Chaarat Gold Holdings is raising £4.1 million of new capital to cover the costs of completing the bankable feasibility study (BFS) for the Tulkubash heap leach gold project in the Kyrgyz Republic. Chaarat issued 78.84 million new shares at a price of 5.25p in the share sale.
The oversubscribed share placing was well supported by the company’s directors, with both the incumbent and incoming chairmen and non-executive directors participating. The company highlights that dilution to existing shareholders was minimised as applications for stock were scaled back.
Tulkubash, which forms part of the Chaarat Gold Project, is expected to be yield some 60,000 to 70,000 ounces annually once operational. The BFS is due to be completed by the end of 2017 and it is anticipated that the permitting process in the Kyrgyz Republic will be substantially concluded in the third quarter of 2017.
Labro Investments, already a 25% shareholder, participated in the placing by taking up 41.7 million new shares and as a result will own a 31.7% stake.
Chaarat’s CEO Dekel Golan said, “The company set out to raise a modest amount of money in order to minimise dilution to shareholders. We were pleased with the interest and support of our existing and new shareholders and the directors. On account of the interest shown, the placing was oversubscribed and orders were scaled back.
“We appreciate the trust and support placed in us and will continue to do our best to justify it.”
The company has appointed Martin Andersson as non-executive chairman. He holds his Chaarat stake through Labro. An additional director, Martin Wiwen-Nilsson, an associate of Martin Andersson, will also be appointed as a non-executive director.
Presently, the capital cost of the mine is predicted in the range of US$80-100 million.
Under the terms of Chaarat’s arrangement with China Nonferrous Metals International Mining (CNMIM), the company is required to offer the 8.23% shareholder the opportunity to subscribe for additional shares, so it can maintain its proportional equity holding in the company. CNMIM will have a period of 15 days to take up the option.
Dekel Golan said that financing to build the mine still needed to be finalised but he hoped construction should start by the end of 2017 or the beginning of 2018.
He said the project looked extremely attractive and highlighted that the heap leach project only represented 13% of the overall Chaarat project.
He said being in production with a simple, low heap leach project would allow the company to “ramp up and increase production quite significantly”.