Chaarat Gold : Q1 2020 Operational and Production Update

RNS Number : 5478N

Chaarat Gold Holdings Ltd

21 May 2020

21 May 2020

Chaarat Gold Holdings Limited

("Chaarat" or "the Company")

Q1 2020 Operational and Production 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 31 March 2020 (the "Quarter", "Q1" or the "Period") for its Kapan Mine ("Kapan"), in Armenia and progress at the Tulkubash Project.

Operations - COVID-19 response

• COVID-19prevention measures have been successfully implemented at all Chaarat offices and sites since mid-February leading to no cases on record within the group.
• We have also worked closely with our communities to provide support and assistance via medical supplies and infrastructure to help with social distancing. These measures are not limited to but include the following:

• Kapan/Armenia
• • Donated beds and equipment to the medical centre of Kapan
  • Provided diagnostic test kits and masks to the Kapan regional hospital
  • Provided computers to help school children attend remote classes
  • Sent gifts to the nurses of Kapan for their contribution during the pandemic

• Tulkubash - Chatkal/Kyrgyz Republic
• • Delivered flour, masks, and disinfectant to communities in the Chatkal region
  • Donated masks and hand sanitisers to hospitals
  • Donated PCR thermocycler and PCR tests for COVID-19 to the Kyrgyz Ministry of Health

Q1 Kapan Highlights and Outlook 1

• One lost time injury in Q1 and the recordable injury case rate (per one million hours worked) is 0.39.
• Gold equivalent production of 12,992 gold equivalent ounces 2 ("oz") produced which represents a 12% increase on the Q4 2019 production of
  11,402 oz due to grade improvements. Q1 2020 production consisted of:

• 6,656 ounces of gold;

• • 130,366 ounces of silver;
  • 455 tonnes of copper; and
  • 1,886 tonnes of zinc;
• All-in-sustainingcost ("AISC" 3) of USD1,074 /oz was also improved compared to Q4 2019 (USD1,242 /oz).
• Realised gold price for the quarter of USD1,565 /oz versus USD1,512 /oz in Q4 2019 (+3.5%) in line with the average gold price for the three months to end-March.
• The geology in the areas mined in Q1 2020 led to delays in accessing higher grade areas that were anticipated and recoveries are directly impacted by lower grade areas:
• • Total tonnes mined of 178,144t at a feed grade of 2.86g/t AuEq. The trend from Q4 2019 was again positive with slight improvements in throughput and grades (Q4 2019: 176,922t at a feed grade of 2.61g/t).
  • AuEq recoveries increased slightly to 79.5% in Q1 2020 versus 78.6% in Q4 2019 (+1.1%) despite processing more oxidised ore, which adversely impacted recoveries, than in prior months.
  • Gold recovery in the higher payable Cu concentrate circuit improved by 2.1% vs Q4 2019. Base metal recoveries and concentration grade have been stable.
  • To improve grind optimisation and associated recovery, two new cyclone clusters are being installed in early Q2 to replace old inefficient units.
• Underground development of 5,623 metres achieved in the quarter,

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compared to 5,732 metres in Q4 2019 (-1.9%). Chaarat continues to pre-

develop at a high rate for improved visibility on the future mining areas.

• Fleet renewal of two new loaders and two new haul trucks to replace aged and expensive equipment has started. Delivery times have been affected by COVID-19, but arrival of the new units is still expected for late Q2. This will help to further improve mechanical availability, decrease maintenance costs, and reduce the AISC.
• Chaarat's new technical team is assisting Kapan with the development of their 2020 mine plan. The focus is to be able to speed up access to more value adding areas of the mine for the rest of 2020 and beyond.
• Chaarat remains on track to deliver on its AuEq 55koz guidance for the year, as previously set out in its FY 2019 Production, Operational and Financial Update on 19 February 2020.

1 The mine was purchased in Q1 2019 from Polymetal International PLC which does not allow for a like for like comparison to Q1 in 2019.

• Gold equivalent ounces for 2019 are based on gold ratios of 81 for silver, 6,698 for copper and 16,075 for zinc. For the LOMP 2020 to 2026 these ratios are being amended to 83 for silver, 7,778 for copper and 20,968 for zinc due to adjusted price assumptions.

3 AISC on a gold oz produced basis exclude smelter TC/RC charges, others which add c. USD$ 150/oz. Sustaining capex of c. USD$ 4 million p.a. is included in the AISC.

Tulkubash Construction Update

Chaarat is proceeding with detailed engineering and current works are being completed on time despite precautionary measures taken with respect to the COVID-19 situation. Design on the Heap Leach Facility (HLF) and Adsorption-Desorption Recovery (ADR) facilities are almost complete, and work on the crushing circuit and final equipment selection are ongoing. Upcoming work streams are being impacted due to border crossing restrictions and equipment delays. Mobilization is on hold due to current travel and movement constraints and camp activities are limited due to in-country restrictions affecting travel in the Kyrgyz Republic.

Tulkubash Project Financing

The Company is continuing discussions with several parties and is working to finalise the project financing by end of 2020. Interest from newly contacted banks has led to a thorough review of additional proposals to further optimise the financing structure for the Tulkubash asset.

Artem Volynets, Chief Executive Officer, commented:

"We are pleased to report continued operational improvement across a number of points at the Kapan mine, that resulted in higher production and lower AISC versus the previous quarter. The fact that this pandemic did not have a material impact on the operation supports the proactive approach on measures Chaarat has successfully implemented. The newly ordered equipment and the added cyclones in the plant shall further improve the operation and add stability to the underground mine and the plant.

At Tulkubash the current workings are being completed in accordance with schedule and budget. The restrictions on people and equipment mobilisation led to a delay in first gold pour as previously announced but will enable Chaarat to optimise the feasibility and engineering further and allow for additional work on exploration."

Christopher Raggett (Joint Broker)

Camille Gochez (Joint Broker)

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 Central Asia and the FSU 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/.

Q1 2020 PRODUCTION & OPERATIONAL SUMMARY

Sales were lower in Q1 2020 due to logistics delays at border crossings and port handling.

Production Summary

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* Higher throughput due to stockpile

** An additional 4,193 tonnes 3rd party ore processed recovering 322oz of AuEq.

ENDS

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