16th Aug 2023 09:46
(Alliance News) - Chaarat Gold Holdings Ltd on Wednesday said it has signed an agreement with Gold Mining Co LLC to sell its Armenian subsidiary, Chaarat Kapan CJSC, which owns the Kapan mine.
In addition to the operating Kapan mine in Armenia, Chaarat Gold has the Tulkubash and Kyzyltash gold projects in Kyrgyzstan.
Gold Mining Co operates the Lichkvaz mine in Armenia, which has supplied third-party ore to the Kapan plant for processing for a number of years. One of its shareholders is also the managing director and a co-owner of S&A Mining LLC, which has been the long-term mining contractor partner at the Kapan mine.
The consideration for the sale is USD55.4 million. This comprises USD5 million in cash and USD50.4 million from the assignment of intra-group payables due to Chaarat Kapan.
Among the reasons behind the sale, Chaarat Gold said the significant appreciation of the Armenian dram had led it to review strategic options to ensure the sustainability of Kapan.
It added that the sale presented a "beneficial exit opportunity" at a time when the asset is seeing "all in sustaining cash cost, potential losses and further funding requirements following several years of profitable operation".
The funds from the sale will be used to provide working capital for other projects, namely completing the potential Xiwang investment, which would in turn assist in developing the Tulkubash project.
"The proposed sale allows Chaarat to focus on its growth pipeline in the gold sector with the aim of developing lower cost and higher value options within its portfolio. It accelerates our strategic objective of developing the Tulkubash project and evaluating opportunities for inorganic growth options," said Chief Executive Officer Mike Fraser.
Chaarat Gold shares were trading 10% higher at 7.44 pence each in London on Wednesday morning.
By Holly Beveridge, Alliance News reporter
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