LONDON (ShareCast) - (Sharecast News) - Kyrgyz Republic and Armenia-focussed mining company Chaarat Gold is launching a fundraise for around $25m (£18.26m), it announced on Friday, through the issue of new shares at 26p each, to complete funding of the Tulkubash project.
The AIM-traded firm said it had received commitments for $23.5m through legally-binding subscriptions representing 65,908,088 new shares, and $1.4m in the form of non-binding commitments.

It said it had closed the initial subscription element of the fundraise, but would keep the balance of it open until 1630 GMT on 9 February to allow completion of the non-binding commitments, as well as any additional demand.

Alongside the Fundraise, Chaarat said its largest shareholder, Labro Investments, had indicated its willingness to convert the entirety of the outstanding term loan of $22m plus accrued interest into equity at the issue price.

The conversion would be subject to approval by the firm's independent directors, and would be satisfied through signing a subscription agreement between the company and Labro to issue around 62.4 million new shares.

If approved, the transaction would reduce Chaarat's debt position to $46.5m, a reduction of 33% from the currently-outstanding $68.5m.

Chaarat Gold said that,. with the progress made in 2019 and 2020 on construction of the Tulkubash project, it expected that the funds received from the binding and non-binding commitments would represent the rest of the upfront equity portion to fund the project in the Kyrgyz Republic, and fulfil one of the key criteria in order to draw on any debt project finance facility that was arranged.

The company was holding ongoing discussions on debt financing of about $80m, and expected to complete those during the first half in order to fully fund the project construction capital of approximately $110m.

Funds in excess of those required for Tulkubash would be used for growth activities at both the Kyzyltash project and the East Flank development at the Kapan operation.

"We are delighted by the strong demand of new investors and our existing shareholders to support the company to fund the required remaining equity portion for the Tulkubash project financing," said chief executive officer Artem Volynets.

"Furthermore, it allows us to progress our strategic activities on the Kyzyltash asset and the East Flank development at Kapan.

"Moreover, we are grateful for the continued support from our major shareholder Labro to optimise the company's balance sheet further."

Volynets said the fundraise would achieve a "critical milestone" in the execution of the firm's strategy to build one of the leading gold companies in the former Soviet Union, by providing the equity funding required to arrange the project debt finance and start full-scale construction of the fully-licensed and permitted Tulkubash project in the Kyrgyz Republic.

"The next key step will be to complete the project financing for the Tulkubash project, which we are well advanced on to complete in the first half of this year."

At 0850 GMT, shares in Chaarat Gold Holdings were up 5.48% at 27.9p.

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