Chaarat Gold Holdings Ltd
HALF YEAR RESULTS TO 30 JUNE 2009
Chaarat Gold Holdings (AIM: CGH) ("Chaarat" or "the Company) today announces its
half-year financial results for the six months ended 30 June 2009.
Highlights
* Significant progress made in the field with exploration work focused on the
C4600-C5300 projects
* Additional drilling results now being interpreted
* Prefeasibility study on schedule for completion during H1 2010
* Successful £2.1m fundraising completed in May
* £5.6m investment by China Nonferrous Metals International Mining Company
Limited ("CNMIM") announced in July - regulatory approval from Chinese
Government expected to be received in the next few weeks.
Dekel Golan CEO comments: "2009 has seen a number of significant developments for
the company. We look forward to working with CNMIM once all the necessary Chinese
approvals are received. The results from the drilling during the current season
continue to be positive and indicate both an increased resource and heighten the
mineability of the Chaarat deposit. We also look forward to announcing the
completion of our Prefeasibility Study before the end of H1 2010. Our host
country, the Kyrgyz Republic, continues to improve its support of the mining
industry with Centerra and now Gold Fields, present in the country."
Enquiries:
Chaarat Gold Holdings Ltd: +44 (0) 20 7499 2612
Dekel Golan dekel@chaarat.com
Linda Naylor linda.naylor@chaarat.com
Canaccord Adams Limited: +44 (0) 20 7050 6500
Mike Jones mike.jones@canaccordadams.com
Smiths Corporate Advisory: +44 (0) 20 7239 0140
Dominic Palmer-Tomkinson tomkinson@smiths-ca.com
Conduit PR +44 (0) 20 7429 6607
Edward Portman ed@conduitpr.com
Leesa Peters leesa@conduitpr.com
Disclaimer
This press release includes forward-looking statements. Such forward-looking
statements involve known and unknown risks, uncertainties and other important
factors beyond Chaarat's control that would cause the actual results, performance
or achievements of Chaarat to be materially different from future results,
performance or achievements expressed or implied by such forward-looking
statements. Such forward-looking statements are based on numerous assumptions
regarding Chaarat's present and future business strategies and the environment in
which Chaarat will operate in the future. Any forward-looking statements speak only
as at the date of this document. Chaarat expressly disclaims any obligation or
undertaking to disseminate any updates or revisions to any forward-looking
statements contained in this document to reflect any change in Chaarat's
expectations with regard to these or any change in events, conditions or
circumstances on which any such statements are based. As a result of these factors,
the events described in the forward-looking statements in this press release may
not occur either partially or at all.
Chief Executive's Report
I am pleased to present Chaarat Gold's Half Year Results for the six months to 30
June 2009.
The first six months of the year are a quiet period typically dedicated to
analysing the results of the last exploration season and raising funds for the
next. On both fronts significant progress has been achieved.
Fund raising
The Chaarat share price has doubled since the lows to which it had fallen following
the forced sale by one of our shareholders, itself a victim of the global financial
crisis. In order to minimise dilution it was agreed by the Board to carry out, as
an interim measure, a very small fund raising in May 2009 to raise £2.1 million,
most of which was subscribed to by existing shareholders. To complement that, we
have reached an agreement with a large Chinese company to invest £5.6 million in
Chaarat, at a significant premium to the share price, subject only to Chinese
government approval anticipated to be received in the next few weeks. Both the
investor, China Nonferrous Metals International Mining Company Limited, and Chaarat
will benefit from this arrangement; for CNMIN, it gives them exposure to a
prospective gold asset in a region they understand well, while for Chaarat it
alleviates any further funding requirements until the beginning of 2011 as well as
bringing regional support, contacts and knowledge which are critical to a junior
miner in Kyrgyzstan. Being a state enterprise CNMIM has now submitted applications
for the necessary governmental approvals for the deal and we expect approval during
the next few weeks.
The investment by CNMIM ensures that Chaarat will have enough money to take the
property through to feasibility study, if we decide so to do. The Company
continues to investigate means of improving liquidity, and coupled with our
operational development, it is hoped this may result in the share price better
reflecting the value of the underlying asset.
The results for the half year reflect the reduction in exploration expenditure as
the operating loss for the six months to 30 June 2009 was $2.86m compared to $4.72m
for the six month period to 30 June 2008.
Kyrgyzstan
There have been significant and positive developments in our host country, the
Kyrgyz Republic, during the six month period. Centerra and the Kyrgyz government
reached agreement regarding the ownership and profit sharing of the Kumtor gold
mine. Another mining dispute which damaged perceptions of the country involved
Aurum Mining, but a civil case which involved its subsidiary has now been
successfully resolved.
The careful balancing act of the Kyrgyz government in keeping both the Russian as
well as the US military air bases in the country reflects an ability to govern and
get things done. The election on 23 July returned the incumbent President to
power. Whilst concerns have been raised over the electoral process, stability has
been maintained and indications are that the country is continuing its attempts to
open up to foreign investment.
In another positive sign, EBRD has invested over �175 million in more than 50
projects in the infrastructure, corporate, energy and financial sectors of the
Kyrgyz Republic since the beginning of its operations there.
Gold Fields, the world's fourth largest gold producer, farmed in to a large, albeit
low grade, project. The presence of two majors, Gold Fields and Centerra, is
definitely positive news for the mining industry in the Kyrgyz Republic. Both of
these moves are important in terms of raising the profile of the country as a
credible mining jurisdiction.
Geology
Characteristically, due to weather factors, the first six months of the year see
less by way of exploration activity and a greater concentration on consolidating
data from the previous drilling season and preparing the programme for the June to
November period.
The resource calculation prepared by SRK of Johannesburg resulted in a JORC
compliant resource of 3.34 million ounces of gold at an average grade of 4.3 g/t.
What has become clear is that certain areas hold very considerable potential, not
only in terms of increasing overall resources but, more importantly, in heightening
the mineability of Chaarat as a deposit. Such is the area between Projects C5300,
where the adit penetrates mineralization of 22.45m in true width at a grade of
5.78g/t Au and C4600, where the last hole drilled during 2008 returned 17.97 metres
of true width at a grade of 6.21g/t Au. The 640 metres of strike between those two
points, which has been confirmed by additional drilling, has thrown up a very
significant opportunity which we now intend to explore. There are grounds for
thinking that this large area of mineralization is open on both sides as well as
down dip.
The interpretation that has been developed from the data on the T0700 project at
Tulkubash, which is located approximately 4600m from the adit at C5300, also
suggests a similar significance in its potential. Not only is it a highly
prospective target in its own right but, should it meet our hopes, we believe that
the depths there could lend itself to open cut development.
Prefeasibility study
Progress is ongoing on the preparation of the prefeasibility study, now scheduled
for completion during the first half of 2010, to enable us to include the current
season's exploration results and the new resource calculation. A decision has been
taken to suspend work on mine modelling until the end of the season when it is
hoped more hardened data from exploration will become available. Work on
geo-technological issues and the development of a metallurgical process is,
however, going ahead as planned.
CNMIM Deal
China Nonferrous Metals International Mining Co. Limited (www.cnmim.com) is a
subsidiary of a large Chinese state entity China Nonferrous Metal Mining (Group) Co
Ltd (www.cnmc.com.cn). In discussion with a number of companies, it became clear to
us that the opportunity to source engineering work, contractors, equipment and
project finance from China is tremendous. It also became clear that Chinese
industry is keen to have access to projects either by way of acquiring them or via
other forms of investment. Following meetings with a number of companies we came to
the conclusion that introducing a Chinese shareholder to the company will be
helpful in accessing the Chinese markets in terms of services and procurement as
well as having exposure to a Chinese company which may have an ultimate interest in
either acquiring Chaarat or working with the company in a manner that delivers
value both to itself and to other shareholders.
CNMIM will join Chaarat as a shareholder and will nominate two directors to the
Chaarat Board. We believe that they recognise the value of Chaarat and see it as a
project that can either be successfully brought to fruition through their own
involvement or, through corporate activity, worked to their advantage in some other
way. For shareholders we retain flexibility and a position in which a number of
different options can still be pursued.
Directors
Stuart Comline, who has been with us since early 2007, left the board to focus on
other opportunities. Stuart will continue to advise the board on areas of his
expertise and the Board will continue to benefit from his experience, wisdom,
knowledge and great common sense. We wish to thank Stuart for his contribution.
Linda Naylor joined the company as Finance Director. Linda was an audit partner
with Grant Thornton and has experience and knowledge of the resource sector.
Dekel Golan
Chief Executive Officer
The Competent Person with overall responsibility and who has reviewed the
information in this press release is Mr. Sunit Patel, M.Sc. (Geology), FGS, GSSA,
who is an employee of Chaarat Gold. Mr. Patel is an exploration geologist with 21
years of experience in the resource industry who has sufficient experience relevant
to the style of mineralisation and type of deposit under consideration and was
supervisor of the work which is the subject of this release.
Consolidated income statement
For the six months ended 30 June
6 months to 6 months to 12 months to
30 June 30 June 31 December
2009 2008 2008
(unaudited) (unaudited) (audited)
Note USD USD USD
Exploration expenses (1,512,461) (2,997,849) (8,244,068)
Administrative expenses (932,472) (1,381,708) (2,461,734)
Share options expense 5 (385,189) (357,598) (752,345)
Other operating expenses (33,524) 14,569 (34,998)
Operating loss (2,863,646) (4,722,586) (11,493,145)
Financial expense - (247,475) (645,972)
Financial income 106,880 178,239 226,753
Loss for the period, attributable to
equity shareholders of the Parent (2,756,766) (4,791,822) (11,912,364 )
Loss per share (basic and diluted) - USD
cents 2 (0.04)c (6.67)c (16.57)c
All amounts relate to continuing activities.
Consolidated statement of comprehensive
income and expense
For the six months ended 30 June
6 months to 6 months to 12 months to
30 June 30 June 31 December
2009 2008 2008
(unaudited) (unaudited) (audited)
USD USD USD
Loss for the period, attributable to
equity shareholders of the Parent (2,756,766) (4,791,822) (11,912,364 )
Other comprehensive income:
Exchange differences on translating
foreign operations (64,874) (13,357) (187,829)
Total comprehensive income for the
period (2,821,640) (4,805,179) (12,100,193)
Consolidated balance sheet
At 30 June
30 June 30 June 31 December
2009 2008 2008
(unaudited) (unaudited) (audited)
USD USD USD
Assets
Non-current assets
Intangible assets 73,470 25,628 99,473
Property, plant and equipment 1,667,202 2,064,833 2,022,414
Other receivables - 38,388 -
1,740,672 2,128,849 2,121,887
Current assets
Inventories 27,057 294,167 59,587
Trade and other receivables 212,876 1,706,812 434,610
Cash and cash equivalents 2,850,852 7,004,269 1,375,445
3,090,785 9,005,248 1,869,642
Assets held for sale - - 39,562
3,090,785 9,005,248 1,909,204
Total assets 4,831,457 11,134,097 4,031,091
Liabilities and equity
Equity attributable to shareholders
Share capital 911,780 718,834 718,834
Share premium 18,700,475 15,665,928 15,665,928
Other reserves 12,162,011 11,405,955 11,782,189
Foreign currency reserve (660,762) (421,416) (595,888)
Retained losses (26,641,110) (16,787,682) (23,889,711)
4,472,394 10,581,619 3,681,352
Current liabilities
Trade payables 127,911 481,972 69,525
Accrued liabilities 231,152 70,506 280,214
359,063 552,478 349,739
Total liabilities and equity 4,831,457 11,134,097 4,031,091
Consolidated cash flow statement
For the 6 months ended 30 June
6 months to 6 months to 12 months to
30 June 30 June 31 December
2009 2008 2008
(unaudited) (unaudited) (audited)
USD USD USD
Operating activities
Loss for the period before and after tax (2,756,766) (4,791,822) (11,912,364)
Adjustments:
Amortisation expense - intangible assets 26,003 2,671 21,791
Depreciation expense - property plant and 313,075 256,757 613,029
equipment
Loss on disposal of property plant and 34,864 5,838 19,701
Equipment
Finance income (4,883) (179,498) (226,753)
Share based payments 385,189 357,598 752,345
Foreign exchange (174,477) 247,475 618,990
Decrease/(Increase) in inventories (24,012) 181,679 416,259
Decrease/(Increase)in accounts receivable 345,283 (965,027) 393,189
(Decrease)/Increase in accounts payable 18,418 (23,233) (225,972)
Net cash flow used in operations (1,837,306) (4,907,562) (9,529,785)
Investing activities
Purchase of computer software - (23,560) (116,467)
Purchase of property plant and equipment (70,217) (1,129,357) (1,642,604)
Proceeds from sale of equipment 40,000 2,644 41,885
Purchase of assets held for sale - - (39,562)
Loans issued - - (93,316)
Loans repaid 8,557 - 53,360
Interest received 4,186 179,498 219,084
Net cash used in investing activities (17,474) (970,775) (1,577,620)
Financing activities
Proceeds from issue of share capital 3,357,258 - -
Issue costs (129,765) - -
Net cash from financing activities 3,227,493 - -
Net change in cash and cash equivalents 1,372,713 (5,878,337) (11,107,405)
Cash and cash equivalents at beginning of 1,375,445 13,128,822 13,128,822
the period
Effect of changes in foreign exchange rates 102,694 (246,216) (645,972)
Cash and cash equivalents at end of the 2,850,852 7,004,269 1,375,445
period
Consolidated statement of changes in
equity
For the six months ended 30 June
Share Share Retained Other Translation
capital premium losses reserves reserve Total
USD USD USD USD USD USD
Balance at
31 December
2007 718,834 15,665,928 (11,995,860) 11,048,357 (408,059) 15,029,200
Currency
translation - - - - (13,357) (13,357)
Net income
recognised
directly in
equity - - - - (13,357) (13,357)
Loss for
the six
months
ended
30 June
2008 - - (4,791,822) - - (4,791,822)
Total
recognised
income and
expense for
the six
months - - (4,791,822) (13,357) (4,805,179)
Share
options
expense - - - 357,598 - 357,598
Balance at
30 June
2008 718,834 15,665,928 (16,787,682) 11,405,955 (421,416) 10,581,619
Currency
translation - - - - (174,472) (174,472)
Net income
recognised
directly in
equity - - - - (174,472) (174,472)
Loss for
the six
months
ended
31 December
2008 - - (7,120,542) - - (7,120,542)
Total
recognised
income and
expense for
the six
months - - (7,120,542) (174,472) (7,295,014)
Share
options
lapsed - - 18,513 (18,513) - -
Share
options
expense - - - 394,747 - 394,747
Balance at
31 December
2008 718,834 15,665,928 (23,889,711) 11,782,189 (595,888) 3,681,352
Currency
translation - - - - (64,874) (64,874)
Net income
recognised
directly in
equity - - - - (64,874) (64,874)
Loss for
the six
months
ended
30 June
2009 - - (2,756,766) - - (2,756,766)
Total
recognised
income and
expense for
the six
months - - (2,756,766) (64,874) (2,821,640)
Share
options
lapsed - - 5,367 (5,367) - -
Share
options
expense - - 385,189 - 385,189
Issuance of
shares for
cash 192,946 3,164,312 - 3,357,258
Share issue
costs - (129,765) - - (129,765)
Balance at
30 June
2009 911,780 18,700,475 (26,641,110) 12,162,011 (660,762) 4,472,394
Notes to the financial statements
1 Dividend
No dividend is proposed in respect of the period.
2 Loss per share
The loss per share is calculated by reference to the loss of USD2,756,766 for the
six months ended 30 June 2009 and the weighted average number of shares in issue of
77,038,511 during the period. There is no dilutive effect of share options or
warrants.
3 Basis of preparation of financial statements
The unaudited results have been prepared on a going concern basis and on the basis
of the accounting policies adopted in the audited accounts for the year ended 31
December 2008 with the exception of the impact of changes to the applicable
accounting standards as set out below. The results for the period are derived from
continuing activities.
* IAS1 (revised), 'Presentation of Financial Statements' has become
effective from 1 January 2009. The revision has resulted in minor changes to the
presentation of the primary statements.
* IFRS8, 'Operating segments' effective for annual periods from 1 January
2009. Management does not believe this standard is relevant to the Group
disclosures.
The financial information set out in this half-yearly report does not constitute
statutory accounts. The figures for the period ended 31 December 2008 have been
extracted from the statutory financial statements, prepared under IFRS, which are
available on the Group's website www.chaarat.com. The auditor's report on those
financial statements was unqualified.
4 Selected accounting policy
Mining exploration and development costs
During the exploration phase of operations, all costs are expensed in the Income
Statement as incurred.
A subsequent decision to develop a mine property within an area of interest is
based on the exploration results, an assessment of the commercial viability of the
property, the availability of financing and the existence of markets for the
product. Once the decision to proceed to development is made, exploration,
development and other expenditures relating to the project are capitalised and
carried at cost with the intention that these will be depreciated by charges
against earnings from future mining operations over the relevant life of mine on a
units of production basis.
5 Share options
On 9 June 2009 the Company awarded 665,000 share options to staff, at an exercise
price of GBP£0.54 per share. The total number of share options outstanding were:
At 31 December 2008 7,375,000
Awarded 30 June 2009 665,000
Lapsed in period (45,000)
At 30 June 2009 7,995,000
An amount of USD 385,189 was recognised as share based payment expense during the
six month period ended 30 June 2009 (six months ended 30 June 2008: USD 357,598; 12
months ended 31 December 2008: USD 752,345).
6 Placing of shares
On 1 May 2009 the Company announced the closing of a Placing of 18,558,281 new
Ordinary Shares at 12p per share. Trading of the new shares commenced on the AIM
market of the London Stock Exchange on 11 May 2009. The Placing raised USD
3,357,258 before issue costs of USD 129,765.
7 Post Balance Sheet Events
On 13 July 2009 the Company announced the signing of a subscription agreement with
China Nonferrous Metals Int'l Mining Co Ltd ("CNMIM"). CNMIM will subscribe for
22,469,289 shares in the Company at 25p per share for a total consideration of
£5,617,322. The subscription is subject to the regulatory approval of the Chinese
Government, which is expected to be received in September 2009.
On completion CNMIM's shareholding will represent 19.9% of the Company's (non fully
diluted) issued share capital. CNMIM will have the right to appoint two directors
to the board of the Company as long as its interest in Chaarat does not fall below
15%, and one director as long as its interest does not fall below 10%, in either
case for a period exceeding 6 months. Chaarat undertakes that when it issues
further shares CNMIM will be invited to participate in order to maintain its level
of shareholding on the same terms as offered to other subscribers or, where options
are exercised, by reference to the market share price prior to exercise. Chaarat
further agreed not to exercise its right to require CNMIM to make a cash offer to
shareholders under the Company's articles of association, unless CNMIM reaches a
30% threshold.
Directors and Advisers
Directors
C Palmer-Tomkinson Non-executive Chairman
D Golan Chief Executive
Officer
A Novak Executive Director
L Naylor Finance Director
O Greene Non-executive Director
Company Secretary Auditors Solicitors (UK)
Watson, Farley &
Chateau Management Limited Grant Thornton UK LLP Williams LLP
PO Box 693 Grant Thornton House 15 Appold Street
Hamilton Estate Melton Street London, EC2A 2HB
Charlestown London, NW1 2EP
Nevis
Tel +41 22 316 6620 Registrars Solicitors (Guernsey)
Capita Registrars Ogier
lee@chateaufid.ch (Guernsey) Ltd Ogier House,
2nd Floor, No 1 Le
Truchot St. Julien's Avenue
Registered Office St Peter Port St. Peter Port
Palm Grove House Guernsey Guernsey, GY1 1WA
PO Box 438
Road Town, Tortola Depositary Solicitors (BVI)
Capita IRG Trustees
British Virgin Islands, VG1110 Limited Ogier
Qwomar Complex, 4th
Registered Number 1420336 The Registry Floor
34 Beckenham Road PO Box 3170 Road Town
Kyrgyz Republic Office Beckenham Tortola
British Virgin
Chaarat Zaav CJSC Kent, BR3 4TU Islands, VG 1110
Chokmorova Street, 127
Solicitors (Kyrgyz
720040, Bishkek Principal Bankers Republic)
Royal Bank of Scotland
Kyrgyz Republic International Kalikova & Associates
Royal Bank Place 71 Erkindik Boulevard
Web Site 1 Glategny Esplanade Bishkek, 720040
www.chaarat.com St Peter Port Kyrgyz Republic
Guernsey
Nominated Advisor &
Broker Financial PR
Canaccord Adams Limited Conduit PR
Cardinal Place, 7th Floor 76 Cannon Street
80 Victoria Street London
London, SW1E 5JL EC4N 6AE
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