Three strikes at Gold for Chaarat Gold Holdings Ltd
With a market cap of around £200m, four City Brokers have an average target price that would double that of Chaarat Gold.
There are plenty of orphan mining assets in the former Soviet Union (FSU) and they are firmly in the sights of Chaarat Gold, but there they will remain for the time being because this gold mining company is very busy.
It is focused on its three value accretive assets, all of which are in different stages of production and development, and according to chief financial officer Chris Eger, the combined portfolio will yield 500,000 ounces of gold in five to six years time.
Once achieved it will transform Chaarat to a “proper mid to large cap gold operating business within the FSU base.” With that in mind, the board and its brokers are in agreement that the company’s stock is undervalued. The brokers have an average target price of 60p. It’s currently trading at half that.
Eger believes the stock may be “suffering from a country discount” because Chaarat operates in an “exotic” part of the world. Armenia and Kyrgyzstan may well be ‘exotic’, but both have experienced political instability over the past six months, though Chaarat’s operations were immune to the civil unrest as evidenced by shareholder updates.
“…The secret sauce for Chaarat Gold is its people as it transforms into a large cap gold operating business within the former Soviet Union…”
It’s potential delays to Chaarat’s projects that keeps Eger awake at night because time is as precious a commodity as that which is being explored for and produced.
Eger knows how quickly time passes and how much can be achieved in a relatively short period. Chaarat has been through a full-scale turnaround in the last 18 months, and the recent full year results reveal it moved into a “healthy profitable EBITDA business” in 2020.
The company’s near-term focus in Kyrgyzstan is on the development of its Tulkubash heap leach project which should be a producing mine in the next 24 months contributing 100,000 ounces of gold. The ‘massive’ Kyzyltash sulphide ore body represents the long term future for Chaarat presenting a clear avenue for organic growth; and there’s the operating mine Kapan in Armenia which should grow the “EBITDA by up t0 50% in the next two years.”
Listen to Chris talk to Sarah Lowther about Chaarat as a platform for both organic and M&A growth and the financial initiatives taken to shore up cash reserves and reduce debt.
Watch Chaarat’s CEO Artem Volynets articulate to Proactive London’s Katie Pilbeam about ‘excellent results’ considering last year was ‘full of challenges.’
Click here to access the latest corporate presentation which is also viewable in video format below.
The author was remunerated but does not hold shares in the company