Company Announcements

28 October 2020

Chaarat Gold Holdings Limited

("Chaarat" or "the Company")

Q3 2020 Production and Operational Update

Chaarat (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, announces its production and operational results for the quarter ended 30 September 2020 (the "Quarter", "Q3" or the "Period") for its Kapan Gold Mine ("Kapan"), in Armenia, progress at the Tulkubash Project and a general corporate update.

Highlights

Update on our countries of operation

Armenia

International powers continue to broker talks aimed at cessation of hostilities in the region.  Although the size of our workforce has been temporarily reduced as a consequence of the hostilities, overall operational impact has been limited thus far thanks to the efforts of our dedicated employees which have allowed the continued stability of, and minimal disruption to, our operations in the short term.  However, output in Q4 2020 could be affected should hostilities and its demand on our employees continue.

Kyrgyz Republic

The political unrest following the recent parliamentary elections in the country have not had any material impact on our operations. An interim government is in place, with Presidential and Parliamentary elections scheduled for early 2021.

The 2020 drilling programme was completed in September as planned. All assay results are expected by the end of October.

COVID-19 update

COVID-19 prevention measures remain in place at all Chaarat offices and sites. The Company is continuing to follow best practice to prevent our employees contracting or spreading COVID-19 in the workplace. These measures have been successful to date in minimising the number of cases at our sites, and operations were not impacted due to illness as a result. We will continue these practices to ensure we will be prepared for the winter season. We are continuing to work with our local communities to help them with their preparations for the upcoming season.

Q3 2020 Kapan Operational Highlights

¹ Gold equivalent ounces based on gold price of USD 1,500/oz and gold ratios of 83 for silver (Au/Ag), 7,778 for copper (Au/Cu) and 20,968 for zinc (Au/Zn). Includes production of 24,345 t from third-party ore. Please note difference in price assumptions used to calculate gold equivalent ounces may lead to different numbers compared with those reported in the Q3 2019 press release.

² AISC on a gold oz produced basis exclude smelter TC/RC charges, others which add c. USD 136/oz. Sustaining capex of c. USD 1,7 million in Q3 2020 is included in the AISC.

Kapan Outlook

Tulkubash Construction Update

The 2020 drilling programme was completed in Q3 with assay results expected by the end of this month. This additional drilling will be included in this year's planned mineral resource estimate ("MRE") and ore reserves ("OR") updates. This year's construction season is now coming to an end.  Preparation works on the heap leach facility ("HLF") and haul road were undertaken, as well as the installation of first modules of the new employee accommodation units.

As well as revising the MRE and OR, Chaarat will be issuing updates to the Environmental and Social Impact Assessment ("ESIA") and bankable feasibility study ("BFS") to reflect the advances in detailed engineering, design construction, and the comprehensive environmental and social studies that have been carried out since the last reports were finalised (2017 and 2019 respectively).

The updated BFS and ESIA document are expected to be completed before year end based on the latest detailed engineering work completed and results from the updated 2020 MRE and OR reports. This will allow for a faster due diligence process on the project finance side as it reflects the current status of the project. Based on the information available to date, the conclusions of the updated BFS are expected to be similar to the 2019 BFS.

Tulkubash Project Financing

Despite the COVID-19 and the recent political events, the Company is further advancing project financing discussions with several international groups. Chaarat received two further non-binding term sheets in Q3 and is seeking to achieve the best solution to maximise shareholder value. Given the political situation in country, closing is expected in H1 2021.

Corporate Finance

As announced on 6 October 2020 (RNS 2680B), Chaarat has extended and refinanced its US$19.4 million investor loan plus US$1.1 million of accrued interest (the "Investor Loan"). As part of this debt refinancing, US$13.5 million of the Investor Loan has been assumed and extended to 31 December 2024 at 9.5% interest by Labro Investments Limited via a new facility with the Company. The US$7.0 million remaining under the Investor Loan continues with similar terms to the existing Investor Loan but with an option of being extended at Chaarat's discretion to 31 December 2021. However, it is Chaarat's intention to redeem the US$7.0 million by year end as it is in discussions with financing parties in order to repay this loan.

This successful refinancing has reduced Chaarat's funding cost until Tulkubash is expected to be producing significantly.

Chaarat has further reduced the Kapan acquisition financing by US$ 2 million with US$ 28 million now outstanding and the consolidated corporate debt reduced to US$ 67 million.

As part of Chaarat's overall finance strategy and as announced in the Company's interim results on 11 September 2020, the Company continues to evaluate all financing options in order to fund its corporate expenses and strategic initiatives, optimise the Company's capital structure, refinance existing facilities and/or reduce its overall cost of capital.

Artem Volynets, Chief Executive Officer, commented:

"The ongoing COVID-19 pandemic and events in our countries of operation have presented unprecedented challenges for Chaarat during this quarter. The safety of our employees, their families, and the communities in which we operate, remain our key focus during these difficult times. As well as this, we have been actively pursuing a number of measures with regard to the operational and financial stability of the business, to ensure we are in a robust position. In preparation for any possible operational disruptions during this quarter we are targeting higher grade ore at Kapan to offset potential lower capacity through the plant and to ensure that full-year guidance is met. In addition, we are continuing our advanced-stage discussions with financiers for our Tulkubash Project and during the current quarter we were successful in refinancing our Investor Loan.  

"I would also like to thank all of our employees for their outstanding efforts, which have been critical in keeping our operations as stable and successful as they have been to date.

Given the circumstances, it is an even more recognisable achievement that we were able to achieve a strong Q3 operational result and continued progress at our Tulkubash project allowing us to remain on track with our targets."

Enquiries

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.

Q3 2020 PRODUCTION & OPERATIONAL SUMMARY

Production Summary

³ AuEq calculated on 2020 budget prices based on gold price of USD 1,500/oz and gold ratios of 83 for silver (Au/Ag), 7,778 for copper (Au/Cu) and 20,968 for zinc (Au/Zn). Please note difference in price assumptions used in Q3 2019 press release may lead to different numbers.

ENDS