Despite going from developer to producer in one fell swoop through the $55m (£43m) acquisition of the Kapan mine from Polymetal (POLY), Chaarat Gold (CGH) will need to raise more cash this year. This comes after already being handed $15m in new loans by executive chairman Martin Andersson at the end of 2018 and raising another $15m in convertible bonds through a new investor this year, because a $10m repayment falls due in August.
The company’s key holding remains the Tulkubash project in Kyrgyzstan, where it is 3,800 metres (m) into a 20,000m drill programme as it moves towards a 2021 production target. The development will be part-funded by a new partner and the new copper and zinc mine at Kapan.
The Armenian operation started delivering revenue for Chaarat this year. It produced 51,000 ounces (oz) of gold equivalent in 2018 and pre-tax profit of $3.2m. The company said it could get that to 65,000oz this year. Copper and zinc prices started the year strongly, but have fallen heavily since May, so this may weigh on future earnings.
Broker SP Angel values the Kapan mine at 22p a share, compared with the company’s share price of 29p. Bloomberg consensus estimates are for $68.5m of revenue this year, rising to $112.5m in 2020.
| CHAARAT GOLD (CGH) | ||||
| ORD PRICE: | 29p | MARKET VALUE: | £117m | |
| TOUCH: | 28-29p | 12-MONTH HIGH: | 32p | LOW: 19p |
| DIVIDEND YIELD: | na | PE RATIO: | na | |
| NET ASSET VALUE: | 5.9c | NET DEBT: | $15.1m | |
| Year to Dec 31 | Turnover ($m) | Pre-tax profit ($m) | Earnings per share (c) | Dividend per share (c) |
| 2014 | nil | -13.5 | -5.4 | nil |
| 2015 | nil | -4.6 | -1.7 | nil |
| 2016 | nil | -4.5 | -1.5 | nil |
| 2017 | nil | -18.0 | -5.1 | nil |
| 2018 | nil | -17.0 | -4.5 | nil |
| % change | - | - | - | - |
| Ex-div: | na | |||
| Payment: | na |
