Map of Chaarat with location of projects and zones
The Chaarat Gold Project is the principal project of the Chaarat Gold Holdings Ltd. The deposit is located at the centre of the Sandalash License Area. The gold mineralisation, typical of the Tien Shan belt, is associated with a series of sericiticaly altered sulphide rich lodes (tabular zones), within a quartzitic and shale rich meta-sedimentary succession. The lodes occur in three mineralised zones; the Main Zone, the Contact Zone and the Tulkubash Zone. The mineralized zones are generally developed sub-parallel to the strike and dip at between 45 and 90°. The gold mineralisation is associated with silver and arsenic mineralisation. The Project divides into three zones – the Main Zone, the Tulkubash Zone and Contact Zone. The Zones may ultimately prove to be connected but currently the Company is treating them as separate mineralised structures within the Chaarat Gold Project.

The firm believes that the mine development programme will take place “only a few months” later than planned. And the project will still start gold production next year, it says. The talks come as the Kyrgyz Republic put the fiscal regime governing mining companies under review. And Chaarat says it is aware that the fiscal regime is likely to change. So to mitigate any uncertainty concerning the impact on the Chaarat project, comprising the proposed Tulkubash and Kiziltash mines, direct negotiations are being held.

Chaarat said it aims to establish a mutually agreed Investment Agreement which would secure long term stability for the project. This would include a “stabilisation clause” protecting the company from changes to taxation, ownership structure and royalties, it added. The government supports this approach and the company believes it is the most responsible way to ensure “economic predictability”, Chaarat explained.

Permitting activities will continue in the meantime and they will not be interrupted by the negotiations. “Many countries have recently changed their mining fiscal regime and others are likely to follow,” said chief executive Dekel Golan. “This situation creates uncertainty which makes financial planning harder, especially for junior companies. The Board of Chaarat is taking a proactive approach and is entering into negotiations with the Kyrgyz Government with a view to establishing an agreement in law that is both satisfactory for the Government and provides greater certainty over the financial planning horizon for the company.”

He adds: “We have confidence that these discussions will yield a positive long term benefit for shareholders.”

The company also said today that it is satisfied that the Tulkubash mine development budget remains adequate and it has completed the design and engineering part of the project. The firm also says that an option to upgrade the design so that output capacity is doubled would be viable and within budget. And it is currently considering this option.

It said it would use the “suspension period” to attempt to increase the Tulkubash reserves with further drilling. The drill results would be used to complete a definitive feasibility study based on the higher production rate.

Chaarat says it will seek additional investment to help it achieve this higher production rate as well as source a lower power source, which would in both cases improve the projects economics and value. It said that a number of funding options are available to it. And any equity based funding would only be considered if the funding price is at least equal the 50p price it raised £51 million at last March, Chaarat added.