ArmInfo.Chaarat Gold has it has signed an agreement on the sale of the Kapan mine to the Quanto company (Armenia) for $55.4mln, a press release by Chaarat gold reads.
The consideration for the Proposed Sale is USD 55.4 million (the "Consideration") which comprises USD 5 million payable in cash and USD 50.4 million being satisfied by way of the Buyer taking an assignment of intra-group payables due to Chaarat Kapan1.
The decision to sell is due to rising costs, potential losses and increased funding due to the appreciation of the Armenian dram against the US dollar. The transaction is expected to close in Q4 2023 or Q1 2024, subject to shareholder and regulatory approval.
Chaarat plans to focus on the Tulkubash project in Kyrgyzstan and Kyzyltash roject in Uzbekistan.
The Kapan Mine is located in the south of Armenia and has been operating since the 1960s. It hosts a polymetallic ore body and produces copper and zinc concentrates with gold and silver by-products. Chaarat acquired the Kapan Mine in 2019. During this time, mine life has been extended, operational performance has been improved, delivering on production guidance between 50-65koz AuEq in each year under Chaarat's ownership. The asset has been the sole operating asset of the Company, which generated an EBITDA of USD 22.7 million in 2021 and USD 12.6 million in 2022 and a profit after tax of USD 10.5 million and USD 1.7 million in 2021 and 2022 respectively. As recently announced, the EBITDA for H1 2023 was USD 2.3 million (comprising positive EBITDA in Q1 2023 of USD 3.2 million and negative EBITDA in Q2 2023 of USD 0.9 million), which was again impacted by the adverse USD/AMD FX rate exchange and lower production. This persistently high AMD against the USD FX rate impact began in Q2 2022 and has retained its strength relative to the USD. As at 31 December 2022, the Kapan Mine had assets of USD 75.1 million and liabilities of USD 53.4 million.
Charaat Kapan is one of the assets of Chaarat Gold International Limited (Great Britain). The company is operating the Shahumyan gold and polymetallic mine in Syunik, producing gold concentrate containing copper and silver.
Among the key stockholders are Executive Chairman Martin Andersson (co-founder of Brunswick Brokerage) (33.4% of shares and 6% of convertible bonds), China Nonferrous International Mining Co. Ltd (CNIMC, 6.05%), Sarastro Group Limited, UBS (3.9%) and management (3.12%). Since 2007, Chaarat shares have been listed on LSE.
In 1988, the Kapan combine was divided and renamed the Kapan ore mining and processing enterprise. In 2002, Deno Gold Mining Company (Switzerland) privatized the company. In 2006, Dundee Precious Metals, Canadian-based international mining company, continued operation of the company, and in 206 the company was sold to Russia-based Polymetal International.
