(Alliance News) - Chaarat Gold Holdings Ltd on Thursday hailed production above expectations at its operating mine in Kapan, but bemoaned the impact of foreign exchange rates as earnings declined.

Chaarat Gold is a gold mining company which owns an operating mine in Kapan, Armenia, as well as the Tulkubash and Kyzyltash gold projects in Kyrgyzstan.

The Kapan mine finished the year above its production guidance of 56,000 to 62,000 gold equivalent ounces, producing 63,000 ounces.

All-in-sustaining cash costs for ore production of USD1,376 per ounce were higher than USD1,205 the previous year. Chaarat said this was mainly due to the impact of a worsened foreign exchange rate between the US and Armenia.

Kapan saw a 41% drop in preliminary earnings before interest, tax, depreciation and amortisation to USD13.3 million from USD22.7 million in 2021. Chaarat attributed this to the adverse impact of the exchange rate, and noted an uptick in the fourth quarter on improved commodity prices and cost savings.

Looking ahead, the company expects 2023 Kapan production of 50,000 to 55,000 ounces of own-ore production, and an additional 5,000 to 10,000 of third-party ore production.

In other news, Chaarat said that the Tulkubash project remains ready for a final investment decision, once project financing has been finalised. Financing discussions continue with various financial and strategic parties, it added.

As at December 31, net debt was USD51.9 million, widened from USD48.1 million at September 30.

"Whilst Kapan benefited from improvement in the commodity basket in 2022, Ebitda was impacted by the 20% strengthening of the Armenian dram compared to the US dollar during the year and higher commodity and energy costs due to the war in Europe. This had a consequential impact on AISC in US dollar terms. The increase was partially offset by real local currency efficiency and productivity improvements," said Chief Executive Officer Mike Fraser.

"Chaarat continues to focus on its internal development options in the Kyrgyz republic as well as non-organic growth options, which include the Amulsar target. Further updates will be provided on the growth opportunities as these options progress."

Chaarat shares were flat at 10.68 pence in London on Thursday at noon.

By Holly Beveridge; Alliance News reporter

Comments and questions to newsroom@alliancenews.com

Copyright 2023 Alliance News Ltd. All Rights Reserved.