Chaarat Gold Holdings Limited

("Chaarat" or "the Company")

INTERIM STATEMENT FOR THE SIX MONTHS ENDED 30 JUNE 2017

Road Town, Tortola, British Virgin Islands (27 September 2017)

Chaarat (AIM - CGH), the AIM quoted exploration and development company with assets in the Kyrgyz Republic, today publishes its unaudited results for the period ended 30 June 2017.  

HIGHLIGHTS

·     Funding of USD 15 million secured via the issue of convertible loan notes to finalise the Tulkubash Heap Leach Project Bankable Feasibility Study and begin preparations for construction

·     Development of the Tulkubash Heap Leach Project accelerated by an intensive drilling programme and construction of access road

·     Drilling results to date support the Board's confidence in the potential to increase the reserves of the Tulkubash Project

·     Geotechnical works completed in preparation for detailed design

·     Senior management team continues to be strengthened in preparation for construction

·     Successful Kyrgyz Investor Forum held in May amid government expressions of support for the Chaarat Gold Project 

·     Licence agreement signed with Kyrgyz Government confirms approval to bring stages one and two of the Chaarat Gold Project to production following successful submission of the Technical Project and positive public hearing

Martin Andersson, Chairman of Chaarat, commented: "I am delighted with the progress during the first six months of 2017, and subsequently, and the diligent execution of our plans to take the Tulkubash heap leach project into production. 

Based on the progress we have achieved, including the positive drilling results and with all local permitting secured, the management team are now working on budgets, plans and timelines to accelerate construction ahead of securing the full construction financing. 

The improving climate in the country for mining companies has been demonstrated not only by the recent licence agreement signed by the Kyrgyz Government and Chaarat, confirming approval for the plan to take stages one and two of the Chaarat Project to production, but also the successful conclusion of the long running dispute between the Kyrgyz government and Centerra in relation to the Kumtor mine.

I would like to welcome our convertible holders and new shareholders and thank all shareholders and convertible holders for their support. The Board and management team at Chaarat are well aware of the challenges ahead but can look forward with increasing confidence based on a record of solid achievement so far in 2017."

Enquiries:  

About Chaarat Gold

Chaarat Gold is an exploration and development company operating in the Kyrgyz Republic with a large, high grade resource - the Chaarat Gold Project. The Company's key objective is to become a low cost gold producer generating significant production from the development of the Chaarat Gold Project. Chaarat is engaged in an active community engagement programme to optimise the value of the Chaarat investment proposition. 

Chaarat aims to create value for its shareholders, employees and communities from its high quality gold and mineral deposits in the Kyrgyz Republic by building relationships based on trust and operating to the best environmental, social and employment standards.

Further information is available at www.chaarat.com

CHIEF EXECUTIVE OFFICER'S REPORT

Dear Shareholder

Reporting progress is easier than achieving that progress and as I write about our progress this year, I want to recognize the efforts of our employees in achieving the accomplishments discussed below.  Our progress would not be possible without them.  We continue our steady progress towards putting the Tulkubash heap leach project into production.

The Company executed the license agreement with the Kyrgyz government as announced on 20 September 2017.  This marks a major milestone in advancing the mine.  The agreement approves both the oxide and the refractory ore project and supports the Company's plan to develop the Tulkubash deposit first and the refractory ore project at a later date.  It also approves the local Kyrgyz environmental assessment and mitigation measures.  The Company is working on an environmental and social impact analysis that meets international standards.  We are pleased that the agreement recognizes the support of local communities in the Chatkal region.

We initiated a drilling program earlier this year to add oxide resources to our mineral inventory.  As reported in our update released on 7 September 2017, we are encouraged by the interim results received so far.  Originally planned as an 11,000-meter program, excellent drilling productivity is allowing us to extend the drilling program to 15,000 meters.   We are encouraged by the assay results and even more encouraged that the northeast trend remains open-ended.  As winter approaches, the drilling program will wind down and we will begin building the new resource model, designing the mine and reporting resources and reserves early next year.

Construction of a new 16 km access road from the Chatkal valley to the top of Kumbel pass began in late May.  Two Kyrgyz contractors are working on this road, one from the top down and one from the bottom up.  We expect the two will be connected by the end of the construction season.  This road will provide safe access to the top of Kumbel pass for transporting equipment and supplies during construction and operating supplies during operations.  The access road will be extended from the top of Kumbel pass down to the project site as part of the next project construction program.

The Company continues to advance design of the crushing facility, heap leach facility, ADR plant and infrastructure.  Geotechnical site investigations for detailed design were completed this season for all facilities thus allowing foundation designs to proceed.  The Company is currently reviewing design schedules for meeting our goals for beginning construction in the second quarter next year.

Key additions to the project team are a Head of Geology to oversee the drilling program and a Commercial Manager and a Technical Manager to manage preparations for construction.  The requirement for additional personnel has been identified and a recruitment schedule put in place as part of the construction planning.  Attracting high quality personnel to the project continues to be our primary goal in recruitment.

I am proud of our team's efforts in achieving these results.  Of special note is the efforts of our Kyrgyz governmental group in getting the license agreement signed amid a presidential election campaign.  The support from the Kyrgyz government and the local communities reflects the hard work of our team.

With Highest Regards

Robert D. Benbow

Notes to the financial statements

1       Loss per share

The loss per share is calculated by reference to the loss of USD 3,069,256 for the six months ended 30 June 2017 and the weighted average number of shares in issue of 351,775,832 during the period. There is no dilutive effect of share options.

2       Basis of preparation of financial statements

The financial information set out in this interim statement does not constitute statutory accounts.

The unaudited results for the period ended 30 June 2017 have been prepared on the basis of the accounting policies adopted in the audited accounts for the year ended 31 December 2016 except as disclosed below in relation to the issue of convertible loan notes. The results for the period are derived from continuing activities. The figures for the period ended 31 December 2016 have been extracted from the statutory financial statements, prepared under IFRS, which are available on the Group's website www.chaarat.com. The auditor's report on those financial statements was unqualified.

The proceeds received from the issue of the Company's convertible loan notes have been allocated into their liability and equity components.  The amount initially attributed to the debt component equals to the discounted cash flows using a market rate of interest that would be payable on a similar debt instrument that does not include an option to convert.  Subsequently, the debt component is accounted for as a financial liability measured at amortised cost until extinguished on conversion or maturity of the loan note. The remainder of the proceeds is allocated to the conversion option and is recognised in other reserves within the shareholders' equity, net of income tax effects.