Chaarat Gold announces sale of Kapan mine

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.