TIDMCGH
RNS Number : 1872L
Chaarat Gold Holdings Ltd
09 September 2021
9 September 2021
Chaarat Gold Holdings Limited
("Chaarat" or "the Company")
Interim results for the six months ended 30 June 2021
Chaarat Gold Holdings Limited (AIM: CGH), the AIM-quoted gold
mining company with an operating mine in Armenia, and assets at
various stages of development in the Kyrgyz Republic, today
publishes its unaudited results for the six-month period ended 30
June 2021 ("H1 2021").
Highlights for interim period ended 30 June 2021
Group Financial Results
-- Revenue up 61% in H1 2021 (US$48.1 million) compared to H1
2020 (US$29.9 million), reflecting the positive impact of increased
production including third-party ore (H1 2021: US$11.1 million and
H1 2020: nil) and strong commodity prices.
-- Positive adjusted Group EBITDA (1) in H1 2021 of US$10.4
million (H1 2020: US$0.5 million), reflecting the significantly
improved operating performance at Kapan and lower overhead
costs.
-- Cash and cash equivalents as at 30 June 2021 of US$24.6
million (30 June 2020: US$5.9 million).
Kapan
-- On track to deliver on our gold equivalent AuEq 57k oz guidance for the year (2) .
-- Standalone Kapan EBITDA contribution of US$13.8 million in H1
2021, +237% increase compared to H1 2020 EBITDA contribution
(US$4.1 million).
-- Improved all-in-sustaining cost ("AISC" (3) ) of US$1,063 /oz
vs US$1,076 /oz in H1 2020 (-1%).
-- Kapan produced a total of 32,813 gold equivalent ounces
("oz"); 25,896 oz of own ore vs 27,140 oz in H1 2020 (-5%) and
6,917 oz of third-party ore vs 543 oz in H1 2020 (1174%), in line
with mine plan.
-- Significantly increased third-party ore production of 70kt
for H1 2021 vs 10kt for H1 2020 (+600%), in turn contributing
US$1.8 million to Kapan's EBITDA in H1 2021.
-- Exploration of the East Flank area adjacent to the existing
Kapan mine is progressing according to schedule.
Tulkubash
-- Updated bankable feasibility study ("BFS") released in May
2021 confirming robust project economics.
-- Exploration programmes for Tulkubash commenced in May 2021
and are progressing on budget and on schedule.
-- Results of the drilling on Tulkubash are expected for Q4 2021
and should lead to a revised resource and reserve update prior to
year-end.
Kyzyltash
-- Drilling programme to obtain Kyzyltash ore for metallurgical
testing commenced in May 2021 and is progressing on budget and on
time with metallurgical testing to commence in Q4 2021.
Governance
-- Sandra (Sandy) Stash was appointed to the board from 1 May
2021 as an independent non-executive director and chair of the
Environmental Social and Governance Committee. Sandy has over 35
years of international executive and non-executive board
experience.
-- As announced on 5 August 2021, Artem Volynets stepped down
from his role as Chief Executive Officer (CEO) and Executive
Director and moved into a senior adviser role. The Company is in
advanced discussions with a preferred potential candidate and the
Executive Chairman, Martin Andersson, is serving as interim CEO
until a formal appointment is made.
Outlook for 2021
-- Kapan remains on track to deliver on its AuEq 57koz guidance
including third-party ore production for the year(2) .
-- Management is continuing to explore debt financing
opportunities for Tulkubash project and expects to conclude them in
H2 2021.
-- Management is considering alternatives for the refinancing of
the approximately US$26 million debt outstanding from the 2021
Convertible Bonds due on 31 October 2021 and has been in
discussions with bond holders around an optimal solution.
(1) The calculation of adjusted Group EBITDA is set out
in the Financial Review further below.
(2) 57koz AuEq guidance includes third-party ore production
based on the assumption that purchased ore was sold by Kapan,
whereas in 2021 third-party ore is treated on a tolling
basis. 57koz AuEq total consists of 48koz AuEq produced
from own ore and 9koz AuEq from third-party ore.
(3) AISC on a gold oz produced basis exclude smelter TC/RC,
penalty, MTM charges, others which add c. US$164/oz. Sustaining
capex of c. US$8 million p.a. is included in the AISC, of
which capex of US$2.5 million was spent in H1 2021.
Martin Andersson , Interim Chief Executive Officer and Chairman,
commented: "With a stable operation at Kapan and the equity
financing in the beginning of 2021, we made further progress
towards achieving project financing and developing our Tulkubash
gold project in the Kyrgyz Republic. Kapan had a significantly
better first half compared to last year, mainly due to the
favourable commodity prices on all fronts but also as a result of
the additional optimisation initiatives on recoveries implemented
this year.
The early implemented COVID-19 initiatives remain in place to
assist with ensuring the safety and health of our employees,
contractors, and frequent visitors at our sites. Unfortunately, a
fatality occurred in March 2021 to one of our contract mining team.
A full review of the incident identified certain behavioural
deficiencies. Work is continuing on site to develop a more robust
safety culture to prevent such tragic incidents occurring
again.
At Kapan, we are pleased to report that we are on track to meet
our operational guidance of 57koz for 2021. Further improvements on
the AISC and the benefits of higher utilisation by constant
third-party ore treatment have shown positive results since
beginning of the year. With US$13.8m Kapan EBITDA contribution in
H1 2021 and continuing strong price environment, we look to the
second half of the year with confidence to another strong
performance. Moreover, I am pleased that the East Flank exploration
has commenced and work is progressing to define the next phase of
mining at Kapan.
At Tulkubash, we are pleased to report that the equity portion
for the project construction was raised in February 2021 and we
expect that despite the challenges to the market perception the
Kumtor situation has caused, we will finalise the debt financing in
H2 2021 and advance the project in accordance with the budget and
updated schedule."
Analyst and Investor conference call and presentation
Chaarat will host an analyst and investor conference call and
presentation on Thursday, 9th September, at 9:00 BST. Participants
can register via the link below and will receive a link to the Zoom
presentation and dial-in numbers in their inbox.
https://www.investormeetcompany.com/chaarat-gold-holdings-ltd/register-investor
Participants are invited to submit questions prior to the
presentation to IR@chaarat.com .
The presentation will be available for download from the
Company's website two hours before the call at
https://www.chaarat.com/report_category/presentations/ .
A recording of the conference call will subsequently be
available on the Company's website.
Enquiries
Chaarat Gold Holdings Limited +44 (0) 77 0416 0216
Patrick Henze (Investor Relations) info@chaarat.com
Canaccord Genuity Limited (NOMAD and Joint Broker) +44 (0)20 7523 8000
Henry Fitzgerald-O'Connor
James Asensio
finnCap Limited (Joint Broker) +44 (0)20 7220 0500
Christopher Raggett
Panmure Gordon (UK) Limited (Joint Broker) +44 (0)20 7886
2500
John Prior
Hugh Rich
About Chaarat
Chaarat is a gold mining company which owns the Kapan operating
mine in Armenia as well as Tulkubash and Kyzyltash Gold Projects in
the Kyrgyz Republic. The Company has a clear strategy to build a
leading emerging markets gold company with an initial focus on the
Former Soviet Union through organic growth and selective
M&A.
Chaarat is engaged in active community engagement programmes to
optimise the value of the Chaarat investment proposition.
Chaarat aims to create value for its shareholders, employees and
communities from its high-quality gold and mineral deposits by
building relationships based on trust and operating to the best
environmental, social and employment standards. Further information
is available at www.chaarat.com .
Forward-looking statements
This announcement may include or incorporate by reference
statements that may constitute "forward-looking statements" in
respect of Chaarat's operations, performance, prospects, and/or
financial condition. Forward-looking statements are sometimes, but
not always, identified by their use of a date in the future or such
words and words of similar meaning as "anticipates", "aims", "due",
"could", "may", "will", "should", "expects", "believes", "intends",
"plans", "potential", "targets", "goal" or "estimates". By their
nature, forward-looking statements involve a number of risks,
uncertainties and assumptions and actual results or events may
differ materially from those expressed or implied by those
statements. Accordingly, no assurance can be given that any
particular expectation will be met, and reliance should not be
placed on any forward-looking statement. Additionally,
forward-looking statements regarding past trends or activities
should not be taken as a representation that such trends or
activities will continue in the future. No responsibility or
obligation is accepted to update or revise any forward-looking
statement resulting from new information, future events or
otherwise. Nothing in this announcement should be construed as a
profit forecast. This announcement does not constitute or form part
of any offer or invitation to sell, or any solicitation of any
offer to purchase any shares or other securities in the Company,
nor shall it or any part of it or the fact of its distribution form
the basis of, or be relied on in connection with, any contract
or
commitment or investment decisions relating thereto, nor does it
constitute a recommendation regarding the shares or other
securities of the Company. Past performance cannot be relied upon
as a guide to future performance and persons needing advice should
consult an independent financial adviser. Statements in this
announcement reflect the knowledge and information available at the
time of its preparation. Liability arising from anything in this
announcement shall be governed by English law. Nothing in this
announcement shall exclude any liability under applicable laws that
cannot be excluded in accordance with such laws.
OPERATIONAL REVIEW
Kapan
As previously disclosed, Kapan experienced a fatal workplace
injury in early March. Recordable injury case rate (per one million
hours worked) is 1.43 compared to 0.7 in H1 2020. Actions are
ongoing to strengthen the gains made to the safety culture on site
since the time of acquiring Kapan.
COVID-19 measures remain in place despite the country wide
lifting of restrictions and the impact to operations has been
minimal to date. The largest impact has been as a result of the
global supply chain disruptions which have affected deliveries of
spare parts and consumables.
Total of 32,813 gold equivalent ounces (1) produced, consisting
of:
-- Kapan AuEq production of 25,896 oz(1) which represents a 4.6%
decrease on H1 2020 (27,140 oz). Fewer own ore tonnes were mined as
a result of delayed development work in Q4 2020 caused by last
year's hostilities.
-- Third party AuEq production of 6,917 oz(1) which represents a
substantial increase on H1 2020 (543 oz) and is linked to the
increase in volume processed.
Own ore production consisted of the following for H1 2021 and H1
2020:
H1 2021 H1 2020
Gold (oz) 13,466 13,723
-------- --------
Silver (oz) 272,635 261,551
-------- --------
Copper (tonnes) 852 960
-------- --------
Zinc (tonnes) 3,170 3,997
-------- --------
-- Own ore All-in-sustaining cost ("AISC"(2)) of US$1,063 /oz
slightly improved compared to US$1,076 /oz in H1 2020 (-1%).
-- Third-party ore treated was 70kt for H1 2021 vs 10kt for H1
2020 (+600%). Treatment was approximately 45kt above target as
management was able to contract more material in order to maximize
mill throughput for the period(2) .
-- Realised gold price for the quarter of US$1,783 /oz versus
US$1,665 /oz in H1 2020 (+7%) in line with the average gold price
for H1 2021. Especially realised copper prices of US$9,230/t vs
US$5,400/t in H1 2020 (+71 % vs H1 2020) had a significant positive
impact.
-- Tonnes mined were down year on year by 16.4% due to lower
development mining during the hostilities, and changes in mining
method resulting in a grade improvement of 13.3% with 3.33 g/t AuEq
in H1 2021 vs 2.94 g/t AuEq in H1 2020.
-- Mill throughput increased year on year by 2.5%. The reduced
mining volumes were offset by higher grade and increased
third-party ore treatment.
-- AuEq recoveries were at 79.4% in H1 2021 compared with 79.2% in H1 2020.
-- Despite the reduced development work, the team was able to
return to the planned development schedule in H1 2021. 11,783
metres were achieved in the period compared to 11,216 metres in H1
2020 (+5%).
-- Capital expenditure ("CAPEX") was US$2.5 million, 40% lower
than expected due to timing of capital decisions in relation to the
initial plan. Annual CAPEX is still expected to be in line with the
original guidance of ca. US$8 million.
-- The exploration work on the East flank started in May 2021
and is progressing well. Depending on results, development of a
decline and ordering of first equipment will occur in 2022.
Expected first ore from the new area is expected in 2023, in
parallel with exploration to get to a JORC defined resource.
Outlook
-- Chaarat remains on track to deliver on its AuEq 57koz
guidance including third-party ore production for the year (3)
.
-- Third-party ore supply is expected to remain in line with H1 for the remainder of 2021.
-- An update to the current resource and reserve statement is in
progress with completion and release of the new Life of Mine
targeted for Q4 2021.
-- Development of the East Flank area, adjacent to the existing
Kapan mine, is progressing according to schedule.
-- The Company expects improved financial performance for the
2021 financial year vs 2020 due to increased commodity prices,
higher-grade mining, and a consistent third-party ore supply.
(1) Gold equivalent ounces for 2020 recalculated on 2021 budget
prices with Au at US$1,700/oz and gold ratios of 68 for silver,
7,287 for copper and 21,862 for zinc. In last year's H1 2020
operations update, 2020 oz were based on gold ratios of 83 for
silver, 7,778 for copper and 20,968 for zinc leading to a lower
AuEq number reported in that previous year.
(2) AISC on a gold equivalent oz produced basis excluding
smelter TC/RC, penalty, MTM charges, others which add c. US$164/oz.
Sustaining capex of c. US$8 million p.a. is included in the AISC,
of which capex of US$2.5 million was spent in H1 2021.
(3) 57koz AuEq guidance includes third-party ore production
based on the assumption that purchased ore was sold by Kapan,
whereas in 2021 third-party ore is treated on a tolling basis.
57koz AuEq total consists of 48koz AuEq produced from own ore and
9koz AuEq from third-party ore.
Tulkubash and Kyzyltash Project Update
The updated BFS for the Tulkubash project was published along
with revised mineral resource and ore reserve estimates summarising
the progress achieved since the previous 2019 BFS. The full study
is available on Chaarat's website.
The 2021 exploration programme commenced in May 2021, with
results expected in Q4 2021. The focus is infill drilling of areas
currently classified as inferred, as well as new exploration of
nearby areas with high potential. By the end of June, 1,633 metres
from 10 drill holes were completed which represents 17% of this
year's programme. 2,484 metres of the trenching programme were also
complete (62%).
Geotechnical drilling of the Tulkubash ore body is also being
carried out this year to improve the final pit designs ahead of
production.
Drilling to obtain core for metallurgical testing of Kyzyltash
ore has also commenced. Testing is planned to start in late
2021.
Site infrastructure works and early construction works are
limited pending completion of the debt financing.
FINANCIAL REVIEW
Income statement
Revenue in the period amounted to US$48.1 million (H1 2020:
US$29.9 million). During this period, Kapan sold 22,909 ounces of
AuEq (H1 2020: 20,882 ounces) with a realised gold price per ounce
of US$1,783 (US$1,665 in H1 2020).
The Group operating profit for the period was US$7.8 million (H1
2020: loss of US$5.2 million) and the Group EBITDA was US$9.2
million (H1 2020: negative US$2.2 million). The adjusted Group
EBITDA, excluding non-cash items as detailed below, was US$10.4
million (H1 2020: US$0.5 million). The increase in EBITDA was
mainly due to a more favourable commodity price environment and
further improvements to the operational efficiency at Kapan.
2021 Armenia 2021 2021 2020 2020 2020
Kyrgyz Republic & Total Armenia Kyrgyz Republic & Total
Corporate Corporate
US$'000 US$'000 US$'000 US$'000 US$'000 US$'000
----------------------- ------------- ---------------------- -------- --------- ---------------------- ---------
EBITDA 13,788 (4,626) 9,162 4,102 (6,323) (2,221)
Depreciation and
amortisation (2,385) (252) (2,637) (2,487) (467) (2,954)
Net finance costs (1,580) (2,856) (4,436) (1,990) (6,021) (8,011)
Unrealised foreign
exchange gain 1,293 - 1,293 - - -
Fair value gain on
warrant - 163 163 - - -
Change in provisions - - - 21 - 21
Profit/(loss) before
tax 11,116 (7,571) 3,545 (354) (12,811) (13,165)
----------------------- ------------- ---------------------- -------- --------- ---------------------- ---------
Income tax charge (2,173) - (2,173) (355) - (355)
----------------------- ------------- ---------------------- -------- --------- ---------------------- ---------
Profit/(loss) after
tax 8,943 (7,571) 1,372 (709) (12,811) (13,520)
----------------------- ------------- ---------------------- -------- --------- ---------------------- ---------
The adjusted Group EBITDA, excluding the share-based payment
expense, which is a non-cash item, was as follows:
2021 2020
US$'000 US$'000
-------------------------------------- ------- -------
Kapan EBITDA 13,788 4,102
Kyrgyz Republic & Corporate EBITDA (4,626) (6,323)
Group EBITDA 9,162 (2,221)
Corporate share-based payment expense 1,251 2,697
Adjusted Group EBITDA 10,413 476
-------------------------------------- ------- -------
Finance costs in H1 2021 were US$4.4 million (non-cash US$3.3
million) compared to US$8.0 million (non-cash US$6.3 million) in H1
2020 mainly due to the refinancing of the Investor Loan in H2 2020
and settlement of the Labro working capital facility and Labro Term
Loan in February 2021 resulting in less accrued interest in the
period. Further, in H1 2020, a modification loss of US$1.1 million
was incurred in relation to the refinance of the Investor Loan
versus nil in H1 2021. Income taxes were US$2.2 million versus
US$0.4 million in the comparable period, reflecting the improved
profit achieved at Kapan. Consequently, the Group made a profit
after tax of US$1.4 million in H1 2021 compared to a loss after tax
of US$13.5 million in the comparative 2020 period.
Balance sheet
Non-current assets increased from US$109.3 million at 31
December 2020 to US$112.7 million at 30 June 2021. The increase was
mainly due to the purchase of property, plant, and equipment at
Kapan. Additionally, exploration and evaluation costs of US$1.6
million were capitalised relating to the asset in the Kyrgyz
Republic.
Current assets were US$51.8 million at 30 June 2021 compared to
US$25.8 million at 31 December 2020. The increase mainly related to
the equity raise that took place in February 2021 resulting in an
increase in cash and cash equivalents from US$6.9 million at 31
December 2020 to US$24.6 million at 30 June 2021.
Total liabilities at 30 June 2021 were US$85.0 million compared
to US$110.7 million at 31 December 2020. This reduction was mainly
due to repayments of bank debt and the Labro Facility in the amount
of US$6.2 million (including interest) and settlement of the Labro
Term Loan in the amount of US$22.1 million through shares issued,
offset by accrued interest on loans for the H1 2021 period. The
movement in liabilities is set out in more detail in Note 11 to the
interim financial statements, including the split between long-term
and short-term components. In addition, liabilities at 30 June 2021
included a rehabilitation provision at Kapan of US$8.5 million (31
December 2020: US$7.5 million).
Total equity was US$79.5 million at 30 June 2021 compared to
US$24.5 million at 31 December 2020. This mainly reflects the
increase in share capital and premium of US$51.7 million as a
result of the equity raise in February 2021. Net proceeds of
US$29.6 million was raised and indebtedness reduced by US$22.1
million from the issue of 146,549,943 ordinary shares of US$0.01
each. Refer to Note 9 for further detail on movements in share
capital.
Cash flow
During the first six months of 2021, the Group's operating
profit was US$7.8 million compared to a loss of US$5.2 million in
the first six months of 2020.
Cash and cash equivalents increased from US$6.9 million at 1
January 2021 to US$24.6 million at 30 June 2021. The movement
comprised of:
-- net operating cash flows of US$3.0 million (H1 2020: US$5.9
million), mainly due to improved operating performance offset by
working capital movements at Kapan
-- net cash used in investing activities of US$8.7 million (H1
2020: US$5.8 million) relating to the purchase of property, plant
and equipment at Kapan and in the Kyrgyz Republic together with
capitalised exploration and development spend in the Kyrgyz
Republic
-- cash inflows from financing activities of US$22.9 million (H1
2020: US$2.2 million) relating to the funds received from the
equity raise of US$29.6 million offset by external debt repayments,
including interest, of US$6.2 million
At 1 August 2021, the Group had approximately US$23.0 million of
cash and cash equivalents on hand.
Going concern
In order to achieve the planned future capital developments of
assets and to refinance the convertible loan notes due on 31
October 2021, management will need to raise future financing. There
are currently no binding agreements in place in respect of any
additional funding and there is no guarantee that any course of
funding will proceed. However, management is committed to raising
additional funds and has an established track record of
successfully achieving this in the past as demonstrated by the
fundraising activities in early 2021. Further details of the
Group's going concern and expected future financing plans are set
out below in Note 2 to the interim financial statements.
Martin Andersson Chris Eger
Chairman and Interim Chief Executive Officer Chief Financial Officer
8 September 2021
Consolidated Income Statement
For the six months ended 30 June 2021
6 months ended 6 months ended
30 June 2021 30 June 2020
(Unaudited) (Unaudited)
US$'000 US$'000
Revenue 48,095 29,886
Cost of Sales (33,385) (24,448)
---------------------------------------------------------------------------------- ------------------- --------------
Gross profit 14,710 5,438
Selling expenses (956) (935)
Administrative expenses (5,958) (9,657)
Other income 22 -
Operating profit/(loss) 7,818 (5,154)
Finance income 9 13
Finance costs (4,445) (8,024)
Fair value gain on warrant 163 -
Profit/(loss) before tax for the period, attributable to equity shareholders of
the parent 3,545 (13,165)
Income tax charge (2,173) (355)
Profit/(loss) after tax for the period, attributable to equity shareholders of
the parent 1,372 (13,520)
E arnings /(loss) per share (basic and diluted) - US$ cents 0.21 (2.76)
Consolidated Statement of Comprehensive Income
For the six months ended 30 June 2021
6 months ended 6 months ended
30 June 2021 30 June 2020
(Unaudited) (Unaudited)
US$'000 US$'000
Profit/(loss) for the period, attributable to equity shareholders of the parent 1,372 (13,520)
Items which may subsequently be reclassified to profit and loss
Exchange differences on translating foreign operations and investments 687 (386)
Other comprehensive income for the period, net of tax 687 (386)
Total comprehensive profit/(loss) for the period attributable to equity
shareholders of the
parent 2,059 (13,906)
------------------------------------------------------------------------------------ -------------- --------------
Consolidated Balance Sheet
As at 30 June 2021
As at As at
30 June 2021 (Unaudited) 31 December 2020 (Audited)
Note US$'000 US$'000
---------------------------------------------- --------- ---------------- ---------------------------
Assets
Non-current assets
Exploration and evaluation costs 8 62,247 61,359
Other Intangible assets 1,307 1,221
Property, plant, and equipment 43,535 40,538
Prepayments for non-current assets 239 563
Deferred income tax assets 5,325 5,631
Total non - current assets 112,653 109,312
---------------------------------------------- --------- ---------------- ---------------------------
Current assets
Inventories 15,794 12,251
Trade and other receivables 11,381 6,646
Cash and cash equivalents 24,608 6,928
Total current assets 51,783 25,825
Total assets 164,436 135,137
---------------------------------------------- --------- ---------------- ---------------------------
Equity and liabilities
Equity attributable to shareholders
Share capital 9 6,866 5,401
Share premium 9 241,922 191,594
Own shares reserve (153) (216)
Convertible loan note reserve 2,493 2,493
Merger reserve 10,885 10,885
Share option reserve 12,883 14,103
Translation reserve (14,595) (15,282)
Accumulated losses (180,848) (184,527)
---------------------------------------------- --------- ---------------- ---------------------------
Total equity 79,453 24,451
---------------------------------------------- --------- ---------------- ---------------------------
Liabilities
Non-current liabilities
Provision for rehabilitation 8,540 7,479
Lease liabilities 11 762 771
Other loans 11 14,062 21,947
---------------------------------------------- --------- ---------------- ---------------------------
Total non-current liabilities 23,364 30,197
---------------------------------------------- --------- ---------------- ---------------------------
Current liabilities
Trade and other payables 17,533 17,400
Contract liabilities 11 4,051 5,328
Lease liabilities 11 461 654
Other loans 11 12,214 31,400
Warrant financial liability 651 814
Convertible loan notes 11 25,054 23,252
Other provisions for liabilities and charges 1,655 1,641
Total current liabilities 61,619 80,489
---------------------------------------------- --------- ---------------- ---------------------------
Total liabilities 84,983 110,686
---------------------------------------------- --------- ---------------- ---------------------------
Total liabilities and equity 164,436 135,137
---------------------------------------------- --------- ---------------- ---------------------------
Consolidated Statement
of Changes in Equity
For the six
months ended
30 June 2021
Share Share Own Convertible Merger Share Shares Translation Accumulated Total
Capital Premium Shares loan note Reserve Option to be Reserve Losses
issued
Reserve Reserve Reserve
US$'000 US$'000 US$'000 US$'000 US$'000 US$'000 US$'000 US$'000 US$'000 US$'000
--------------- -------- -------- -------- ------------ -------- -------- -------- ------------ ------------ ---------
As at 31
December 2019
(Audited) 4,688 168,616 (216) 2,493 10,885 10,624 217 (14,875) (162,253) 20,179
--------------- -------- -------- -------- ------------ -------- -------- -------- ------------ ------------ ---------
Loss for the
year - - - - - - - - (22,443) (22,443)
Translation
losses for
the year - - - - - - - (407) - (407)
--------------- -------- -------- -------- ------------ -------- -------- -------- ------------ ------------ ---------
Total
comprehensive
loss for the
year - - - - - - - (407) (22,443) (22,850)
--------------- -------- -------- -------- ------------ -------- -------- -------- ------------ ------------ ---------
Share options
lapsed - - - - - (159) - - 159 -
Share options
expense - - - - - 3,612 - - - 3,612
Share options
exercised 1 21 - - - (10) - - 10 22
Share scheme
modification - - - - - 36 - - - 36
Issuance of
shares for
cash 191 6,041 - - - - - - - 6,232
Issuance of
shares for
settlement of
liabilities 513 16,707 - - - - - - - 17,220
Issuance of
shares for
exercised
warrants 8 209 - - - - (217) - - -
As at 31
December 2020
(Audited) 5,401 191,594 (216) 2,493 10,885 14,103 - (15,282) (184,527) 24,451
--------------- -------- -------- -------- ------------ -------- -------- -------- ------------ ------------ ---------
Profit for the
period - - - - - - - - 1,372 1,372
Translation
gains for the
period - - - - - - - 687 - 687
---------------
Total
comprehensive
income for
the period - - - - - - - 687 1,372 2,059
--------------- -------- -------- -------- ------------ -------- -------- -------- ------------ ------------ ---------
Share-based
payment
charge - - - - - 1,251 - - - 1,251
Issuance of
shares for
cash 841 28,711 - - - - - - - 29,552
Issuance of
shares for
settlement of
liabilities 624 21,617 - - - - - - (101) 22,140
Transfer of
treasury
shares - - 63 - - (2,471) - - 2,408 -
As at 30 June
2021
(Unaudited) 6,866 241,922 (153) 2,493 10,885 12,883 - (14,595) (180,848) 79,453
--------------- -------- -------- -------- ------------ -------- -------- -------- ------------ ------------ ---------
Consolidated Cash Flow Statement
For the six months ended 30 June 2020 6 months ended 30 June 2021 6 months ended 30 June 2020
(Unaudited) (Unaudited)
US$'000 US$'000
--------------------------------------------------------- --------------------------- ---------------------------
Cash flows from operating activities
Operating profit/(loss) 7,818 (5,154)
Depreciation and amortisation 2,637 2,954
Loss/(gain) on disposal of property, plant, and equipment 4 (2)
Loss on sale of inventories - 44
Non-cash expenses 59 -
Change in provisions - 1,133
Unrealised foreign exchange (gains)/losses (1,339) 141
Share-based payments 1,251 2,697
Increase in inventories (2,806) (858)
(Increase)/decrease in trade and other receivables (5,967) 5,043
Increase/(decrease) in trade and other payables 4,026 (344)
Decrease in contract liabilities (1,583) -
Cash generated in operations 4,100 5,654
---------------------------------------------------------- --------------------------- ---------------------------
Income taxes (paid)/refunded (1,107) 273
Net cash generated in operations 2,993 5,927
Investing activities
Purchase of property, plant & equipment (6,533) (3,569)
Exploration and evaluation costs (2,003) (2,104)
Purchase of intangible assets (144) (140)
Proceeds from sale of property, plant & equipment - 2
Interest received 3 13
---------------------------------------------------------- --------------------------- ---------------------------
Net cash used in investing activities (8,677) (5,798)
---------------------------------------------------------- --------------------------- ---------------------------
Financing activities
Proceeds from issue of share capital 29,983 6,232
Share issue costs paid (432) -
Receipt of funds for share options exercised - 22
Repayments of principal portion of lease liabilities (334) (322)
Proceeds from loans - 2,500
Finance costs paid for modifications of other loans (104) (521)
Repayments of principal amount of loan (5,050) (4,000)
Payments of interest (1,193) (1,758)
Net cash from financing activities 22,870 2,153
---------------------------------------------------------- --------------------------- ---------------------------
Net change in cash and cash equivalents 17,186 2,282
Cash and cash equivalents at beginning of the period 6,928 3,585
Effect of changes in foreign exchange rates 494 66
---------------------------------------------------------- --------------------------- ---------------------------
Cash and cash equivalents at end of the period 24,608 5,933
---------------------------------------------------------- --------------------------- ---------------------------
Notes to the Financial Statements
1 General information and group structure
Chaarat Gold Holdings Limited (the "Company") (registration
number 1420336) is incorporated in the British Virgin Islands (BVI)
and is the ultimate holding company for the companies set out below
(the "Group"). The Company's shares are admitted to trading on the
Alternative Investment Market of the London Stock Exchange
(AIM:CGH). The registered address of the Company is: Palm Grove
House, PO Box 438, Road Town, Tortola, British Virgin Islands,
VG1110.
As at 30 June 2021 the Group consisted of the following
companies all of which are wholly owned:
Group company Country of incorporation Principal activity
Chaarat Gold Holdings BVI Ultimate holding company
Limited
Zaav Holdings Limited BVI Holding company
Chon-tash Holdings Limited BVI Holding company
At-Bashi Holdings Limited BVI Holding company
Akshirak Holdings Limited BVI Holding company
Goldex Asia Holdings Limited BVI Holding company
Chon-tash Mining LLC* Kyrgyz Republic Exploration
At-Bashi Mining LLC* Kyrgyz Republic Exploration
Akshirak Mining LLC* Kyrgyz Republic Exploration
Goldex Asia LLC* Kyrgyz Republic Exploration
Chaarat Zaav CJSC* Kyrgyz Republic Exploration
Chaarat Gold International Cyprus Holding company
Limited
Chaarat Gold Services England & Wales Services company
Limited Armenia Production company
Chaarat Kapan CJSC*
*Companies owned indirectly by the Company.
2 Going concern
As at 1 August 2021 the Group had approximately US$23.0 million
of cash and cash equivalents and US$48.9 million of debt (excluding
lease liabilities and contract liabilities) comprising the
following:
- US$25.4 million convertible loan notes, including accrued
interest to 1 August 2021
- US$23.5 million borrowings outstanding
Kyrgyz Republic
In order to achieve the planned (though as yet uncommitted)
capital developments of assets in the Kyrgyz Republic, future
financing will need to be raised.
Kapan
The Board has based the cash flow forecasts for Kapan on the
most recent budgets which show that Kapan is expected to generate
sufficient revenue to cover its operating costs and principal and
interest payments and meet its covenants. Based on current
forecasts, covenants will be met, however, performance of Kapan is
sensitive to commodity prices and production. If these were to
decrease, there is a risk that covenants will be breached.
Convertible Loan Notes
By 31 October 2021 the convertible loan notes are due to be
redeemed by conversion into equity at approximately GBP0.35 per
ordinary share, at the holder's option, or will be repaid in cash
for a total of US$26.4 million (which includes accrued
interest).
Labro Term Loan
In February 2021 Labro converted all of the outstanding US$22.0
million term loan due, as well as the US$0.2 million of accrued
interest for US$22.2 million in equity. Labro subscribed for
62,380,154 ordinary shares of US$0.01 each in the Company at the
issue price of GBP0.26 per share (non-cash). The loan therefore has
been extinguished, avoiding any related financing required in
future periods.
Labro Facility
In February 2021 the company repaid the outstanding US$0.8
million owing under the Labro Facility. No further drawdowns took
place from this point until the expiry date of the facility on 30
June 2021.
Conclusion
The convertible loan notes will need to be refinanced with cash
or alternative funding, to the extent that loan note holders do not
choose to convert to equity, prior to 31 October 2021. To proceed
with the development in Kyrgyz Republic further financing will also
be required.
The Board has a reasonable expectation that the Group will be
able to raise additional funds as demonstrated by the Group's
established track record in historical fund raisings and
refinancing events and ongoing proactive discussions with
stakeholders.
Subject to the above, the Directors have concluded that it is
appropriate to prepare the financial statements on a going concern
basis. However, there are currently no binding agreements in place
in respect of any additional funding and there is no guarantee that
any course of funding will proceed. Therefore, this indicates the
existence of a material uncertainty which may cast significant
doubt over the Group's ability to continue as a going concern and,
therefore, it may be unable to realise its assets and discharge its
liabilities in the normal course of business. The financial
statements do not include the adjustments that would result if the
Group were unable to continue as a going concern.
3 Accounting policies
The significant accounting policies which have been consistently
applied in the preparation of these interim financial statements
are summarised below:
Basis of preparation
The consolidated interim financial information has been prepared
using policies based on International Financial Reporting Standards
(IFRS and IFRIC interpretations) issued by the International
Accounting Standards Board ("IASB"). It does not include all
disclosures that would otherwise be required in a complete set of
financial statements and should be read in conjunction with the
2020 Annual Report. The results for the period are derived from
continuing activities. The figures for the year ended 31 December
2020 have been extracted from the statutory financial statements,
prepared under IFRS as adopted by the European Union, which are
available on the Group's website www.chaarat.com. The auditor's
report on those financial statements was unqualified and noted a
material uncertainty in respect of the Group's ability to continue
as a going concern.
The consolidated interim financial information for the six
months ended 30 June 2021 and 30 June 2020 (unaudited) does not
constitute statutory accounts as defined in Section 435 of the
Companies Act 2006.
New standards, interpretations and amendments adopted by the
Group
The accounting policies adopted in the preparation of the
consolidated interim financial information are consistent with
those adopted in the preparation of the Group's annual consolidated
financial statements for the year ended 31 December 2020. There
were no new applicable standards that became effective on 1 January
2021 and the Group has not early adopted any amendment, standard or
interpretation that has been issued but is not yet effective. It is
expected that where applicable, these standards and amendments will
be adopted on each respective effective date.
Critical accounting judgements and key sources of estimation
uncertainty
The preparation of interim financial information requires
management to make judgements, estimates and assumptions that
affect the application of accounting policies and the reported
amounts of assets and liabilities, income, and expenses. Actual
results may differ from these estimates.
In preparing the consolidated interim financial information, the
significant judgements made by management in applying the Group's
accounting policies and the key sources of estimation uncertainty
were the same as those that applied to the consolidated financial
statements for the year ended 31 December 2020.
4 Revenue
The revenue recognised from contracts with customers for the 6
months ended 30 June 2021 and 30 June 2020 consisted of the
following:
2021 2020
US$'000 US$'000
-------------------- -------- --------
Copper concentrate 40,294 23,794
Zinc concentrate 7,801 6,092
Total 48,095 29,886
-------------------- -------- --------
The Group's sales of copper and zinc concentrate are based on
provisional 1-3 month commodity forward prices and as such, contain
an embedded derivative which is marked-to-market at each month
end.
The Group's sales are to internationally well-established
commodity traders under standard offtake terms.
In 2021, Copper concentrate sales are made on an Ex Works basis
meaning that control passes to the buyer when the concentrate is
loaded on the truck at the Kapan mine. Zinc concentrate sales are
made on a cost, insurance and freight ("CIF") basis meaning that
control passes to the buyer when the concentrate is loaded on the
vessel in the port of shipment (e.g. port of Poti, Georgia).
Of the US$40.3 million generated from copper concentrate sales
in H1 2021, US$29.2 million relates to own ore revenue and US$11.1
million relates to third-party revenue (H1 2020: US$23.8 million
own ore and no third-party revenue).
In 2021, the Group has continued to recognise contract
liabilities in relation to its contracts with customers for
prepayments received for the future transfer of concentrates, as
set out in Note 11.
5 Segmental analysis
Operating segments are identified based on internal reports
about components of the Group that are regularly reviewed by the
Board, in order to allocate resources to the segments and to assess
their performance.
Based on the proportion of revenue and profit within the Group's
operations and on the differences in principal activities, the
Board considers there to be two operating segments:
-- Exploration for mineral deposits in the Kyrgyz Republic with
support provided from the British Virgin Islands ("Kyrgyz
Republic")
-- Exploration and production of copper and zinc concentrates at
Kapan in Armenia ("Armenia")
Kyrgyz Republic Armenia Corporate Total
30 June 2021 US$'000 US$'000 US$'000 US$'000
Revenue
Sales to external customers - 48,095 - 48,095
Total segment revenue - 48,095 - 48,095
---------------- -------- ---------- --------
Operating profit/(loss) (995) 12,695 (3,882) 7,818
Finance income - 3 6 9
Finance costs - (1,583) (2,862) (4,445)
Fair value gain on warrant - - 163 163
---------------- -------- ---------- --------
Profit/(loss) before income tax (995) 11,115 (6,575) 3,545
---------------- -------- ---------- --------
Income tax charge - (2,173) - (2,173)
---------------- -------- ---------- --------
Profit/(loss) after income tax (995) 8,942 (6,577) 1,372
---------------- -------- ---------- --------
Assets
Segment assets - non-current 73,495 39,158 - 112,653
Segment assets - current 267 30,348 21,168 51,783
Total assets 73,762 69,506 21,168 164,436
---------------- -------- ---------- --------
Liabilities
Segment liabilities 2,063 55,993 26,927 84,983
Total liabilities 2,063 55,993 26,927 84,983
---------------- -------- ---------- --------
Kyrgyz Republic Armenia Corporate Total
30 June 2020 US$'000 US$'000 US$'000 US$'000
Revenue
Sales to external customers - 29,886 - 29,886
Total segment revenue - 29,886 - 29,886
---------------- -------- ---------- ---------
Operating profit/(loss) (1,260) 1,636 (5,530) (5,154)
Finance income - 13 - 13
Finance costs - (2,003) (6,021) (8,024)
Loss before income tax expense (1,260) (354) (11,551) (13,165)
---------------- -------- ---------- ---------
Income tax charge - (355) - (355)
---------------- -------- ---------- ---------
Loss after income tax expense (1,260) (709) (11,551) (13,520)
---------------- -------- ---------- ---------
Assets
Segment assets - non-current 66,937 42,103 108 109,148
Segment assets - current 491 16,828 3,745 21,064
Total assets 67,428 58,931 3,853 130,212
---------------- -------- ---------- ---------
Liabilities
Segment liabilities 4,426 58,287 38,647 101,360
Total liabilities 4,426 58,287 38,647 101,360
---------------- -------- ---------- ---------
6 Finance costs
The finance costs for the 6 months ended 30 June consisted of
the following:
2021 2020
US$'000 US$'000
------------------------------------------------------ -------- --------
Interest on convertible loan notes 1,802 3,048
Interest on other loans 1,266 2,496
Interest on lease liabilities 69 83
Interest on contract liabilities 128 -
Unwinding of discount - provision for rehabilitation 315 345
Financing costs 865 2,006
Other - 46
------------------------------------------------------- -------- --------
Total 4,445 8,024
------------------------------------------------------- -------- --------
Interest on the convertible loan notes amounted to US$1.8
million in H1 2021. In H1 2020, the Investor Loan (which was
refinanced in H2 2020) was reclassified form "Other loans" to
"Convertible loans" resulting in a higher charge in this
period.
The interest on other loans of US$1.3 million includes interest
on borrowings of US$1.0 million and interest on the Labro Term Loan
of US$0.2 million. The interest charge in the comparative period
was higher as it included interest on the Investor Loan and the
Labro Facility amounting to US$1.0 million.
The financing costs of US$0.9 million, a non-cash cost, relates
to the amortisation of the Labro Facility commitment fee as
disclosed in Note 11. In H1 2020, the financing costs of US$2.0
million comprised the modification loss on the refinancing of the
Investor Loan of US$1.1 million and the Labro security fee of
US$0.9 million.
7 Earnings per share
Earnings per share is calculated by reference to the profit for
the 6 months ended 30 June 2021 of US$1.4 million (2020: loss of
US$13.5 million) and the weighted average number of ordinary shares
in issue during the period of 657,425,878 (2020: 490,694,593).
At 30 June 2021, 8,920,341 (2020: nil) warrants, 55,027,006
(2020: 57,712,508) share options and convertible loan notes have
been excluded from the diluted weighted average number of ordinary
shares calculation because their effect would have been
anti-dilutive.
8 Exploration and evaluation costs
Tulkubash Kyzyltash Total
US$'000 US$'000 US$'000
------------------------- ---------- ---------- --------
At 1 January 2021 52,157 9,202 61,359
Additions 1,485 131 1,616
Reclassification to PPE (728) - (728)
------------------------- ---------- ---------- --------
At 30 June 2021 52,914 9,333 62,247
------------------------- ---------- ---------- --------
Exploration and evaluation assets comprise costs associated with
exploration for, and evaluation of, mineral resources together with
costs to maintain mining and exploration licences for mining
properties that are considered by the Directors to meet the
requirements for capitalisation under the Group's accounting
policies. As at 30 June 2021, management does not consider there to
be any indicators of impairment in respect of these assets.
9 Share capital
Share Capital Share Premium
Ordinary shares of US$0.01 each Number of Shares ('000) Nominal Value US$'000 Nominal Value US$'000
--------------------------------- ------------------------ ---------------------- ----------------------
Authorised 1,395,167 13,952 -
--------------------------------- ------------------------ ---------------------- ----------------------
Issued and fully paid
At 1 January 2021 5 40,061 5 ,401 191,594
Issued for cash 8 4,115 8 41 2 8,711
Issued to settle liabilities 6 2,435 6 24 2 1,617
At 30 June 2021 6 86,611 6 ,866 2 41,922
--------------------------------- ------------------------ ---------------------- ----------------------
On 5 February 2021, the Company issued 55,240 ordinary shares to
Labro to satisfy outstanding drawdown fees under the Labro Facility
agreement, as disclosed in Note 13. On the same day, a further
62,380,154 ordinary shares were issued to Labro to set off the
outstanding amount owed by the Company on the Labro Term Loan.
Later in February 2021, as part of an equity fundraise the
Company issued a further 84,114,549 ordinary shares of US$0.01 each
to new and existing investors for cash (US$30.0 million).
10 Share-based payments
Management Incentive Plan
On 18 September 2019, the Group adopted a new Management
Incentive Plan ("MIP") whereby 56,805,258 share options exercisable
at GBP0.42 per share and 21,494,198 restricted stock units ("RSUs")
were granted to key management personnel ("KMPs") and other
employees (subject to performance conditions for executives in the
case of the RSUs). 33% of the share options and RSUs vested on 15
October 2019 (Tranche 1), 33% on 31 December 2019 and (in the case
of RSUs subject to performance conditions) on 21 February 2020
(Tranche 2), and the remaining 33% of share options vested on 31
December 2020 subject to a vesting condition of continued
employment by the Group. The remaining 5,308,640 RSUs (Tranche 3)
vested on 15 April 2021 following final determination by the
remuneration committee of the extent to which performance criteria
had been achieved, in the case of awards subject to performance
conditions. RSUs not subject to performance conditions in Tranche 3
vested at the same time.
On 22 April 2021, a further 2,122,466 RSUs were granted to KMPs
and other employees which vested immediately on this date. As a
result, a total share-based payment charge of US$1.3 million was
recognised during the 6 months ended 30 June 2021, US$0.5 million
of which related to the remaining Tranche 3 RSUs and US$0.8 million
to the additional RSUs granted on 22 April 2021.
There was no exercise or lapse of share options during the 6
months ended 30 June 2021.
No further share awards have been granted for 2021, however
should any such awards be made later this year, they will be
accounted for in H2 2021.
Employee Benefit Trust
On 7 October 2019, the Group established the Chaarat Gold
Holdings Limited Employee Benefit Trust in order to acquire and
hold sufficient shares to satisfy the awards under the new Plan.
The Company was considered to have control over the Trust and
therefore the results of the Trust were consolidated within these
financial statements. During the period, expenses of US$0.02
million were incurred by the Trust.
11 Liabilities
Reconciliation of liabilities
Convertible loans Contract liabilities Lease liabilities Other loans Total
Liabilities from US$'000 US$'000 US$'000
financing activities US$'000 US$'000
----------------------- ------------------ --------------------- ------------------ -------------- --------------
At 1 January 2021 23,252 5,328 1,425 53,347 83,352
----------------------- ------------------ --------------------- ------------------ -------------- --------------
Cash flows:
Payment of interest - - - (1,193) (1,193)
Payment of principal
amount - - - (5,050) (5,050)
Lease payments - - (334) - (334)
Net proceeds - - (334) (6,243) 6,577
Non-cash items:
Loan modification - - - 8 8
Converted to equity - - - (22,117) (22,117)
Interest accrued 1,802 128 69 1,266 3,265
Settlement of interest
against receivables - (56) - - (56)
Amounts recognised as
revenue - (1,583) - - (1,583)
Effect of currency
translation - 234 63 16 313
----------------------- ------------------ --------------------- ------------------ -------------- --------------
Total liabilities from
financing activities
at 30 June 2021 25,054 4,051 1,223 26,276 56,605
----------------------- ------------------ --------------------- ------------------ -------------- --------------
Non-current - - 762 14,062 14,824
Current 25,054 4,051 461 12,214 41,780
----------------------- ------------------ --------------------- ------------------ -------------- --------------
Convertible loan notes
During the period there were no new issues of 2021 convertible
loan notes. The only movement in the period was accrued interest of
US$1.8 million (2020: US$1.6 million).
2 021 Notes U S$'000
----------------------------- ---------
At 1 January 2021 23,252
Cash proceeds -
Transaction costs -
----------------------------- ---------
Net proceeds -
----------------------------- ---------
Amount classified as equity -
Accrued interest 1,802
At 30 June 2021 25,054
-------------------------------- ---------
N on-current -
C urrent 25,054
-------------------------------- ---------
The number of shares to be issued on conversion is fixed. There
are no covenants attached to the convertible loan notes.
The 2021 notes accrued interest at 10% p.a. until 30 April 2020
and then at a rate of 12% p.a. until 31 October 2021. The notes are
secured on the shares of the Group's principal operating
subsidiary, Chaarat Zaav CJSC via the intermediate holding company
Zaav Holdings Limited. The notes are repayable on 31 October 2021
and can be redeemed by the Company at any time subject to paying a
minimum of 5% interest. The notes, including accrued interest, can
be converted into shares at any time at the holder's option at a
USD conversion price of US$0.473 or approximately GBP0.343 pending
the USD/GBP foreign exchange rate. If not converted, the notes will
be repaid in cash for a total of US$26.4 million in October 2021,
as disclosed in Note 2.
The value of the liability and equity conversion component was
determined at the date of issue. The fair value of the liability
component at inception was calculated using a market interest rate
of 15% for an equivalent instrument without conversion option.
Contract liabilities
The movements in the Group's contract liabilities for the period
are presented below:
US$'000
------------------------------------------------ --------
At 1 January 2021 5,328
Interest on contract liabilities 128
Settlement of interest against receivables (56)
Amounts offset against receipts from customers (1,583)
Effect of currency translation 234
At 30 June 2021 4,051
------------------------------------------------- --------
Non-current -
Current 4,051
------------------------------------------------- --------
The contract liabilities balance relates to prepayments received
from one of Chaarat Kapan's customers in December 2020 for the sale
of concentrates in 2021. The prepayments accrue interest at a rate
defined in the sales contract and are settled by way of deduction
against outstanding invoices.
Lease liabilities
The Group's leases are accounted for by recognising a
right-of-use asset and a lease liability except for leases of low
value assets and leases with a duration of 12 months or less.
The Group leases equipment and land in the jurisdictions from
which it operates, the most notable being the land that is leased
in Armenia. Certain items of property, plant and equipment are also
leased in the Kyrgyz Republic which contain variable payments over
the lease terms, however these leases do not fall within the scope
of IFRS 16, and right-of-use assets and lease liabilities are not
recognised as a result.
The movements in the Group's right-of-use assets and lease
liabilities for the period are presented below:
Right-of-use assets
Land Equipment Total
US$'000 US$'000 US$'000
------------------------------- -------- ---------- --------
At 1 January 2021 808 460 1,268
Depreciation charge (55) (229) (284)
Effect of currency translation 41 13 54
At 30 June 2021 794 244 1,038
-------------------------------- -------- ---------- --------
Lease liabilities
Land Equipment Total
US$'000 US$'000 US$'000
------------------------------- -------- ---------- --------
At 1 January 2021 859 566 1,425
Interest expense 47 22 69
Lease payments (78) (256) (334)
Effect of currency translation 45 18 63
At 30 June 2021 873 350 1,223
-------------------------------- -------- ---------- --------
Non-current 762 - 762
Current 111 350 461
-------------------------------- -------- ---------- --------
The maturity of the gross contractual undiscounted cash flows
due on the Group's lease liabilities is set out below based on the
period between 30 June 2021 and the contractual maturity date:
Within 6 months 6 months to 1 year 1 to 5 years Over 5 years Total at 30 June 2021
US$'000 US$'000 US$'000 US$'000 US$'000
------------------ ---------------- ------------------- ------------- ------------- ----------------------
Land leases 108 96 881 147 1,232
Equipment leases 359 - - - 359
------------------ ---------------- ------------------- ------------- ------------- ----------------------
Total 467 96 881 147 1,591
------------------ ---------------- ------------------- ------------- ------------- ----------------------
As at 30 June 2021, the contractual discounted cash flows due on
the Group's lease liabilities amounts to US$1.2 million (2020:
US$1.4 million).
The discount rate used in calculating the lease liabilities is
the rate implicit in the lease, unless this cannot readily be
determined, in which case the Group's incremental rate of borrowing
is used instead. In 2021, a discount rate of 12% per annum has been
used to calculate the Group's lease liabilities for its land and
equipment leases.
Other loans
The movements in the Group's other loans for the period are
presented below:
Labro Facility Labro Term Loan Borrowings Other Borrowings Total
US$'000 US$'000 US$'000 US$'000 US$'000
----------------------------------- ---------------- ----------------- ------------ ------------------ ----------
At 1 January 2021 791 21,947 28,583 2,026 53,347
Interest accrued 17 176 1,008 65 1,266
Loan modification 14 (6) - - 8
Converted to equity - (22,117) - - (22,117)
Payment of interest in cash (22) - (1,121) (50) (1,193)
Payment of principal amount in
cash (800) - (4,250) - (5,050)
Effect of currency translation - - 15 - 15
----------------------------------- ---------------- ----------------- ------------ ------------------ ----------
At 30 June 2021 - - 24,235 2,041 26,276
----------------------------------- ---------------- ----------------- ------------ ------------------ ----------
Non-current - - 14,062 - 14,062
Current - - 10,173 2,041 12,214
----------------------------------- ---------------- ----------------- ------------ ------------------ ----------
Labro Facility
In February 2021, the Company repaid the outstanding US$0.8
million on the Labro Facility. The consideration paid exceeded the
carrying amount extinguished and therefore a loss of US$13,900 was
recognised in profit or loss as a financing cost under IFRS 9. No
further drawdowns took place from this point until the maturity
date of the facility on 30 June 2021. The remaining commitment fee
of US$0.9 million was amortised and recognised as a financing cost
in profit or loss on this date.
Labro Term Loan
In February 2021, the outstanding US$22 million on the Labro
Term Loan as well as the US$0.2 million of accrued interest was
converted into equity. Labro subscribed for 62,380,154 ordinary
shares of US$0.01 each in the Company at the issue price of GBP0.26
per share.
Borrowings
On 30 January 2019, the documentation was finalised for the
Kapan Acquisition Financing totalling US$40 million, which is
syndicated with Ameriabank CJSC (US$32 million), HSBC Bank Armenia
CJSC (US$5 million) and Ararat Bank OJSC (US$3 million). The loan
incurs interest at Libor plus 8% and was originally repayable
through quarterly payments over a four-year period however in July
2021, the maturity date of the facility was extended from 31
January 2023 to 2 October 2023. The non-current and current
balances as at 30 June 2021 reflect the revised repayment schedule,
as disclosed in Note 13.
This bank financing has certain covenants attached to it that
the Group needs to adhere to. All covenants were met as at 30 June
2021 and as such the Group remains in full compliance with the
loan.
Other Borrowings
Other borrowings include an amount owing to one of Chaarat
Kapan's customers in respect of prepayments for the future sale of
concentrates. The prepayments accrue interest and will be settled
in cash in accordance with a repayment schedule defined in the
sales contract. The prepayments can be requested upon notice and
therefore are repayable on demand.
12 Related party transactions
Remuneration of key management personnel
Remuneration of key management personnel for the 6 months ended
30 June 2021 and 30 June 2020 is as follows:
2021 2020
US$'000 US$'000
Short term employee benefits 904 1,684
Share-based payments charge 856 2,970
Total 1,760 4,654
----------------------------- ------------- -------------
Included in the above key management personnel are 8 directors
and 2 key managers (2020: 7 and 2).
Entities with significant influence over the Group
At 30 June 2021, Labro Investments Limited, Chaarat's largest
shareholder, owned 42.66% (2020: 38.67%) of the ordinary US$0.01
shares in Chaarat ("Ordinary Shares") and US$1.0 million of 10%
secured 2021 convertible loan notes which, assuming full conversion
of principal and interest to maturity on 31 October 2021, are
convertible into 2,849,330 Ordinary Shares (comprised of 2,111,484
Ordinary Shares in respect of principal and around 737,846 Ordinary
Shares in respect of interest). If converted, Labro's ownership
would increase to 42.89% of the Ordinary Shares in Chaarat at 30
June 2021.
Labro Loan Agreements
The Company has issued the following Ordinary Shares in the
Company to Labro, payment for which was offset against drawdown
fees incurred under the Labro Facility and reduction of
indebtedness under the Labro Term Loan:
Date payment due Amount to be paid under Labro Type of payment of shares issued Date shares issued
Loan Agreement under Labro Loan to Labro in to Labro
Agreement satisfaction
30 June 2021 US$ 24,000 Drawdown fee 55,240 5 February 2021
------------- ------------------- ------------------- ------------------- --------------------
Indebtedness
n/a US$ 22,123,195 reduction 62,380,154 5 February 2021
------------- ------------------- ------------------- ------------------- --------------------
Refer to Note 11 above for a reconciliation of the Labro
Facility during the period, showing a nil balance as at 30 June
2021, the maturity date of the facility.
On 5 February 2021, the Company issued 55,240 Ordinary Shares at
GBP0.33 per share to Labro to settle the drawdown fees that were
incurred on the US$0.8 million drawdown that took place in November
2020.
On the same date, the Company issued 62,380,154 Ordinary shares
at GBP0.26 per share to Labro. Labro's obligation to deliver cash
in respect of these shares was offset against the Company's
indebtedness under the Labro Term Loan with the consequence that
the Company's obligations under the Labro Term Loan decreased by
US$22.1 million to nil, as disclosed in Note 11.
Shares issued to Key Management Personnel
In April 2020, 1,286,839 Ordinary Shares were subscribed for by,
and issued to, key management personnel ("KMPs") at a price of
GBP0.26 per Ordinary Share upon terms that the subscription price
would be satisfied by way of set-off against a proportion of fees
and salaries due and to become due until such time as the
subscription price was fully paid. The outstanding balance of the
subscription price at 30 June 2021 is as follows:
Category Total No. of Placing Shares Total amount Total repayments Outstanding balance at 30
issued June 2021
Directors (including the 1,073,635 US$ 352,500 US$ 336,711 US$ 15,789
Executive Chairman)
-------------------------- ------------- ----------------- --------------------------
Other KMPs 213,204 US$ 70,000 US$ 51,579 US$ 18,421
-------------------------- ------------- ----------------- --------------------------
Total 1,286,839 US$ 422,500 US$ 388,290 US$ 34,210
-------------------------- ------------- ----------------- --------------------------
13 Post balance sheet events
Amendment to Kapan Syndicated Loan Facility
In July 2021, an agreement was reached in principle with the
security agent, Ameriabank CJSC, to extend the maturity date of the
Syndicated Loan Facility from 31 January 2023 to 2 October 2023 and
to amend the repayment schedule to reflect the new maturity date.
Even though this is a post balance sheet event, this has been
treated as an "adjusting event" as negotiations for the loan
extension commenced in March 2021 and the revised maturity date had
been substantively agreed by 30 June 2021. Therefore, the
non-current and current balances disclosed in these financial
statements reflect the amended repayment schedule.
Issue of shares to Çiftay
On 21 June 2021, Çiftay and the Company entered into a new
investment agreement, in order to simplify the structure of the
partnership and further align the interests of both parties.
Chaarat will retain 100% ownership of the Tulkubash and Kyzyltash
projects with Çiftay becoming a strategic investor at the Company
level, through the issuance of new ordinary shares. On 30 July
2021, the Company issued 2.8 million new ordinary shares of US$0.01
each in the Company to Çiftay in settlement of accrued expenses as
at 30 June 2021.
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END
IR EAPNPEFLFEFA
(END) Dow Jones Newswires
September 09, 2021 02:00 ET (06:00 GMT)
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