Chaarat Gold Holding Ltd., a gold mining company based in the British Virgin Islands with exploratory mineral deposits in the Kyrgyz Republic, recently secured a $250 million investment from Xiwang International. After signing the non-binding letter of intent and indicative term sheet, Chaarat Gold has officially announced its potential equity investment with the investment management company Xiwang, which holds assets across numerous verticals including wellness, food, steel, real estate management, and now, precious metals mining.
Chaarat hopes to use the investment to fund further organic pipeline development and external growth efforts with value-added acquisitions. With the transaction, Chaarat would issue shares at a £0.20 price per share, allowing Xiwang to hold 60% of shares in the company.
Additional terms allow Xiwang to appoint two members of choice on the Chaarat board following payment completion. Both companies would also sign a relationship agreement with various terms that essentially ensure that Chaarat maintains independent operations.
After signing the non-binding agreement, Chaarat’s share prices immediately jumped 87.3% with investors rallying behind the movement. Assuming all terms continue as planned, investors should see flourishing company growth supported by the extra cash. Of course, the current terms are non-binding, so anything can still change.
Analysts expect a further share price rally after deal execution, allowing share prices to reach the promised 20p rate.
Both companies plan to reach a full agreement on the preliminary investment by the end of the month. Assuming everything works out, Chaarat and Xiwang will enter a formal investment agreement that finalizes by July 30, 2023. Before the investment agreement can conclude, Xiwang must finish conducting all due diligence, financing, and regulatory approvals from corporate and government levels.
“We are pleased to have taken the discussions with Xiwang to this stage. We will now work with Xiwang towards progressing the PIA and subsequent investment and relationship agreements to support the growth objectives of Chaarat,” Martin Andersson, the executive chair of Chaarat, explained
“Xiwang is undergoing a transformational change, and Chaarat is one of the potential platforms for their investment consideration and passed their initial due diligence, governance and investment criteria,” Andersson concluded.
Chaarat Gold controls a few high-yielding mines around the globe, including the Kapan operating mine in Armenia and the Tulkubash Kyzyltash Gold Projects in the Kyrgyz Republic. The company hopes to build emerging markets in Central Asia and the FSU through organic growth and expansion opportunities, such as the investment offer from Xiwang. Assuming the deal goes through, Chaarat should be able to further develop organic pipelines across projects, offering higher yields and growth potential.
In other recent news, Chaarat Gold released its Q1 2023 output reports showing a significant increase in production. The company produced 12,371 gold equivalent ounces at the Kapan mine compared to 12,164 ounces during Q1 2022, displaying a 1.7% increase year-on-year.
Chaarat Gold also recently published the 2022 Kapan Ore Reserve Estimate in April 2023, confirming a 25% reserve increase at the mine. With these results, Kapan has now shown significant reserve increases for two years in a row. The company prioritized both development and stockpile reserves on the surface.
“Kapan continues to operate on a steady state basis with the team focusing on value, not just volume. Milling performance improved in the quarter which allowed for a draw-down of the on-site ore stocks., The continued strong price environment has partially offset the cost impact of the higher Armenian Dram compared to the US Dollar. Since Q2/Q3 2022 EBITDA has steadily improved upwards, towards the steady state EBITDA target as cost savings from supply chain improvements are being realised at current AMD/USD FX rate,” Mike Fraser, the company’s CEO, explained in the press release.
“The first drill results on the East Flank are encouraging and we are looking forward to further results in the coming months,” Fraser concluded.
With Chaarat Gold signing the potential equity investment to expand operations, we see yet another major gold mining corporation joining the movement toward capitalizing on rising demand rates. As gold prices reach the highest points we’ve seen in years, it only makes sense that such large players want to increase their output as much as possible. An investment of $250 million now is an investment in what could be the globe’s future currency.
Gold started the year at just around $1,845 per ounce. As of May 4, the shiny precious metal traded at $2,055 per ounce. Gold hasn’t steadily carried price levels above the $2,000-per-ounce line since mid-2020 at the height of the pandemic.
As always, investors should consult their financial advisors before making any portfolio decisions.