two years away this is regarded as just an investment in Kapan. Repeated deferrals of any hard news on financing isn't helping either.

[casual47] 14/8/2020 14:24

43p would still leave a healthy ~35% increase to share price Angel's new 58p target.

[casual47] 14/8/2020 13:48

With gold above $1800/oz I think Chaarat could easily support a nudge to 42-44p (the chart looks made for it) and have that remain a stable gravitational area this side of Tulku news.

Especially with the prospect of really good record-beating financials for H1.

If Labro don't help tip the balance towards that target then I can only assume they need it to stay at 36-38p for some reason, e.g. perhaps to recruit IIs.

[jc2706] 14/8/2020 13:42

Very true. You see this all the time with these sort of companies and share buy backs. People just sell into buying.

[casual47] 14/8/2020 13:39

Clearly I'd rather have the waiver than not while we are still waiting for Tulku finance.

I do wonder if an unfortunate flipside to its support at 36-38p is that it effectively makes 36-38p a much stronger resistance point than it otherwise would be also.

Iow, by reducing volatility on the downside it is also dampening volatility on the upside.

[casual47] 14/8/2020 13:06

JC, it's a two-edged sword. On the one hand, it gives us PIs some degree of "insurance" that no matter how far the share price drops the shareprice is likely to gravitate back to 36-38p.

However, on the other hand it completely destroys any incentive for PIs to buy shares at higher price points and even encourages us to trade the shares: buy the dips, sell at 36-38p, rinse and repeat.

If Mr. A doesn't want to buy his shares at averages greater than 38p then why should we?

[jc2706] 14/8/2020 13:00

Because up to now it has been 'operation share support'. If he wants to create that kind of environment it needs to be 'operation share pump'. But I don't think that would work in isolation. One buyer, even Mr A., cannot sustain a share price rise and people are just as likely to sell into it. This is one of the reasons I prefer dividends to share buy backs.

[casual47] 14/8/2020 12:49

The whole waiver thing is designed to create a Pavlovian response with PIs but for it to keep being effective they need to match expectation. The last waiver went completely unused and got "renewed" to end of August. If all they manage now is a measly 300k shares out of a 3m waiver limit then why would anyone pay much attention the next time they are given a waiver? Law of diminishing returns etc.

[casual47] 14/8/2020 12:46

The Labro waiver thing has been a bit of a damp squib so far.

Still some hope that before the end of month (and waiver deadline/interim closed period) we'll get a beefy bit of news followed by a frantic few days of intense share buying but they're running out of time.

[casual47] 14/8/2020 11:57

For those who want to delve deeper:

Yesterday's BBC Hardtalk episode with Armenia's prime minister (24 mins)



Hardtalk is, by design, tough and confrontational but I think Mr. Pashinyan handled himself well. The fact he was willing to offer himself up to this kind of scrutiny is a huge thumbs up.

[jc2706] 13/8/2020 17:04

Progress on the Kapan production will be useful.

Given the rise in gold price, you don’t need a drilling season to seriously upgrade the resource. It will be interesting as it will reverse the direction somewhat given that they have been more conservative over the last few years.

[casual47] 13/8/2020 16:34

Warren Gilman has just joined the BOD of a gold royalty company:

[casual47] 13/8/2020 15:05

Well, they have already effectively indicated nearly 50% growth at Kapan by H2 2022 as they are targetting throughput to increase from 700ktpa to 1mtpa thanks to opening an additional mine face at the East Flank and adding 3rd party ore. That should see AISC drop quite significantly and see gold output increase to ~75k oz pa

Not sure there can be that much improvement at Tulku as they appear to be skipping the drilling season this year, but we may see them revisit the modelling and adjust for higher gold prices, lower oil prices, depreciated currencies and better supplier quotes for the big ticket items.

Given the above they might be able to add a large bulk of the resource back into the plan without changing the $110m initial capex figure.

[jc2706] 13/8/2020 14:43

So you are expecting an aggressive resource growth? I don't see why not given the recent strength in the gold price and the fact that this would be an obvious marketing ploy to attract investors (both debt and equity). The market loves resource growth. Up to a point.

What we really need is an obvious path to revenue improvement, whether that be via M&A, production increases at Kapan or Tulkubash financing.

[casual47] 13/8/2020 11:49

The hiring of the new geology VP might have something to do with Dusty's approach so I wouldn't be surprised to see a rather significant u-turn.

(Dusty made a couple of u-turns himself which perhaps is indicative of the decision re. Tulku mine plan being on a knife edge with small changes in input parameters capable of easily flipping things one way or t'other - e.g. increasing resources vs reducing costs and resources, if e.g. something changes which allows costs to be reduced independently of resource then that could allow widening the resource and vice versa)

[casual47] 13/8/2020 11:47

I wonder if they will expand their $1600/oz "pit shell constraint" for the Tulkubash resource?

Will it make much of a difference if they make it e.g. a $1750/oz pit shell?

[casual47] 13/8/2020 11:02

Here's the share price Angel flash note of 6th August:



Some interesting projections re. financials for 2020E to 2023E.

(I think they made a mistake for 2020E on the net interest figure as I think a large chunk of that ($8m) is actually loan repayment rather than interest. If so, that would make the numbers a lot better)

[casual47] 13/8/2020 10:22

While we are waiting.....here's what could be ahead:

1. Updated feasibility study. Last year it dropped in August. According to the July presentation it should come out in "q3 2020"

2. News on $19.6m investor loan refinancing. Current maturity is end of December this year but Labro have a deadline of end of October to get it finished (or else they get more shares).

3. Interim results. Any time from 14th to 30th September

4. Kapan resource update? Last year this dropped with the operational results end of July so perhaps there won't be an update this year (instead maybe they are holding it to release with the update on the East Flank exploration? Due "2020-2021")

5. News on an investment agreement with the Kyrgyz government. From AR: "In 2020, an investment agreement between Chaarat Zaav and the government is expected to be signed, which will provide even more stable conditions for the successful implementation of the project."
My understanding is that this is related to providing extra safeguards re. ability of Chaarat to take the Kyrgyz government to the international court of arbitration. Might be an important consideration for a major Western investor wanting to take part in the project finance. That said, I don't think it would matter much to the likes of sberbank/VTB or the EBRD (who already have such safeguards and more for all investments they are involved in) so the importance of this agreement could be more symbolic than practical.

[casual47] 11/8/2020 18:32

A loan from sberbank would be significant imo. Would be hard to become a FSU consolidator without Sberbank and VTB

[casual47] 11/8/2020 18:09

Yes. The Lydian Armenia guy and the Standard Chartered guy are regular 'likers'.

The (what I believe to be) Labro CFO is frequently liking the posts also.

[jc2706] 11/8/2020 17:51

Yes, interesting. A couple of other bankers liking it as well.

Also interesting that someone from Lydian Armenia liked the original post by the company.

[casual47] 11/8/2020 16:59

Good to see a "head of credit" at Sberbank 'like' the operational results post on Linkedin:

[casual47] 11/8/2020 16:11

I don't think the market has tweaked yet that for an investment of only $7-10m Chaarat will be able to increase its throughput tonnage at Kapan by 50%, and this within the next two years.

[casual47] 11/8/2020 10:21

The 100K AT looks very Mr. A.

Fingers crossed he blows through at least half of his waiver this side of the interims.