Chaarat Gold Holdings will use US$15 million raised through the issue of short term senior secured convertible loan notes to move into the first stage of development at the Tulkubash Heap Leach Project in the Kyrgyz Republic. Tulkubash will be the first stage developed at the wider Chaarat project.

The funding will allow the company to drill 12,000 metres to increase the reserve base; construct a new section of the access road; start the basic and detailed engineering design; and recruit construction and operating teams.

Chaarat completed a feasibility study in 2016 for the Chaarat deposit, a 7.04 million ounce JORC-compliant measured, indicated and inferred resource. The first lower risk start-up phase of the development of the deposit will be a mid-size heap leach operation on which a bankable feasibility study (BFS) is now under way.

The BFS forms the basis upon which the company intends to raise project finance and commence construction. The resource underpinning the Tulkubash project comprises only 13% of the total Chaarat resource.

Directors believe that there is significant upside beyond this initial phase including additional exploration along strike in order to extend the life of the heap leach operation and, in due course, the development of the larger refractory resource.

Chaarat has been investigating the impact of different processing capacities to increase production from the project, whilst being cognisant that this will reduce the life of mine with the project’s current resource.

In parallel, preliminary negotiations with various potential project finance providers have resulted in a recommendation from Endeavour Financial, Chaarat’s financial advisors, that the Tulkubash reserve base be enlarged in order to significantly extend the life of mine beyond the period required to pay back the project finance. This is expected to satisfy the requirements of project finance institutions and increase the pool of providers, and should ensure an optimal project finance process and package.

The Chaarat team has therefore planned a drilling program to increase the heap leachable reserve base, which will take place throughout the 2017 season. Based on this increased reserve, the mine plan will be updated and it is expected that the pre-stripping required before mining can commence will be considerably reduced.

Accordingly, this is expected to reduce the capital expenditure required for the project with an anticipated consequent positive impact on the economic return.

The drilling companies that will carry out the program have been selected and will start work in early May with an updated resource estimate expected by the end of 2017.

The permit for construction of the new portion of the access road has been obtained and construction will begin in early May as soon as the weather improves. Tenders are under way to select the contractors to build the road.

The design of a significant proportion of the project, such as the crusher and the plant, is well under way as part of the BFS. On completion of this work, basic and detailed engineering will begin and commitments will be made for long lead items.

Completion of the access road and the anticipated reduction in pre-stripping is expected to accelerate the construction of the project. Local permitting has reached the stage of submission to the authorities for review and approval.

Chaarat anticipates that the BFS can be updated to include a revised reserve by the end of Q1 2018. Based on the ability to work in parallel on a number of elements of the project and to accelerate some areas, the Board reiterates its intention to achieve the first gold pour from the Tulkubash Heap Leach Project in 2019.

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